Lizenzanalogie

English translation: license analogy

GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW)
German term or phrase:Lizenzanalogie
English translation:license analogy
Entered by: Gudrun Russo

21:37 Apr 22, 2005
German to English translations [PRO]
Law/Patents - Law: Patents, Trademarks, Copyright / credit card processing
German term or phrase: Lizenzanalogie
Schadensberechnung bei Markenverletzung nach der sogenannten Lizenzanalogie
Gudrun Russo
Local time: 02:38
license analogy
Explanation:
See: http://www.wipo.int/enforcement/en/faq/judiciary/faq08.html
:-)

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Note added at 7 mins (2005-04-22 21:44:11 GMT)
--------------------------------------------------

From the above link:
\"In addition to these traditional ways of assessing damages, some countries offer a third option, compensation based on a license analogy. The rationale behind this assessment is that the infringer must not be in a better position than he would have found himself if he entered a license agreement with the right holder. Hence, the plaintiff is entitled to reasonable royalties for an infringement. This is permitted even if the plaintiff had no intention, or the capability, to grant the respective license. The most important - and typically most controversial - aspect of the license analogy assessment concerns the calculation of this fictitious license. The court generally determines the value of the license based on rates, which are customary in license agreements for a similar product and a similar use.

Given the wide range of possible reasonable license agreements, many economic factors have to be taken into account for this determination. For instance, if tariffs exist, the calculation can be based on these figures. In practice, courts often have tended to base their calculations on rates on the upper end of the scale of commonly concluded agreements. This practice, however, has to be justified in every case since a general ‘surcharge for infringements’ is not considered permissible in that context.\"

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Note added at 14 mins (2005-04-22 21:51:11 GMT)
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\"5.2.1. Methods of Determining Remuneration
Principally, The Law [\"Goering-Speer-Verordnung\"=\"Law relating to Inventions made by Employees\", (hereinafter referred to as \"The Law\")] provides three methods for calculating remuneration.

The first method consists of the so-called license analogy, in which the inventor gets a certain percentage of a reasonable royalty, based on the net sales made by the employer, which the employer would have received from a third party under a license. This method is by far the one most used in Germany and is discussed in more detail in Section 5.2.2.

[...]

5.2.2. License Analogy in Practice
The aforementioned principles shall be discussed further in relation to license analogy.

The first step in such an instance is to determine the reasonable royalty in the respective field of industry. A typical example would be found in the machine industry, where reasonable royalty rates of 4%, based on net sales, are not uncommon.

In the second step, the personal share factor of the inventor is determined. This share factor does not mean the personal percentage of ownership of an invention for a certain inventor where there are co-inventors. In such a case the considerations of this paragraph must be fully concentrated on the personal percentage of the respective inventor. Rather, what is meant is that even in the case where there is a sole inventor, in view of the fact that this inventor is an employee, he/she will not get the full remuneration a third party licensor would usually receive from the employer.

The aforementioned share factor is determined by taking into consideration three sub-factors, namely: a) the contribution of the company/employer in creating the problem to be solved by the invention; b) the contribution of the company/employer in creat ing the solution to the problem; and c) the position and duties of the employee in relation to the company/employer. According to the rules attached to The Law, these three sub-factors usually lead, in the case of a chief chemist in a research department , to a share factor of 10%, which means that the employee gets 10% of the aforementioned reasonable royalty of 4% (i.e. 0.4% of the net turnover of the employer).

The turnover achieved by the employer before applying the share-factor-reduced royalty rate is progressively devaluated in the case of high turnovers. The effect is that beyond a turnover of 3,000,000 DM, a reduction of 10 % takes place, with further re ductions increasing the effect, until beyond 100,000,000 DM turnover the royalty is reduced by 80%. In other words, the inventor for turnovers beyond 100,000,000 DM in this example, no longer receives a remuneration of 0.4%, rather only of 0.032% of the employer\'s turnover.

It should be noted that the turnover-based decrease takes into consideration not the annual, but the accumulated turnover achieved, beginning with the use of the invention by the employer.

It should be stressed that after notification of an invention, an individual agreement between the employer and the employee can fully renounce any remuneration to the employee. It should be noted however, that up to six months after termination of any employment agreement, the employee has the opportunity to object to any remuneration agreement he concluded earlier as being considerably unjustified. Such circumstances will be assumed by courts in instances where remuneration was renoucned when a rather considerable remuneration to the employee would have been required. Accordingly, it is recommended that agreements are made in good faith and are justified so as not to bear the risk of revision later on, when disputes between an employer and an employe e are likely to arise (e.g. after termination of the employment agreement). It should be stressed that the right of later revising any remuneration agreement is provided for in The Law and cannot be renounced by either the employee or the employer.

Last Updated 10/4/2004
© 2000-2005 University of Washington, School of Law, CASRIP. All Rights Reserved.
Developed by Toshiko Takenaka, casrip@u.washington.edu \" (cf. http://www.law.washington.edu/casrip/newsletter/Vol3/newsv3i...
:-)
Selected response from:

Derek Gill Franßen
Germany
Local time: 08:38
Grading comment
Thank you. I also found something similar to your 1st question after I asked the Kudos question.
Best regards from Washington, DC,
Gudrun Russo
4 KudoZ points were awarded for this answer



Summary of answers provided
4 +1license analogy
Kim Metzger
3license analogy
Derek Gill Franßen


  

Answers


10 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +1
license analogy


Explanation:
Yes, I think so.
---
This kind of situation was existent in Germany up to a few years ago. The compensation for damage awarded in practice was in most cases limited – despite three theoretically available methods of calculation, namely the license analogy, the compensation for lost profits and the recovery of the infringer’s profit2 – to a simple,

This situation, however, has meanwhile been fundamentally changed. With the so–called “overhead share decision” of the Federal Court of Justice (BGH)4 the infringer’s profit superseded the license analogy as the most important method of damage calculation. The infringer’s profits, which have recently been claimed by (alleged) application of said decision, often amount in patent disputes to 30 – 50%
of the turnover realized with the infringing object, whereas the conventional royalty rates mostly range between 1% and 10% only (see in this context our detailed comments set out below after Q186.6

Conclusion
The introduction of an increased royalty instead of the previously applied simple license analogy appears to be desirable and a helpful instrument in practice. Penal considerations are, however, not – or at any rate not primarily – required for that purpose and are furthermore afflicted with problems in the German system.

http://www.aippi.org/reports/q186/q186_germany.pdf


Kim Metzger
Mexico
Local time: 01:38
Native speaker of: Native in EnglishEnglish
PRO pts in category: 180

Peer comments on this answer (and responses from the answerer)
agree  Georgieva: License analogy sounds good to me too. I would suggest it!
10 mins
Login to enter a peer comment (or grade)

6 mins   confidence: Answerer confidence 3/5Answerer confidence 3/5
license analogy


Explanation:
See: http://www.wipo.int/enforcement/en/faq/judiciary/faq08.html
:-)

--------------------------------------------------
Note added at 7 mins (2005-04-22 21:44:11 GMT)
--------------------------------------------------

From the above link:
\"In addition to these traditional ways of assessing damages, some countries offer a third option, compensation based on a license analogy. The rationale behind this assessment is that the infringer must not be in a better position than he would have found himself if he entered a license agreement with the right holder. Hence, the plaintiff is entitled to reasonable royalties for an infringement. This is permitted even if the plaintiff had no intention, or the capability, to grant the respective license. The most important - and typically most controversial - aspect of the license analogy assessment concerns the calculation of this fictitious license. The court generally determines the value of the license based on rates, which are customary in license agreements for a similar product and a similar use.

Given the wide range of possible reasonable license agreements, many economic factors have to be taken into account for this determination. For instance, if tariffs exist, the calculation can be based on these figures. In practice, courts often have tended to base their calculations on rates on the upper end of the scale of commonly concluded agreements. This practice, however, has to be justified in every case since a general ‘surcharge for infringements’ is not considered permissible in that context.\"

--------------------------------------------------
Note added at 14 mins (2005-04-22 21:51:11 GMT)
--------------------------------------------------

\"5.2.1. Methods of Determining Remuneration
Principally, The Law [\"Goering-Speer-Verordnung\"=\"Law relating to Inventions made by Employees\", (hereinafter referred to as \"The Law\")] provides three methods for calculating remuneration.

The first method consists of the so-called license analogy, in which the inventor gets a certain percentage of a reasonable royalty, based on the net sales made by the employer, which the employer would have received from a third party under a license. This method is by far the one most used in Germany and is discussed in more detail in Section 5.2.2.

[...]

5.2.2. License Analogy in Practice
The aforementioned principles shall be discussed further in relation to license analogy.

The first step in such an instance is to determine the reasonable royalty in the respective field of industry. A typical example would be found in the machine industry, where reasonable royalty rates of 4%, based on net sales, are not uncommon.

In the second step, the personal share factor of the inventor is determined. This share factor does not mean the personal percentage of ownership of an invention for a certain inventor where there are co-inventors. In such a case the considerations of this paragraph must be fully concentrated on the personal percentage of the respective inventor. Rather, what is meant is that even in the case where there is a sole inventor, in view of the fact that this inventor is an employee, he/she will not get the full remuneration a third party licensor would usually receive from the employer.

The aforementioned share factor is determined by taking into consideration three sub-factors, namely: a) the contribution of the company/employer in creating the problem to be solved by the invention; b) the contribution of the company/employer in creat ing the solution to the problem; and c) the position and duties of the employee in relation to the company/employer. According to the rules attached to The Law, these three sub-factors usually lead, in the case of a chief chemist in a research department , to a share factor of 10%, which means that the employee gets 10% of the aforementioned reasonable royalty of 4% (i.e. 0.4% of the net turnover of the employer).

The turnover achieved by the employer before applying the share-factor-reduced royalty rate is progressively devaluated in the case of high turnovers. The effect is that beyond a turnover of 3,000,000 DM, a reduction of 10 % takes place, with further re ductions increasing the effect, until beyond 100,000,000 DM turnover the royalty is reduced by 80%. In other words, the inventor for turnovers beyond 100,000,000 DM in this example, no longer receives a remuneration of 0.4%, rather only of 0.032% of the employer\'s turnover.

It should be noted that the turnover-based decrease takes into consideration not the annual, but the accumulated turnover achieved, beginning with the use of the invention by the employer.

It should be stressed that after notification of an invention, an individual agreement between the employer and the employee can fully renounce any remuneration to the employee. It should be noted however, that up to six months after termination of any employment agreement, the employee has the opportunity to object to any remuneration agreement he concluded earlier as being considerably unjustified. Such circumstances will be assumed by courts in instances where remuneration was renoucned when a rather considerable remuneration to the employee would have been required. Accordingly, it is recommended that agreements are made in good faith and are justified so as not to bear the risk of revision later on, when disputes between an employer and an employe e are likely to arise (e.g. after termination of the employment agreement). It should be stressed that the right of later revising any remuneration agreement is provided for in The Law and cannot be renounced by either the employee or the employer.

Last Updated 10/4/2004
© 2000-2005 University of Washington, School of Law, CASRIP. All Rights Reserved.
Developed by Toshiko Takenaka, casrip@u.washington.edu \" (cf. http://www.law.washington.edu/casrip/newsletter/Vol3/newsv3i...
:-)

Derek Gill Franßen
Germany
Local time: 08:38
Specializes in field
Native speaker of: English
PRO pts in category: 58
Grading comment
Thank you. I also found something similar to your 1st question after I asked the Kudos question.
Best regards from Washington, DC,
Gudrun Russo
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