Study On The Royalty In Patent Licensing System

With the publication of the "Annual Chapter of the Patent Law Amendment(Draft)of the People's Republic of China ",which is subject to the draft.China already has four licensing systems,including general licenses for patents,compulsory licenses for patents,open license and standard essential patents implied permission.And the determination of the amount of royalty in the licensing system,there is no clear way in legislation and justice,but only a general stipulation by the patent administrative agency or the judiciary according to its own discretion.From the current research of domestic scholars,most of them are studying a separate consideration of one kind of license for a certain royalty calculating method.especially the royalty in the SEPs.However,the differences in royalties for various types of licensing methods have not yet been considered by the academic community as a macro overall consideration and an analysis of royalties from an economic perspective.By analyzing the characteristics of various licensing methods,and by means of comparative analysis,the author draws on the experience of European and American countries and the evaluation of patent value in economics,and proposes a more operational royalty calculation method which hopes to help administrative and judicial agencies in the calculation of royalties in practice.This article is divided into five parts.The first part specifically introduces the characteristics of various types of patent licensing systems currently in existence in China and the procedures and methods for determining the amount of each royalty.In General,patent general licenses and open licenses can be regarded as voluntary licenses,while implied licenses for standard essential patents are between voluntary and involuntary,and compulsory licenses are entirely involuntary licenses.From the perspective of China's legislation,the clauses are mainly in terms of procedures.There is no provision for the method of calculating the royalty,but it is generally determined by the patent administrative organ or the judicial authority.On the one hand,the second part puts forward the relevant issues in the patent licensing fee from the perspective of legislation:the legislative method of calculating the royalty is too general causing the royalty to be used less and misused;The open license royalty lack of methods of remedies;implied license of standard essential patents lacks the basic principle of royalty compensation.On the otheir hand,author poiints out the problems that arise in the current judicial practice in determining,the patent royalty:for the implied royalty of standard essential patents,China Judicial practice has taken an important step-through the comparable agreement method,but there is insufficient determination of the final consideration of the royalty:in the case of a small number of cases in which the patent royalty is used as the patent infringement compensation amount,the Chinese court also has the problem of not using it mechanically.The third section describes some of the ways in which foreign countries currently determine royalties.Including the analytic method used in the United States to compensate the patentee in government procurement,the royalty base multiplied by the royalty rate,and the hypothetical negotiation method between the highest and lowest cost ranges between licensor and licensee:the United States and the United Kingdom use referred agreement and the value pool of patent pools in the calculation of the royalty under the FRAND principle of the standard essential patent:and how the licensing fees are determined by countries in open licenses.The fourth part demonstrates the difference between the patent value and the patent royalty,and concludes that the patent evaluation value can be regarded as the patent royalty for the patentee to obtain an exclusive license to the licensee.In addition,author introduces three traditional evaluation methods in the evaluation of patent value from the perspective of economics which including cost method.income method and market method.discussing the advantages and disadvantages of the three methods.The evaluation nmethod can be used to determine the value of a patent in certain circumstances,but there is no universal formula that is universally applicable.The fifth part puts forward the method of calculating the patent royalty that can be used in different patent licenses,and summarizes several feasible methods for calculating the patent royalty,including the reference agreement method,the hypothetical negotiation method and the analysis method and make the steps that should be taken and the problems that should be noted during use.