High Technology Royalty Survey: Economic and Econometric Analysis on Major Issues in Survey
Jiaqing "Jack" Lu
Applied Economics Consulting Group, Inc.
April 15, 2012
Chapter 6, 2011 High Technology Sector Deal Term & Royalty Rate Survey Report, the Licensing Executives Society (U.S.A. and Canada), March 30, 2012.
The High Technology Sector of the Licensing Executives Society (U.S.A. and Canada) conducted the first deal term and royalty survey in 2011. A total of 228 licensing transactions were reported, and 220 of them included various forms of royalty payments. This article presents the economic and econometric analysis on the lump sum payments and the flat running royalty rates expressed as percentages of sales. The study first compares and contrasts the adoption of sales-based royalty rate and lump sum payment, and then highlights the important role of the technology transfer from academic entities, mainly universities and federal labs. Econometric analysis also reveals further insights into royalty pricing, in royalty premium or discount, by licensor type, licensee size, industry, the numbers and types of IP licensed, exclusivity, and non-practicing entities (NPEs), among various other characteristics.
Keywords: high tech, royalty survey, running royalty rate, lump sum payment, technology transfer, royalty premium, royalty discount, dummy variable regression
JEL Classification: O32, O34, C13Accepted Paper Series
Date posted: April 16, 2012
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