Conclusion
Reviewing the range of estimates of both approaches above, the literature study supports a royalty rate of 0.2% to 1.25% of sales for early-stage technology resulting from a university alliance with a chemical industry partner, assuming the partner pays 100% of the sponsored R&D cost and patent filing, prosecution, and maintenance costs.
Since the royalty being estimated is for an exclusive license, fair royalty rates in the range of 0.5% to 1.25% are proposed. Additionally, a cap on the running royalty should be set to reflect the relative investment made by each party.
Get Innovate or Perish: Managing the Enduring Technology Company in the Global Market now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
