Paper to be presented at the DRUID Academy 2012 on January 19-21 at University of Cambridge /The Moeller Centre Cooperation or Competition: Grant-Back Clauses in Technology Licensing Contracts Solon Moreira Copenhagen Business School Department of Innovation and Organizational Economics (INO) sm.ino@cbs.dk Keld Laursen Copenhagen Business School DRUID, Department of Innovation and Organizational Economics kl.ino@cbs.dk Maria Isabella Leone LUMSA University Department of Law m.leone@lumsa.it Toke Reichstein Copenhagen Business School DRUID, Department of Innovation and Organizational Economics tr.ino@cbs.dk Abstract This paper disentangles the tension between cooperation and competition that exists in technology licensing agreements. The grant-back clause is designed to manage the potential loss of competitive position experienced by the licensor due to learning and follow-on invention effects of the licensee. The clause may, however, also lead to lowering of the licensee?s incentives to further invest in the licensed technology thereby inducing a loss in overall benefits of technology licensing. We seek to uncover whether the tension between cooperation and competition leads to a grant-back clause when the licensed technology is core to their business, when they are competing in the same market or when both circumstances are met. We employ a nested logit model in which the decision to include a grant-back is