The Comparative Analysis Between Patent License And Pledge Financing Decision

Patent has become one of the most important assets of the enterprise in theknowledge-based economy age, it is an important basis of small and medium-sizedenterprise for financing. Data that counted by the state intellectual property office shows that,every year, the number of patent authorized to the enterprises and personals is increasing atthe rate of50%in China. Actually, the number of patent authorized in2010has reached740626pieces. It supplies a great platform for academic research in academia and business.At the moment, most of the small and medium-sized enterprises is facing severe financingdifficulties, which hampers their sustainable development seriously. Therefore, there isimportant theoretical and realistic significance to have a deep study on the patent pledge loanfinancing.This paper viewed patent as one of the most important assets of the enterprise,it couldbe used as one of the most important financial instruments, the enterprise can apply patentpledge loan to the bank, license the patent to licensees in the market or other kinds of waysto finance funds.Also, the enterprise could seek for higher revenue in many ways such aslicensing the patent to licensees, developing the patent in commerce, investing to produceproducts and so on. Our study is under the assumption of competitively economicenvironment, and the enterprise which is in a funding gap can apply for money by pledgingpatent to bank to apply for loan, then it can develop the patent in commerce, so demandingproducts could be produced and supplied to the market, the enterprise could also license thepatent to licensees in the market in ways of fixed fee license or royalty license to pursuit themaximization of profit of enterprise profit, so bank loans could be ensured to be repaid ontime. This paper studies the equilibrium between bank and applier which is licensor, licensorand licensee by using comparative analysis and game analysis, we have the followingconclusion: first, when the demand level of the market is low, the enterprise which own apatent achieves monopoly profits of the new products, when the demand was at the higherlevel, the enterprise which own a patent will agree on a royalty license contrast with othercompetitive enterprises in the market, then all the market participants can obtain a higherincome. Second, in order to reduce the degree of information asymmetry between the bankand the enterprise which apply for a patent pledge loan, the bank is willing to pay a cost to screen and monitor the enterprise. Third, the effect of the volume of the capital owned by theenterprise itself on the profits depends on the condition of the economic environment. Thispaper supplies sufficient evidence for studies of patent pledge loan applied by the small andmedium-sized enterprise, at the same time, it enrich the theory research of evaluating patentvalue, payment mode, and other aspects of patent pledge loan.