Chapter 4: Financial Terms: Descriptive Statistics and Analysis

Abstract

The High Technology Sector of the Licensing Executives Society (U.S.A. and Canada) conducted the second Deal Term and Royalty Survey in 2014. The 2014 Survey received 94 samples of licensing transactions occurred from 2011 to the first half of 2014. To explore the market dynamics, this report analyzes the combined data of the 2011 and 2014 Survey, which includes a total of 322 samples, the largest size of survey-based samples ever studied in licensing industry. This chapter presents the descriptive statistics of the licensing transactions paid in flat running royalty rates expressed as percentage of sales and those paid in lump sum payments. The 2014 Survey also added questions about patent sales and exclusive transfers (i.e., privateering deals), and some preliminary statistics are also reported, though the sample size is very limited.

The chapter reports the means and medians of running royalty rates, lump sum payments, and asset prices, and also tabulates descriptive statistics by characteristics of licensor/licensee, performance of licensed products, number and type of IP licensed, field of use, technology type and development stage, and certain licensing terms such as exclusivity, co-marketing, and auxiliary payments.

Keywords: High tech, royalty survey, the average royalty rate, median royalty rate, license term, running royalty rate, lump sum payment, patent sales.

JEL Classification: O32, O34, C13