• Title/Summary/Keyword: Royalty rate

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Estimation Method for Reasonable Running Royalty Rate Based on Classic 25% Rule and Royalty Influential Factors (로열티 상관행법과 영향요인에 근거한 합리적 경상로열티 추정방법)

  • Sung, Oong-Hyun
    • Journal of Korea Technology Innovation Society
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    • v.16 no.4
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    • pp.1090-1108
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    • 2013
  • Recently national technology commercialization policy using the outcomes of public R&D has been promoting the activities of technology transfer and licensing. Firms also are considering licensing strategies to make great strides and strengthen their future competitiveness. In the licensing deals, objective and reasonable royalty determination is required to be accepted for both negotiation parties. This study analyzed the appropriate royalty range for various types of business and established three royalty influential factors with ten valuation items to explain royalty difference. This study suggested new method to estimate rationally reasonable running royalty rate, combining the appropriate royalty range from classic 25% rule and the result evaluated from royalty influential factors. The adequacy of royalty range from classic 25% rule is confirmed because its range is similar to that of royalty of transfer cases. The final estimate of running royalty can be made from linear function for royalty determination using the results of royalty range and royalty influential factors. This method suggested here is expected to practically useful to determine an appropriate running royalty rate for licensing negotiation.

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Some Methods Determining Reasonable Royalty Rates for Patent Valuation - An Infringement Damages Model (특허가치평가를 위한 합리적 로열티율 산정 방안 - 손해액산정모형을 중심으로)

  • Yang, Donghong;Kim, Sung-Chul;Kang, Gunseog
    • Journal of Korea Technology Innovation Society
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    • v.15 no.3
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    • pp.700-721
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    • 2012
  • This paper deals with methods for determining the reasonable royalty rates in the valuation of patents. To calculate the reliable reasonable royalty rate of a patent, we review pros and cons of the 25% rule royalty calculating method and the recent trend of this method. We also review the game theory of Nash Bargaining equation and review the Investment of Rate of Return Method according to the financial analysis. Next, we refer to the reasonable royalty damage cases among the recent patent infringement cases in USA and analyze the corresponding patents. We extract the patent indicators from the patent bibliographic information. Finally, we obtain a regression model for calculating a reasonable royalty rate using the patent indicators and the reasonable royalty rates in the recent patent infringement cases.

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Regression Models for Determining the Patent Royalty Rates using Infringement Damage Awards and Inter-Partes Review Cases (손해배상액과 무효심판 판례를 이용한 특허 로열티율 산정 회귀모형)

  • Yang, Dong Hong;Kang, Gunseog;Kim, Sung-Chul
    • The Journal of Society for e-Business Studies
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    • v.23 no.1
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    • pp.47-63
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    • 2018
  • This study suggested quantitative models to calculate a royalty rate as an important input factor of the relief from royalty method which has the characteristics of income approach method and market approach method that are generally used in the valuation of intangible assets. This study built a royalty rate regression model by referring to the patent infringement damages cases based on royalties, i.e., by using the royalty rates as a dependent variable and the patent indexes of the corresponding patent right as independent variables. Then, a logistic regression model was constructed by referring to inter-partes review cases of patent rights, i.e. by using not-unpatentable results as a dependent variable and the patent indexes of the corresponding patent right as independent variables. A final royalty rate was calculated by matching the royalty rate from the royalty rate regression model with a not-unpatentable probability from the logistic regression model. The suggested royalty rate was compared with the royalty rate obtained by the traditional methods to check its reliability.

An Analysis of Choice of Compensation Structures in Korean Technology Licensing from Abroad

  • Park, Hyun-Woo
    • Journal of Technology Innovation
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    • v.12 no.2
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    • pp.227-245
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    • 2004
  • Studies on compensation structures of international technology licensing show that the level of intellectual property protection in the host market and the favorableness of the host country's economic environment are positively related to the use of running royalty-based compensation structure. Lump-sum fee or fixed royalty compensation is more likely to be used in the introduction and decline stages of the technology life cycle, and running royalty compensation in the growth stage. The international experience and the size of the licensor company are positively related to the use of running royalty. In this theoretical context, this paper analyzes the choice of compensation structures in Korean technology imports. The paper uses the officially reported data to analyze the compensation structures. It analyzes the characteristics of the compensation structures in terms of fixed royalty and running royalty by licensor country, group of licensor countries and size of licensee companies.

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Franchise Market, Contract Conditions, and Welfare Implications: Evidence from Korea

  • LEE, JINKOOK;SEO, MYOUNGSHIK
    • KDI Journal of Economic Policy
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    • v.44 no.1
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    • pp.49-75
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    • 2022
  • This paper analyzes how franchise contract conditions are influenced by business structures as well as how contract conditions affect producer surplus by utilizing Korean franchise Information Disclosure Documents for the years 2014-2016. We find that franchise fees tend to increase in line with increases in the numbers of direct stores or the business period. Accordingly, it would be reasonable to check whether the franchise fee is excessive compared to the amount of reputation capital rather than to criticize the absolute level of the franchise fee. Regarding royalty contracts, the larger the discount in the raw materials purchase is, the higher the initial royalty is. Although this appears to be a royalty discount, it can be a means of inducing a raw materials purchase contract by initially setting a high royalty rate and then lowering it after the purchase contract is signed. Concerning the effect on producer surplus, the results show that an increase in franchise fees and royalties negatively affects the franchisee's operating profits but positively affects those of the franchisor's, leading to conflicts over the distribution of economic value added. Based on the findings here, we propose various policy recommendations, specifically reinforcing the contents in the Information Disclosure Document, further activating fixed-rate royalties, and strengthening the qualifications of franchisors when recruiting franchisees.

A Study on the Estimation of Running Royalty of Biopharmaceutical Technologies in Licensing Agreements (생명제약 기술 라이선스 경상로열티 추정에 관한 연구)

  • Sung, Oong-Hyun
    • Knowledge Management Research
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    • v.11 no.1
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    • pp.37-50
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    • 2010
  • Bioharmaceutical technologies have consistently been areas in which large licensing agreements have been negotiated. However, there are very limited informations in the open literature on how its running royalty rates are determined and no specific methods are yet provided. The purpose of this study is to suggest an appropriate method for the estimation of running royalty of bioharmaceutical technology in licensing agreements. Here distribution of risk-adjusted operating margins are obtained by simulation using statistics of success rates in the stage of clinical trials and profit margins. Three factors based on technology, business and license legal terms are considered and combined as licensing competitiveness level. Finally, reasonable running royalty is estimated by combining simulated distribution and licensing competitiveness level. This suggested method is expected to practically useful for licensor to establish an appropriate running royalty rate for licensing.

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공공연구기관의 기술이전모형연구와 그 정책적 함의 발표분야 : 기술경제, 기술정책분야(기술이전)

  • 류태규;박종복;이정동;김태유
    • Proceedings of the Technology Innovation Conference
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    • 2002.06a
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    • pp.203-223
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    • 2002
  • In Korea, Public Research Institutes(PRIs) are today faced with the challenges of creating values by transferring technologies in store within themselves to private commercial sector. Recently, It has been increasingly pointed out that PRIs have the poor capability to valuate prospective technologies of their own, and don't run the reasonable technology transfer mechanism in terms of establishing royalty rate and initial payment, designing remuneration to inventor, screening qualified licensee, and controlling the moral hazard. This paper develops an enhanced mathematical model of technology transfer from a PRI to a private industrial firm with including the inventor as an important player. The model is made up of the main part which derives the optimal royalty rate by maximizing the social welfare and sharing risk fairly between players and some sub-parts. The one sub-part is a principal-agent model which makes it possible to control the moral hazard of inventors, and the other part provides the criteria for screening appropriate licensees. Moreover, the moral hazard between inventor and licensee is addressed by introducing the cost reduction function of efforts exerted by them. The model is able to relate the optimal royalty rate to the parameters that represent the environments under which the concerned parties operate. Especially, the ratio of initial payment over the value of transferred technology is calculated from the binding relation with the royalty rate. The paper shows that the model suggested here is more enhanced by comparing with the existing technology transfer mechanism. Finally, the paper allows us to find better strategies for effective technology transfer and further develop more sophisticated technology transfer model.

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A Study of Factors Influencing University Royalty through Education Satisfaction (교육만족도를 통한 대학생들의 대학 충성도에 영향을 미치는 요인에 대한 연구)

  • Kang, Min-Chae
    • The Journal of the Korea Contents Association
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    • v.17 no.4
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    • pp.365-374
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    • 2017
  • The purpose of this study is to verify relation between satisfaction of university education and royalty based on analysis of satisfaction survey result of enrolled all students in J regional university. The university royalty in addition to drop out rate is one of the key indicators of managing university performance and it is differentiated approach that has positive perspectives. Based on satisfaction survey results, first, there was a significant difference in satisfaction by school year and grade range. Second, the analysis result of logistic regression method that had been performed to verify the construct which affecting university royalty of students show that satisfaction with lecture, academic guidance, educational environment and self management in academic life were the significant impact on royalty. Also, the decision tree analysis show that top decision factor is self-satisfaction of university life to determine university royalty.

A Study on the Characteristics of Compensation Structures of Korean Technology Imports (우리나라 기술도입의 보상구조 특성분석)

  • Park Hyun-Woo
    • Journal of Korea Technology Innovation Society
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    • v.7 no.3
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    • pp.507-531
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    • 2004
  • This study examines the underlying properties of compensation structures and empirically test the difference in a various aspects of the compensation structures of Korean technology imports. In particular, this study looks into the trends of technology licensing from abroad in Korea and analyze the patterns of compensation structures in terms of compensation type, contract period and royalty rate by licensor country, group of licensor countries, size of licensee companies and area of licensed technologies. By doing so, this paper investigates how compensation structures in international technology transactions are determined in Korea and draw implications from the process of discussion.

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Structure and Determinants of Royalty in Pharmaceutical Licensing (제약분야 기술거래의 로열티 결정구조와 요인)

  • Park, Hyun-Woo
    • Journal of Korea Technology Innovation Society
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    • v.10 no.3
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    • pp.406-430
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    • 2007
  • Most pharmaceutical licensing deals are made in the early stage of drug development. While this development process is not unique for complicated technology, a special feature of drug development is that it is highly regulated and a well-defined process. Its statistics in terms of costs and chances of technical success have been researched extensively. This enables relatively detailed calculations as benchmarks for actual deals to be made. Based on such calculations and on the analysis of licensing terms in published agreements, various companies offer quite expensive information, databases, software programs and consultation services to help establish what might be reasonable economic terms in a licensing deal. Over the years, pharmaceutical royalties have been the subject of various articles in journals. Most specific on this subject was the article on determining pharmaceutical royalties. Many other articles are about a more general nature deal with determining reasonable royalty rates, evaluating and underpinning the empirical value and usefulness of the 25% rule. The object of this article is to provide a relatively simple analytical approach based on the major economic terms underlying pharmaceutical licensing deals. The aim is to enhance the understanding of the relations between the major factors involved. Details are disregarded, as generally, where the terms of licensing deals depend on predictions over a considerable length of time, the value of detail is limited. Some specific issues addressed by the approach are the impact on profits of large investments, high risks and long development times characteristic of drug development, the consequent strong impact that the ultimate sales levels and operating margins may have on what might be considered a reasonable royalty rate, and the relationship between upfront payments and milestone payments to be paid during pharmaceutical development and the royalties due once the drug enters the market.

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