That`s starting to change. International tax authorities deal with transfer pricing issues and the IP is under further scrutiny. Many companies commission studies that will serve as the basis for their IP pricing. These studies are based on market transactions and investment performance analyses discussed later in this book. Such studies are not common, as the IRS does not closely examine many companies. As more and more companies set internal transaction prices in accordance with third-party transaction prices, internal licenses can become useful references to royalties. Third case, ResQNet.com v. Lansa, a software technology that downloads screen information from a remote central computer to a local PC. The claimant`s claims adjuster found that the damage caused by the royalties was reasonable at a fee of 12.5 per cent, which was based in part on seven “comparable licences”. Five of these seven licenses were intended for the rebranding or bundling of software products and software code. The Federal Circuit rejected the expert`s confidence in these five licenses and said, “The court of law should not rely on independent licenses to increase reasonable royalties through rates more clearly tied to the economic demand for the claimed technology.” Cornell stresses the importance of royalty analysis with respect to the royalty base.
For example, in the TLD, data shows that the average royalty for bare patent licenses covering software technology is 4.0 percent if the technology is used in the software, but less than 1.5 percent if the product is used in computer hardware. For a licence to be considered reliable evidence of what a reasonable royalty could be, it must be “sufficiently comparable” to the situation in a dispute. But licenses are often very individualized to adapt certain situations, which makes comparability difficult to find. Sprint also put forward two additional arguments, both insisting on “a categorical legal rule prohibiting the authorization of a patent owner`s licenses received as part of a comparison of infringement proceedings… Id. . . .