Chapter 8 deals with the financial terms of licensing agreements, including fixed/up-front/lump sum payments, running royalties, sublicensing income, milestone payments (Law v. BioHeart), equity compensation, cost reimbursement (including for patent prosecution), most-favored clauses (Kohle v. Hercules) and audit clauses. Special attention is given to the calculation of license royalty rates, including tiered royalties, the royalty base (Allen Archerty v. Precision Shooting), the entire market value rule (EMVR), the smallest-salable patent practicing unit (SSPPU) rule, now-disfavored rules of thumb such as the 25% rule, standard exclusions from royalty calculations, minimum royalties, royalty caps, royalty stacking clauses and escalation clauses (Arbitron v. Tralyn Broadcasting). Special issues such as reach-through royalties and package royalties are also addressed.

Chapter 6 covers some of the fundamental building blocks of a licensing agreement, namely the license grant and scope (Spindelfabrik v. Schubert & Salzer): how are licensed rights identified -- by enumeration or through portfolio definitions? How are corporate affiliates treated by the licensor and the licensee? What is know-how licensing? How to deal with licenses of future rights? How should the licensed territory be defined? How can the field of use be limited? How do have-made and “foundry” rights work (Cyrix v. Intel)? How do technological changes affect the field of use (Boosey & Hawkes v. DIsney)? How should sublicensing be addressed (Rhone-Poulenc v. DeKalb)?