A Saga of Intellectual Property Licensing: Investigating the Credibility of 25 Percent Rule

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.