Welcome to the RoyaltySource® IP Data Guide

At RoyaltySource®, we maintain a database of intangible property licenses that report a royalty rate. These benchmarks are used in valuation, license negotiations, and transfer pricing assignments. Here in the RoyaltySource IP Data Guide, we will offer some insight, frequently asked questions, and proposed solutions offered over the past 20 years from RoyaltySource.
Questions

  • What type of agreements are included in the RoyaltySource database?
  • Do public companies have to disclose their royalty deals?
  • What is the source of RoyaltySource information?
  • Why are most license agreements dated?
  • Does the database include agreements from around the world?
  • Do all transactions in the database report a royalty rate and what is the definition of Royalty Base?
  • What is a tiered royalty and why is there a tiered royalty structure?
  • What is royalty rate upfront fee?
  • Does RoyaltySource report if the parties to the agreements are related or unrelated?
  • What is the difference in rates/values between exclusive and non-exclusive royalty rates charged in technology/software industries?
  • Can you identify licenses in the database for patented and unpatented technology?
  • Can you use franchise agreements as a guide to gain insight into trademark royalty rates?
  • Does RoyaltySource have general royalty rates industry data?
  • Why RoyaltySource doesn't focus on SIC number but instead on the description of the licensed IP?
  • What is the 25% Rule?
  • How do I perform a RoyaltySource online database search?

    • What is the difference in rates/values between exclusive and non-exclusive royalty rates charged in technology/software industries?
    The subject of a discount or premium on royalty payments for "exclusive v. non-exclusive" licenses has been addressed by Tom Varner has written about this. You will note from the article the following paragraph:

    "Some patent licenses include a royalty reduction provision if the license is converted from an exclusive basis to a nonexclusive basis. Among patent licenses that specify a royalty reduction in the event that a licensor converts an exclusive license to a nonexclusive license (either by licensing to a third party or by entering the market itself), over two-thirds specify a royalty reduction of 50 percent." See Thomas R Varner, 2011. "An Economic Perspective on Patent Licensing Structure and Provisions, " Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 46(4), pages 229-238, October.

    As we travel through the database and read licenses Tom has captured what we also see.

    Simple subtraction between exclusive and non-exclusive across licenses is not a very good measure. Remember that every clause in a license agreement has some economic value and impacts the royalty payment. So to attribute the difference to only exclusivity is likely misleading.