Royalty Rates For Technology Transactions
Date of publication: December 1, 2009
Article by Virtuoso Legal
We are often asked by clients what royalty rate they should negotiate in a licensing scenario, either by the licensee or licensor. An interesting study was carried out between 1990 and 2007 which discovered that the most frequently negotiated royalty rate is 5% of net sales.
We advise clients to take stock of the industry norms but surprisingly this study has shown that the 5% royalty rate appears to apply to a number of diverse industries including automotive, chemical, communications, computers, defence, energy, electronics, food, franchises, glass, household products, mechanical, medical, photography, sports, toys and waste treatment to name but a few.
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