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January 13, 2025
If your company is considering joining the EnabLED Licensing Program for Luminaires and Retrofit Bulbs, it is good to know that two different types of agreements are available. Each type involves a dedicated royalty payment method.
Type 1: The Standard Approach
In the standard approach, Signify lists all relevant products, the standard 3%, 4%, or 5% royalty rate, and the countries where a royalty payment is triggered. The Licensee will provide, on a confidential basis, quarterly reports stating its turnover* for all listed products. The royalty due is calculated on the basis of these turnover data for the relevant calendar quarter. If the Licensee introduces new products, these products must be disclosed to Signify and may need to be added to the license agreement. The Licensee can either assess this himself or one of Signify’s licensing experts may assist in this analysis. If a Licensee conducts a self-assessment, Signify may still conduct its own analysis to verify its accuracy.
*The relevant turnover will be based on worldwide sales if at least one invention used in the product is patented in the country where the product was manufactured. Otherwise, Signify asks for the turnover generated only in countries of sale where the inventions used are patented.
Type 2: The Flat Rate (single royalty rate) Approach
In this approach, Signify utilizes portfolio analysis alongside the Licensee's turnover of branded LED luminaires or retrofits from a reference period (e.g., the previous calendar year) to establish a single percentage flat rate. This flat rate is applied quarterly to the total net revenue of your branded luminaires and retrofits. The approach considers patent coverage in the countries where the Licensee assembles and sells its products. If both LED luminaires and retrofits need coverage, two separate flat rates will be applied.
The determination of the single royalty rate for luminaires may be as follows:
Valuation |
Royalty Rate |
Sales |
IP coverage |
Rate |
Single Color |
3% |
a% |
x% |
α=3%*a%*x% |
Tunable White |
4% |
b% |
y% |
β=4%*b%*y% |
Color Changing |
5% |
c% |
z% |
γ=5%*c%*z% |
Flat Rate |
α+β+γ |
a, b and c sum up to 100% of the turnover with LED based luminaires. x, y and z stand for the relevance of the patents within the categories, including the geographical coverage, and will each be between 0% and 100%.
The determination for a single royalty rate for retrofit bulbs would work in the same way, using 5% as the standard royalty rate for LED retrofit bulbs.
The license agreement will enumerate all pertinent brands and delineate the agreed flat rate for a specified duration. During this term, the Licensee is obliged to report its total quarterly turnover for LED luminaire and retrofit brands. Signify will then calculate the royalties due by applying the flat rate percentage to the reported turnover. Upon the termination of the agreed period, either party reserves the right to request a new flat rate determination.
This flat rate will automatically apply to new LED luminaires and retrofits introduced by the Licensee. In other words, there is no need for any further analysis or paperwork through the agreed flat rate period.
Signify (Euronext: LIGHT) is the world leader in lighting for professionals, consumers and the Internet of Things. Our Philips products, Interact systems and data-enabled services, deliver business value and transform life in homes, buildings and public spaces. In 2023, we had sales of EUR 6.7 billion, approximately 32,000 employees and a presence in over 70 countries. We unlock the extraordinary potential of light for brighter lives and a better world. We have been in the Dow Jones Sustainability World Index since our IPO for seven consecutive years and have achieved the EcoVadis Platinum rating for four consecutive years, placing Signify in the top one percent of companies assessed. News from Signify can be found in the Newsroom, on X, LinkedIn and Instagram. Information for investors is located on the Investor Relations page.
