Financial Terms in License Agreements
Jorge L. Contreras, Intellectual Property Licensing and Transactions: Theory and Practice (2021, Forthcoming)
51 Pages Posted: 1 Dec 2020 Last revised: 2 Jan 2021
Date Written: November 7, 2020
This chapter in the forthcoming casebook Intellectual Property Licensing and Transactions: Theory and Practice (2020, forthcoming), discusses the financial terms of IP licensing agreements including fixed payments, running royalties, sublicensing income, milestone payments, equity compensation and cost reimbursement, as well as most-favored and audit clauses. Numerous areas of recent controversy are addressed including the establishment of royalty rates through the entire market value rule (EMVR) versus the smallest salable patent practicing unit (SSPPU) rule, royalties for bundled rights, rules of thumb discredited by the courts, royalty escalation clauses and more. Examples are drawn primarily from biotechnology, high-tech and copyright licensing practice.
Keywords: royalty, patent, copyright, milestone, SSPPU
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