Law Commons^™

The Patentee's Gains From Royalty Differentiation Under Exclusive Territorial Licensing, William G. Snead

University of Michigan Journal of Law Reform

Royalty differentiation under exclusive territorial grants is a device which a patent owner, given proper conditions, can use to maximize his profits from licensing the patent rights to an invention. The patentee creates exclusive territories by granting only one license per territory, and then sets different royalties for each territory in accordance with the differing price elasticities of demand for the patented end product. Commentators have taken various stands on how the interests of the patentee and the public should be balanced in determining the desirability of permitting such exclusive territorial grants. One analysis purports to show that permitting a …