Establishing Licensing Rates Through Options
17 Pages Posted: 20 Sep 2007
Date Written: September 11, 2006
Picture the situation. The company has spent millions developing a new technology, the patent has been issued, and the Intellectual Property holding company (IPH) is ready to leverage the innovation by licensing to various subsidiaries. At what rate should the licenses be structured? What about compliance? The transfer pricing specialists are called, and they come back with: "There are no close comparables!" It seems the new technology is truly innovative and conventional methods to determine transfer prices break down. What now?
Keywords: licensing, royalty rates, real options, intellectual property, valuation, patents
JEL Classification: G45, D30, O32
Suggested Citation: Suggested Citation