Compulsory licensing is an important institutional innovation that improves the knowledge governance and can help fostering the pace of generation of technological knowledge and the rate of introduction of technological innovations. Recent advances in the economics of knowledge have confirmed the medieval wisdom according to which to make knowledge it is necessary to stand on giants’ shoulders. The generation of new technological knowledge is possible only if the stock of existing knowledge can be used as an input. All barriers and delays in the access to existing knowledge risk to reducing the capability to generate new technological knowledge. Intellectual property right regimes based upon exclusivity may increase the incentives to generate new technological knowledge but reduce the efficiency and the actual viability of the knowledge generation process. The costs of the reduction in the access to existing knowledge are larger the larger the scope of application of new technology. Compulsory licensing for technological knowledge can increase the rate of generation of new technological knowledge. The paper contributes the debate with a simple model that enables to identify the correct levels of royalties for compulsory licensing in both product and knowledge markets.