How much does a patent royalty generally cost
The patent royalty is determined through negotiation between the two parties and there is no unified regulation .
1. Patent royalties:
Patent royalties refer to payments made by others other than the patentee. A certain amount of royalties paid to the patentee when using a patent. The amount is negotiated between the two parties in the implementation license contract, and the payment method is also negotiated between the user and the patentee.
2. Determination of patent royalties:
Patent right is a property right, so any If a person wants to exploit a patent right, he should pay patent royalties to the patentee. Of course, in practice, there are also cases where the patentee does not charge royalties through cross-licensing with others.
How to reasonably calculate patent royalties is a very important but also difficult issue in licensing contracts. The determination of patent royalties depends on many factors, which mainly include:
(1) The expenses incurred by the patentee in researching and developing the patent;
(2) The economic benefits that the licensee can obtain from using the patent; (3) The type of patent license, the type of behavior implemented and the period;
(4) The method and time of payment of royalties by the licensee. In addition, whether there are alternative technologies on the market, the likelihood of technological improvements, and the bargaining power of both parties are also factors that affect royalties.
"Civil Code" (effective on January 1, 2021) Article 846 [Technology contract price, remuneration and usage fees] Technology contract price, remuneration or The method of payment of royalties shall be agreed upon by the parties. It may be a lump sum payment, a lump sum payment or a lump sum payment or installment payment. It may also be paid in installments.Commission payment or commission payment plus a prepaid entrance fee. If commission payment is agreed upon, the commission can be based on a certain percentage of the product price, new output value, profit or product sales after implementation of the patent and use of technical secrets, or it can also be calculated in accordance with other agreed methods. The proportion of commission payment can be fixed proportion, increasing proportion year by year or decreasing proportion year by year. If there is an agreement on commission payment, the parties may agree on the method of reviewing relevant accounting accounts.
Both methods, total settlement and commission fee, have their own advantages and disadvantages. In the final approach, the patentee gets the payment early and the risk is smaller, but the tax may be higher, and if the product sells well in the future, the patentee will not get any additional benefits. Of course, this approach creates risks for the licensee if the product does not achieve expected sales in the future. If the royalty is paid in installments, the risk borne by the licensee is relatively small, but if the sales of the product are very good in the future, the patentee can obtain a higher royalty. In many cases, royalties are paid using a combination of entry fees and royalties.
In summary, the royalties for patents are determined through negotiation between the two parties and there are no certain regulations. The payment method is agreed upon by both parties, as long as it is done within a legal background. I hope my answer can solve your problem. If you want to know more related questions, you are welcome to consult the Legal Savior Network.