It becomes more complicated to determine the appropriate patent tax rate, and the licensee must buy the production licensed products used in some components, which is decided by the licensor (so-called "compulsory supply arrangement"). The licensor may say that this arrangement is to ensure the quality of the project and the products produced or to protect its know-how. In most cases, the compulsory supply arrangement will bring an additional source of permitted profits (quantity, which is rarely disclosed), so the originally determined tax rate will often be reduced. If the licensor and the licensee are located in different countries, this arrangement may also be affected by the transportation delay and foreign exchange risk. If the compulsory supply arrangement is part of the license agreement, the licensee shall ensure that the price composition is clearly defined and there are acceptable methods to control the price increase.

Finally, if the royalty is paid in a currency other than the licensor's own currency, the licensor usually bears the exchange rate risk. However, it is often possible to hedge the exchange rate risk in a relatively short period of time (1: 59 years old), and due to practical restrictions, it may not be possible to effectively hedge the longer-term plan. Since time licensing agreements usually exceed a short term, licensors may be affected by long-term structural economic factors due to their franchise income in the licensed area. When determining the acceptable patent tax rate, the licensor should explain the risks in this respect.

conclusion

Licensing is an ideal means for both licensor and licensee to achieve their strategic goals. To do this, both sides know that it is very important to determine the basis on which patent fees should be fair. Over time, it usually refers to expressing the tax rate as a percentage of the income from selling licensed products. The royalty rate agreement should be based on the objective evaluation value, received by the licensee and issued by the licensor. It is the functional feature of product design technology authorization, the terms of the license agreement and the unique factor of the licensor. The fact that the licensee provides cash instead of licensor's value should also be regarded as determining the patent tax rate.