Barun Kumar De (SmartPlay Technologies)
Royalty is a critical component in any IP deal. SoC companies want IP companies to share the risk of success (or failure) of their SoC and to enable that they want IP vendors to accept a substantial part of their payment to be paid as royalty. But the customers are also not very interested to shell out huge money to IP companies if the SoC is successful and hence they would like to have the royalty percentage as much as low which IP companies find non-acceptable in several situations.
One way, the IP companies can overcome the challenge is to provide a buyout option to its customers. The buyout option allows buyer to pay a certain amount of money to the seller and stop all future royalty payment. SoC companies will go to buyout option if they see the cash outflow of all the future royalty is more than the buyout price. IP vendor can demand of higher royalty percentage with the buyout option.
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