Royalty Rate Determination

Dawson Peter ()

Journal of Business Valuation and Economic Loss Analysis, 2013, vol. 8, issue 1, 133-161

Abstract: Courts require royalty rate calculations based on rigorous economic foundations. The licensing literature provides limited guidance for royalty rate determination, leaving appraisal report readers wanting a more tangible and objective lens through which to judge the credibility of royalty rate analyses. This article develops the standard, core model for calculating market royalty rates for intangible asset licenses where royalty rates are determined ex ante in the actual market, or ex post in a hypothetical market under a Market Value Standard. The model forms a consistent basis for performing and evaluating licensing royalty appraisals. Not being distracted with the question of how to combine the input values when calculating a royalty rate, the court can focus on understanding and verifying an appraiser’s calculations of the input variable values.

Keywords: royalty rate; licensing; intangible asset; intellectual property rights; technology; valuation; bargaining range; royalty base; Georgia-Pacific factors (search for similar items in EconPapers)
JEL-codes: D00 D40 D45 D46 D82 D86 K00 K34 L24 M20 O34 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1515/jbvela-2013-0003

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