Abstract:

In the international trade of intellectual property， transnational technology licensing is one of the most important ways of patent technology transfer， and licensing contract is the key to achieve technology licensing cooperation. From the perspective of industry practice and relevant literature， there are three main forms of transnational technology licensing contracts， namely fixed fee licensing contract， royalty licensing contract and two-part tariff licensing contract. How to design and choose transnational technology licensing contract is the key problem that transnational technology licensing must face. However， the rights and obligations of technology licensor and licensee in licensing cooperation are often unequal， which makes the design of technology licensing contract difficult and the decision-making process more complicated. Therefore， it will focus on the following questions in this paper： （i） How should the technology licensor design and select a suitable licensing contract under the OEM and ODM modes （ii） Based on the choice between OEM and ODM modes， is it profitable for the licensee to develop independently （iii） Can independent R&D enhance the licensee's enthusiasm for R&D investment and improve social welfare. It considers a system in this paper， consisting of a foreign innovator， domestic company and ODM or OEM. The foreign innovator licenses patents to the domestic company under specific contracts， enabling it to produce and market products. Given its closer connection to the market， the domestic company has a more accurate grasp of market demand， which is presumed to be its private information. Additionally， the domestic company chooses the production outsourcing mode， including OEM mode and ODM mode. To effectively discern the private information， foreign innovator is necessitated to devise optimal technology licensing contracts， encompassing both royalty and one-time fixed transfer payment.Utilizing the mechanism design theory， two theoretical models are constructed between foreign innovator， domestic company and ODM or OEM. Employing backward induction for the analysis， the pricing， ordering and R&D investment decisions of the domestic company， OEM and ODM in response to the licensing contracts set by foreign innovator are firstly examined. It then evaluates the optimal licensing strategies of foreign innovator under both OEM mode and OEM mode， taking into account the domestic company’s individual participation and incentive compatibility constraints. Further， the equilibrium of the games is used to assess the outsourcing mode selection of the domestic company. Ultimately， the nature of the optimal technology licensing contracts and the value of the domestic company's independent R&D are analyzed.The results show that， the optimal transnational licensing contracts include fixed-fee licensing contract and two-part tariff licensing contract. This conclusion is one of the main innovations of this paper， which theoretically proves the existence of different forms of licensing contracts. Moreover， the design of the optimal licensing contracts form will not be affected by the independent R&D of domestic companies， and domestic companies have a smaller share of profits. When the technical level of domestic companies is high enough， the OEM mode is the best choice， which can stimulate the enthusiasm of domestic company to invest in R&D， and is also beneficial to foreign innovator. However， compared with the ODM mode， consumers in the OEM mode also need to pay higher product price， which may damage social welfare. Finally， based on the theoretical analysis framework and conclusions， the original model is extended and analyzed from the OBM mode. The above theoretical research and conclusions can provide theoretical reference for transnational technology licensing cooperation. In future research， the design of transnational technology licensing contracts in the case of multiple competitive domestic companies is also can be explored.

Key words: transnational technology licensing, R&D investment decision, OEM, ODM