Royalty rate of business method patents for large scale software applications

The royalty rate for Japanese patents is usually 2%-3% in the computer domain. This rate is based on the royalty rate values described in the "Royalty Rate" (published by Japan Institute of Invention and Innovation) and those used by Japanese national holding patents. This paper demonstrates that this conventional royalty is inadequate for large-scale software application systems and large-scale integrations (LSIs), especially the AP system using business method patents. The reason is that the contribution of the invention is very small for these large-scale systems. Moreover, this paper proposes a new method to calculate the royalty rate for large-scale applications in order to resolve these problems. Experimental case analyses show that the proposed method can derive adequate royalty rates that pioneer patents have high royalty rates and that bubble patents have low royalty rates.