The use of conjoint analysis to establish the most important evaluation factors in technology transfer and patent licensing negotiations

This dissertation begins with an overview of the patent licensing industry, some of which was obtained from the literature review and some from the results of a patent licensing questionnaire performed in 1995. The dissertation estimates that U.S. Royalty Receipts in 1996 were approximately {dollar}136.3 billion. And that about one-half of that amount comes from non-affiliated entities. The questionnaire surveyed 428 licensing executives regarding basic licensing terms and conditions including average running royalties paid for revolutionary, major improvement, and minor improvement patents. Based on the results of this questionnaire a literature review of the factors considered by licensing executives in arriving at a negotiated royalty rate for patents was performed. This dissertation found that forty-seven evaluation factors are generally considered by licensing executives when determining whether to take or give a patent license. The dissertation finds that these factors can comfortably be grouped into seven broad categories. The dissertation then lays out the logical steps a licensing executive goes through from the financial prospective in arriving at a negotiated running royalty rate and concludes that there are ten discrete steps in that process.; Finally, a second study, the Internet Conjoint Analysis Study, surveyed 138 licensing executives in 2001. This dissertation develops, tests, and evaluates how important to the licensing executive are twenty-two of the forty-seven factors using a multi-attribute design-making technique called conjoint analysis. Based on the results of this second study the dissertation discusses the ten most important factors considered by licensing executives when arriving at a Risk Adjusted Discount Rate (RADR) and a Running Royalty Rate (RRR) in licensing negotiations. It then analyzes the factors by various demographic segments.