- 28 -
the license agreements regarding the Sea Bulk patents, and,
therefore, a "much higher royalty" was justified.
Under the second approach, the parties to the license agreement
would determine a royalty rate by determining a reasonable division
of profits anticipated through exploitation of the licensed
technology. Mr. Parker noted that, because a licensee typically
assumes greater financial risk in commercializing technology, a
conservative rule of thumb in royalty negotiations allocates 25
percent of the anticipated profits to the licensor. Mr. Parker
noted, however, that such percentage can be negotiated upward or
downward, and, because Mr. Podd brought a "strong arsenal of assets"
to the licensing negotiations, he could demand a royalty rate which
would entitle him to 50 to 75 percent of the anticipated profits.
Mr. Parker used such an allocation of profits to determine that Mr.
Podd was entitled to royalties in the range of 15.3 to 23.0 percent
and that a royalty rate in the range of 12.5 to 15 percent is
"definitely reasonable." In using the allocation of profits to
determine a reasonable royalty rate, however, Mr. Parker used
actual, rather than projected, sales data in his calculations.
iii. George M. Thomas
Mr. Thomas received his B.S. in mechanical engineering from the
University of South Carolina in 1957 and his L.L.B. from the
American University Law School in 1964. From 1960 to 1964, he
worked as a patent examiner in the United States Patent Office in
Washington, D.C. Since 1964, he has been continuously engaged in
Page: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 NextLast modified: May 25, 2011