In 2009, LES conducted the inaugural Chemicals, Energy, Environmental, and Materials Committee (“CEEM”) Royalty Rate and Deal Terms (“RRDT”) survey. This survey, which included responses from CEEM members from both LES USA and Canada as well as LES International, covered a multi-trillion US dollar segment of the economy ranging from specialty chemicals to renewable energy to minerals and mining to packaging materials. While the royalty rate is surely the most talked-about metric when comparing licensing deals, it is by no means the only component of a deal. Two of the goals of the survey were to determine (a) the importance of Other Financial Components (e.g., upfront and milestone payments) and (b) the use of Other License Components (e.g., audit and take back provisions and other non-financial components). The survey confirmed that comparing deals based on royalty rates alone is an "apples-to-oranges" comparison. Further, the survey highlighted an interesting polarity in the use of Other License Components that deserves further investigation.
July 26, 2011
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