In Part 1 of this new volume, we explored the means for determining an absolute, fee-simple value for intellectual property. These values are a walk-away price-the amount at which the owner transfers all rights to intellectual property. This section delves into another measure of value: royalty rates, which are another form of value. They represent the economic foundation of licensing and consequently deserve their own section. Royalty rates are a form of value in that they set the price at which licensors will allow others to use a limited portion of their intellectual property rights. Instead of the prices being set as lump-sum amounts, they are set on a pay-as-you-go basis.
Joint ventures also require special attention, because such alliances require the establishment of methods for appropriately sharing the economic benefits of intellectual property rights contributed to alliances. Sometimes royalties are involved in these transactions, but sometimes an allocation of ownership in the joint venture turns on the value of the intellectual property rights contributed.
Subtle changes to the valuation methods already established in Part 1 of this volume are presented in this part.