License agreement and royalty rate benchmarking study

Our benchmarking study is a detailed comparison of publicly available licence agreements and royalty rates in order to determine an arm’s length (market) royalty rate range for the specific products or services. Although the main purpose of the benchmarking study is to identify external transactions to assess whether intercompany transactions comply with the arm’s length principle, the data provided in our benchmarking study reports may be useful for purposes other than transfer pricing compliance, such as setting reasonable royalty rates, negotiation of licence agreements, intellectual property valuation, and consulting.

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All agreements are manually analysed, rejected or selected, so that the final set consists only of agreements with the most comparable licensing terms. We use these agreements to conduct a Comparable Uncontrolled Price (CUP) analysis in order to calculate a royalty rate range that complies with the arm’s length principle, i.e. any royalty rate within this range is deemed to be at market rate.

Our benchmarking study report is prepared in a relatively short period of time and provides a wealth of additional information on the licensing practices in your industry, e.g. basis of royalty calculation, prepayment terms, terms of exclusivity, distribution of functions performed, risks assumed and assets used by the parties in the transaction, rights to enhancements, revisions and updates, and extent and duration of legal protection.

Why is our benchmarking study advantageous?

• We use our proprietary RoyaltyRange database. The database is constantly updated with the newest transactions and consists of agreements which were typically concluded between unrelated parties. This ensures that the data in our database reflects recent market practices.
• All the work is done for you with precision by our professionals – you will not have to go through hundreds of agreements in order to find what is relevant for you.
• We finalise the whole process within several working days or before the deadline set by you.

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