Typically a biotech or pharmaceutical company will need to license another’s inventions in order to manufacture their own products. Lori M. Waldron of Sills, Cummins & Gross PC, writing in National Law Review, offered some tips on how to minimize these costs.
- Consider using a graduated royalty rate.
- If the basis for the license is sales, make sure it is PAID sales, not just invoiced
- Net sales works better than gross sales because of all of the deductions that can be negotiated
- Negotiate sublicensee sales separately
- Negotiate a lower royalty for patent applications
- Negotiate a lower royalty if unlicensed infringing occurs in a covered territory