Abstract
A healthy IP system creates opportunities and benefits for the industries, consumers, small businesses, governments, and the economy, including greater innovation, choice, competition, and jobs. Incentives to innovate, job creations, opportunities and revenue generation for governments make the environment interoperable and beneficial for all stakeholders. The IP created by industries and individuals can be licensed to others as a way of generating revenue. It is within this, already complex environment, where negotiating a fair royalty rate can become one of the most challenging tasks. It is here where the application of the 25 percent rule emerged as a rule of thumb, to determine royalty rates in most licensing transactions, specifically in patent licensing. In light of the above, this research study has looked into different issues relating to the credibility of the 25 percent rule after the Uniloc case. Moreover, this study tried to trace out and examine multiple issues, such as the validity of the grounds for rejecting the Rule, the criticism leveled against it, the applicability of the Daubert standards, limitations and exceptions to the Rule and other related issues that will answer the credibility of the 25 percent rule.
Highlights
Intellectual Property (IP) is a valuable economic tool
This study tried to trace out and examine multiple issues, such as the validity of the grounds for rejecting the Rule, the criticism leveled against it, the applicability of the Daubert standards, limitations and exceptions to the Rule and other related issues that will answer the credibility of the 25 percent rule
The upcoming methods that have potential to replace the 25 percent rule should be refined extensively and should be flexible enough to get adapted to multiple cases. 6.1 Nash Bargaining Solution Nash Bargaining Solution (NBS) is one of the common methodologies used to calculate damages and to determine reasonable royalties during an infringement
Summary
Intellectual Property (IP) is a valuable economic tool. A healthy IP system creates opportunities and benefits for the industries, consumers, small businesses, governments, and the economy, including greater innovation, choice, competition, and jobs. The fields of IP valuation and IP licensing are the most discussed topics in IP management where negotiations take place between parties relating to IP businesses It is within this, already complex environment, where negotiating a fair royalty rate can become one of the most challenging tasks. The conceptual basis of the Rule is founded on the inherent risks associated with commercializing a licensed product and approximating the risk/reward ratio of 25:75 between the licensee and licensor This is because the licensee usually bears additional costs and face uncertainties when converting the licensed technology into a marketable product, which may or may not attract a good revenue. Since 1943, the Rule was applied, in many instances, for licensing and calculating the damages in multiple intellectual property negotiations and battles in different court cases. This study tried to trace out and examine multiple issues, such as the validity of the grounds for rejecting the Rule, the criticism levelled against it, the applicability of the Daubert (Note 5) standards, limitations and exceptions to the Rule and other related issues that will answer the credibility of the Rule
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