Neil Wilkof has posting a thoughtful discussion on collaboration and IP rights over at the blog IP Finance . He notes that fashioning a collaborative agreement can be a tricky and time consuming activity. He then notes the case of the takeover of Genentech by Roche, which reportedly cut through the legal thicket to make collaborative research possible, to ask a fundamental question:
It is not as if we don't have standardized forms. Take for example the federal government's Cooperative Research and Development Agreements (CRADAs). CRADAs are agreements between federal agencies and private companies on specific joint research projects. Agencies, such as the National Institute of Health, have model agreements. Could it be that in this case, the bureaucracy actually reduces transaction costs? I can image that federal agencies have far less bargaining room in their negotiations than private companies. A CRADA may be much more of a take-it-or-leave-it proposition. Thus the transaction cost may be in part a function of bargaining power and size.
Wilkof ends his comments with the suggestion that this issue would make a good topic for an MBA case study. Let me expand that we need more than a case study on the Roche and Genentech example. That would be a good starting point, but I sense there are a couple of Ph.D. dissertations needed here as well.
Can it be that the transaction costs in bargaining the disposition of IP rights in a collaborative arrangement between two separate parties are so daunting that the only feasible solution is for the two parties to merge, thereby eliminating the friction in the contractual bargaining?To me, this begs the question: why are transaction cost so high? Collaborative research is not a new phenomenon. What is it about IP rights that have caused Wilkof to state that "often times devilishly difficult to find a workable arrangement for the allocation of IP rights . . ."? We seem to lack standardization of contracts -- a complaint I hear about technology licensing agreements as well.
It is not as if we don't have standardized forms. Take for example the federal government's Cooperative Research and Development Agreements (CRADAs). CRADAs are agreements between federal agencies and private companies on specific joint research projects. Agencies, such as the National Institute of Health, have model agreements. Could it be that in this case, the bureaucracy actually reduces transaction costs? I can image that federal agencies have far less bargaining room in their negotiations than private companies. A CRADA may be much more of a take-it-or-leave-it proposition. Thus the transaction cost may be in part a function of bargaining power and size.
Wilkof ends his comments with the suggestion that this issue would make a good topic for an MBA case study. Let me expand that we need more than a case study on the Roche and Genentech example. That would be a good starting point, but I sense there are a couple of Ph.D. dissertations needed here as well.
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