Licensing and the Market for Know-how

Abstract

Intellectual property (IP) developed in the course of R and D activities is not limited to that directly related to the intended outcomes of the research project; nor are the applications of the IP necessarily restricted to the product or technology under development. 'Know-how', the often complex set of experiences, understanding and skills developed within an organization in the course of addressing a given research problem, may not have all of the attributes required for legal protection, but it may well have considerable financial value to the firm. This article examines some of the benefits of accessing know-how, using the example of reusable software components, to improve productivity in new product development. Limitations of legal mechanisms for protecting IP in the software industry are reviewed. Organizational principles and structures which may improve the ability of innovative organizations to more profitably leverage know-how are suggested.