Chapter 5: Economic and Econometric Analysis on Key Issues Raised in the 2011 and 2014 Surveys

2014 High Tech Deal Term & Royalty Rate Survey Report, Licensing Executives Society (USA and Canada).

Posted: 15 Nov 2015

See all articles by Jack Lu

Jack Lu

Intellectual Property Market Advisory Partners(IPMAP), LLC

Date Written: October 22, 2015

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 reports the results from economic and econometric analysis of the major issues raised in the Surveys.

The chapter starts with economic analysis of payment structuring and deal features. Econometric analysis is then performed on flat running royalty rates (expressed as the percentages of sales) and lump sum payments, respectively. The 2014 Survey added several questions about NPE’s functions and roles in IP transaction market. The analysis of these responses, as well as other NPE-related information gathered from the 2011 and 2014 Survey, sheds further light on many of the controversies over the economics and business models of NPEs.

Keywords: high tech, royalty survey, running royalty rate, lump sum payment, royalty premium, royalty discount, dummy variable regression, NPE, patent market.

JEL Classification: O32, O34, C13

Suggested Citation

Lu, Jiaqing, Chapter 5: Economic and Econometric Analysis on Key Issues Raised in the 2011 and 2014 Surveys (October 22, 2015). 2014 High Tech Deal Term & Royalty Rate Survey Report, Licensing Executives Society (USA and Canada).. Available at SSRN: https://ssrn.com/abstract=2689385

Jiaqing Lu (Contact Author)

Intellectual Property Market Advisory Partners(IPMAP), LLC ( email )

13785 Research Blvd,
Suite 125
Austin, TX 78750
United States
(512)238-3088 (Phone)

HOME PAGE: http://www.ipmapllc.com

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