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Technology Stocks : Rambus (RMBS) - Eagle or Penguin
RMBS 99.44+8.3%3:58 PM EST
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To: Bilow who wrote (59132)10/29/2000 4:00:39 PM
From: Zeev Hed  Read Replies (1) of 93625
 
Carl, you are right, it is rare that royalties are paid twice. Most Licensing agreements do go into the description of "what are sales" (another what "is" is <g>). In essence selling price is often determined as the first "arm length" transaction, namely, if NEC makes the chips and sell them to a company in which it owns more than 10% (Elpida), it would not be "arm-length", and the selling price will be determined once the chips are sold to either an independent distributor, or let say to a PC assembler, like NEC (g). That is where the Agreement often dictates that when the end user is the licensed company itself (NEC uses RDRAM in their own PC), or an affiliate (a company in which the licensee has a substantial interest, like 10% or so), the "transfer price" for royalties determination purposes is determined by the price paid by a truly independent third party in a co-temporal transaction. Like what did Compaq pay during the same period for similar quantities.

Zeev
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