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Carrot or Stick?

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INTRODUCTION
Tessera was an innovative developer company for the miniature technologies which were widely used in the production of consumer electronics devices. Company’s inventions mainly focus on advanced chip packaging for microelectronic devices and image capturing devices. The company practiced what intellectual property attorneys referred to as “ carrot licensing”. Carrot licensing is a model where a company invents and patents a new idea. Then the company is licensing the idea to other companies with the trade secrets and know-how, and helps them to implement the innovation to the production. The opposite model to carrot licencing is the “stick licensing”, in which a company used either the threat of or actual litigation to …show more content…

If the company had to resort to litigation, the process was expensive and time consuming.
Tessera frequently used carrot model and has seen it as a marketing exercise. Generally early in licensing programs, licensees were very open to licensing as they didn’t have any know-how. But after some years of licensing, as the manufacturers no longer require a transfer of know-how, and as volumes and consequently royalties climb, manufacturers attemp to work around the patented technology.Also the existing manufactring infrasructure was capable of manufacturing such technology after some time of widespread adoption. It is at this point that stick licensing is often required. As the chip scale packaging was destined to be used so widely used, Tessera choosed the carrot licensing instead of confining its application to a niche. So the type of the technology was directly affecting the way of commercilization, application can be confined to a niche where company would occupy vertically, or can be adopted to many other firms by licensing. But as mentioned above after some time of commercialization, stick licensing was also needed.
PATENT ENFORCEMENT
The U.S. constitution gave Congress the power to “ promote the devellopment of the useful arts” by granting exclusive rights to inventers for a limited period of time. The purpose of a patent was to assurre the rights of the creators in exchange for not keeping these inventions secret, thus overall knowledge base grows.

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