The Handbook of Technology and Innovation Management

11.4. The Potential Costs of Complementary Assets When IP is Separately Owned

In 1995, the US Department of Justice (DOJ) issued its guidelines licensing IP.^[] These guidelines drew a distinction between the market for goods, the market for technology, and the market for innovation. The market for goods relates to product market offerings. The market for technology involves the trading of IP, while the market for innovation involves the conduct of research that may lead to future development of products and services. Here we will focus on the second category, the market for technology, or the market for knowledge assets in our terminology. As discussed in Teece (1982; 1998), Gans, Hsu, and Stern (2002), and Arora, Fosfuri, and Gambardella (2001), this can be conceived to be a market lying upstream from producers of goods and services in the product market, and the presence of this upstream market may have powerful effects on innovation within the industry of the upstream and downstream firms.

^[] US Department of Justice, Antitrust Guidelines for the Licensing of Intellectual Property, Washington, DC, Department of Justice: Federal Trade Commission, April 6, 1995.

Implicit in the dynamic capabilities analysis is the assumption that the IP that supports Schumpeterian innovation is fully controlled by the innovating firm, as in Teece (1986). This does not consider situations such as those contemplated in the DOJ guidelines above, where IP ownership may differ from the ownership of ...