Tax & Accounting Blog

Your Questions Answered #2: SIC Codes and the Inherent Risks of Conducting IP Analysis

Blog, Global Tax Compliance, ONESOURCE, Transfer Pricing, US Income Tax Compliance September 4, 2012

Following our recent webcast “SIC Codes: Inherent Risks When Conducting IP Analyses,” dozens of follow-up questions came in from transfer pricing leaders.  Last week, we addressed one about why analysts still use SIC codes in their searches. This week, we’d like to share more frequently asked questions on the complex topic of SIC Codes.

Q2: While reviewing a licensing filing from the U.S. SEC, I found an exhibit where the percent of royalty was redacted (i.e. treated as confidential). Why is that?

A2: Many filing companies choose to and invest in the ability to treat these exhibits as confidential to protect their IP and their business. It is not uncommon for licensing arrangements to have redacted royalty rates, deal structure, party information, or any other related content removed from the original filing. This practice keeps competitors from gaining competitive intelligence and the general public from viewing this information.

However, sometimes there is a loophole for locating redacted terms. If you are looking for licensing documentation on a particular company whose agreement is redacted, try using the full text search to see what appears for that company. Occasionally, a licensee may sub-license IP to another party who then publishes the full terms of the agreement. In this case, the original Licensor would not be listed as a party to the agreement, but could be noted within the full agreement text.

Tune in next week…. to find out how to locate the right SIC code in your database.  Have questions of your own? Share them below or tweet @ktMINEglobal!

Want better transparency into licensing transactions? Check out our ktMINE Royalty Rate Resource Guide for the most comprehensive license of intangible property by industry.

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 Have questions of your own? Share them below or tweet @ktMINEglobal!