Enabling the digital economy – distributed ledger technologies for automating IP licensing payments

Published as Chapter 21 in Tiwari, R. and Buse, S.: Managing Innovation in a Global and Digital World, Springer Gabler, 2019.


Developing innovations for the digital economy, such as IoT devices and connected mobility solutions is likely to require OEMs to combine IP from multiple sources (licensors) who exploit their IP to as many as possible licensees (other OEMs). Those involved in the provision of what we call distributed multi-IP solutions (d-mIPs) find themselves entangled in a complex many-to-many network or ‘licensing web’ having to operate payments based on licensing contracts under a variety of terms and conditions. In the digital economy and ‘pro-licensing era’ efficiently operating licensing payments to/from multiple licensors/licensees becomes increasingly mission-critical. Unfortunately, the current semi-manual processes are inherent of information asymmetries, uncertainties, trust problems and transaction costs, hence must be considered as inefficient. This paper discusses the challenges licensees and licensors face when operating licensing payments for d-mIPs. We propose a system based on distributed ledger technologies and smart contracts for automating trustworthy licensing payments that can substantially reduce currently existing challenges. The proposed system not only contributes to enabling the digital economy, but has further potential to enable new business models.