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Intellectual Property Right - Licence Fee

Licence Fee

In return for the licence of IPRs, the licensee will normally pay a royalty, a lump sum or combination thereof. If the licence is part of a wider deal e.g. long term supply, then the royalty may be built into the cost of the goods under the supply contract.

The level of licence fee will depend on a number of factors including: degree of exclusivity granted, state of development of any technology, strength of the IPRs, licensee's access to upgrades, going rate for such IPRs, and whether both parties willingly entered into the deal or if it was forced on the licensee as part of a settlement of a dispute over ownership of IPRs.

(As to tax treatment, see "Key Issues in an IP Licence").

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