Case | HBS Case Collection | March 2010 (Revised January 2011)

Carrot or Stick? Getting Paid for Innovation at Tessera Technologies

by Willy C. Shih

Abstract

Tessera Technologies has been very successful developing technologies for the semiconductor and mobile device industry, and then licensing them broadly to manufacturers. In addition to licensing patents, it also supplies know-how to help manufacturers move into high-volume production. But the changing environment for patent enforcement, in particular the use of injunctions post eBay v. MercExchange, has brought new challenges to the company's licensing model. "Patent holdouts," companies who chose to litigate rather than license, created pressure from existing licensees. Further, as the company advanced one of its newest technology developments, a cooling technology for portable devices, it had to contend with markets where there were not strong property rights regimes. Would the company be able to get paid for its innovations, or was its model doomed?

Keywords: Business Model; Innovation Strategy; Patents; Courts and Trials; Rights; Mobile Technology; Semiconductor Industry; California;

Citation:

Shih, Willy C. "Carrot or Stick? Getting Paid for Innovation at Tessera Technologies." Harvard Business School Case 610-085, March 2010. (Revised January 2011.)