Intellectual Property: Valuation, Exploitation and Infringement Damages 2013 Cumulative Supplement, 11th Edition

CHAPTER 27B

* LICENSE FEES AND ROYALTY RATE FREQUENCY FOR TECHNOLOGY (NEW)

  27B.1 REAL DEAL ROYALTY RATES

  27B.2 PER UNIT ROYALTIES

  27B.3 LICENSE FEES

  27B.4 CONCLUSION

The focus of this new chapter is to update Chapter 27A about the compensation terms in technology license agreements. Specially discussed are royalty rates and up-front license fees.

Royalty rates permeate many aspects of business beyond the completion of licensing transactions. They also are often used in technology valuation assignments where a relief-from-royalty calculation defines the value of a technology. As such, royalty rates are important for technology acquisition pricing and also for when valuation conclusions are used in financial reporting. Royalty rates are also the foundation of intellectual property infringement damage awards. U.S. law states that when a plaintiff cannot prove the amount of lost profits suffered because of the infringer's activities, the plaintiff is entitled to at least a reasonable royalty on the sales made by the infringer. So, royalty rates are used for completing license agreements, pricing the purchase and sale of technology, financial reporting, and settling legal disputes. Consequently, we maintain a database of license agreements focused on the compensation terms. Recently, we embarked on a research study to expand and enhance our database. This chapter presents some interesting results of the study.

27B.1 REAL DEAL ROYALTY RATES

This fifth edition of Royalty Rates ...