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Royalty Management

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Challenges of Royalty Management and IP Protection

Many companies in the high tech, pharmaceutical/biologic, entertainment and apparel industries embed their technology or intellectual property (IP) in the products of other companies (OEMs). The embedded technology/IP can take many forms: processing cores, codecs, software, firmware, brand logos, etc. Licensors then rely on licensees to accurately report sales-out so that appropriate royalties can be calculated, invoiced and collected.

However, it quickly gets complicated to track royalties across several tiers of licensees, distributors and subsystem assemblers, especially if data collection and analysis is done via spreadsheets, as it almost always is. But, if you are concerned that particular licensees or distributors are under-reporting royalties, how do you diplomatically bring this to the partner’s attention? What pertinent data do you refer to when you approach the partner, especially if you are not completely sure that your data unequivocally validates the concern? How do you enforce license compliance without upsetting your business partners? And, how do you deal with gray market activity or piracy issues?

Increase Royalty Revenues with cCRM

Entomo’s cCRM solution addresses the issues of under-reported royalties and gray market activity by eliminating complex spreadsheets and ad hoc databases, and replacing them with a single integrated system. With Entomo’s solution customers maximize royalty revenue collections, protect their IP and significantly increase the yield from compliance actions.

Entomo’s SmartHub® Royalty Management system comprises the following modules:

  • Royalty-Related Partner Reports

    Royalty reports and ship out reports from various tiers of licensees are automatically collected, cleansed and normalized by the channel data management module, regardless of the format or transmission method (email, ftp, EDI, etc.).

  • Partner Portal

    The cCRM web portal is used for online collaboration and communication with licensees. The communication can include announcement of new licensable IP and royalty rates. Partners can directly upload royalty and shipment reports and receive invoices for royalties due. In addition, the portal can be used by licensees to view consolidated analytics on royalties due, historical royalties paid, etc.

  • Ship in Ship Out (SISO) Reconciliation

    Automated reconciliation of data from two or more independent sources (e.g., chip vs. system shipments) is performed to flag inconsistencies. These inconsistencies are key determinants of potential royalty under-reporting or gray market activity. After investigation, unresolved variances can be adjusted by authorized sales operations or via Entomo’s managed services. Any overrides can be annotated with comments, and an audit trail is maintained.

  • Royalty Financials and Accounting

    Royalty agreements can be captured in an actionable format. All relevant fields such as technology/IP, royalty steps, selling price, royalty formulas, etc., are captured. Royalty agreements in conjunction with product shipment reports are used to automatically calculate, validate and forecast royalties due. Royalty invoices can also be automatically generated and posted to the companies financial system, and transmitted to the licensee.

  • Royalty Analytics and Dashboards

    A comprehensive view of all royalty-related metrics and trends. These specialized analytics are integrated into the dashboards module.

  • Sales Compensation

    Sales compensation based on royalty payments, technologies, products, territories, named accounts, etc.

  • Royalty Compliance Risk Scorecard

    Measure Key Performance Indicators (KPIs), which are predictors of royalty under-reporting. Allows proactive and preventive compliance actions.

  • Field Compliance

    Provides worldwide access to licensed product database (created from fragmented information in engineering, compliance and finance departments). Specialized smartphone apps allow field compliance personnel access to consolidated data and the ability to collaborate with other agents, all in real- time.

  • Royalty Expense Calculations

    The Royalty Management module can also be toggled to become a royalty expense calculation system to enable licensees to quickly and correctly determine royalties owed, validate royalty invoices received from licensors and perform associated analytics.

As part of implementing Royalty Management, Entomo’s professional services team can provide best practice guidance for executing a license compliance and royalty recovery strategy.