LES Unveils Results of Groundbreaking High Tech Sector Royalty Rates & Deal Terms Survey
Tuesday, March 5, 2019
Licensing Executives Society Unveils Results of Groundbreaking High Tech Sector Royalty Rates & Deal Terms Survey
Survey Results Offer an Inside Look at Deal Dynamics across a Wide Range of High Tech Sectors from Aerospace, Computing, Communications to Electronics, Medical, and Beyond.
RESTON, VIRGINIA — March 5, 2019 — The Licensing Executives Society (U.S.A. and Canada), Inc. today announced the results of its third, comprehensive LES High Tech Sector Royalty Rates & Deal Terms Survey. Conducted by LES High Tech Sector in coordination with LES, the survey addresses the elusive gaps in industry-specific deals and trends. The LES High Tech Sector Royalty Rates & Deal Terms Survey is available free-of-charge to members to download, and non-members may purchase the report here.
"Much has changed in the world of patents and IP licensing. The LES High Tech Sector Royalty Rates & Deal Terms Survey provides access to rare industry-specific data on sector IP licensing royalty rates and deal terms not available from other sources," said LES President and Chair Bob Held. "Due to the effects of the America Invents Act and other judicial rulings, the report data indicates that the sector is increasingly relying on collaborations and deal-making as part of high-tech growth initiatives. As always, we thank all the participants in the survey as well as the LES Survey Committee and Vault Consulting for their work in fielding the survey, analyzing the results and generating the final report."
LES High Tech Sector Royalty Rates & Deal Terms Survey
The survey went out to approximately 2,469 LES members and 17,431 non-members, resulting in a higher response rate of 6.3% compared with 5% in 2014. A total of 155 specific intellectual property deals transacted between 2014 and 2017 were analyzed. Deals of all types were submitted including sales and licenses; out-licenses and in-licenses; lump sum and running royalty; and flat and tiered loyalty.
"The valuable data we've gathered through the LES High Tech Sector Royalty Rates & Deal Terms Survey is not available from other public and commercial sources and reveals much more insight into the dynamics of the licensing market, given that we have the unique ability to analyze and compare the transaction-level data going back to 2008," said Jack Lu, Ph.D., CFA, LES Senior Vice President of Economic Analysis and Survey, and a Partner and Chief Economist of IPMAP, LLC.
The LES High Tech Sector Royalty Rates & Deal Terms Survey addresses major fields including aerospace, software, clean technology, communications, medical devices, semiconductors, consumer products, electronics, and computers. Highlights gleaned from the 155 distinct deals include:
- 88% of respondents were licensors with 35% having entered into deals for monetary gains; 28% for strategic purposes; 11% for a Standards Essential Patent (SEP) licensing; and 10% as part of an assertion strategy
- 67% or two-thirds of deals had an academic or governmental licensor
- 61% of IP licensed assets included patents; 36% had software, copyrights or trademarks; and 34% had know-how or trade secret components
- 48% of deals were exclusive grants and 45% were non-exclusive
- 36% of the licensed technology was either in production or fully developed. The aerospace industry had the highest average royalty rates at 11.69%, a 7% increase over the 2014 survey
- 35% of licensors entered into deals to support new products, a 13% increase over the 2014 survey
Survey Design and Methodology
The surveys were designed by committees of experienced LES members within the High Tech Sector who worked alongside an independent team from Vault Consulting on design, dissemination, data collection, and analysis to ensure confidentiality. Vault Consulting enabled LES to issue and collect the results while keeping the identities of the submitters confidential, as LES has done with all of its previous deal term and royalty rate surveys.
About Licensing Executives Society (U.S.A. and Canada), Inc.:
Established in 1965, Licensing Executives Society (U.S.A. and Canada), Inc. (LES) is a professional society of 2,500 members engaged in the creation, commercial development, and orderly transfer of intellectual property rights; protection and management of intellectual capital; and intellectual capital management standards development. LES members are accountants, business leaders, business model innovators, consultants, deal-makers, economists, engineers, IP valuation experts, lawyers, licensing executives, lobbyists, merger and acquisition experts, public policy leaders, scientists, strategic planners, supply chain managers, tax specialists, and technology transfer specialists. These members represent innovation-centered enterprises of all sizes and kinds—such as government laboratories, professional services firms, universities, operating companies, regulatory authorities, licensing specialty firms, and trade associations. LES is a member society of the Licensing Executives Society International, Inc. (LESI), which has 32 sister societies representing 8,500 members in 90 countries.www.lesusacanada.org