Royalty Payments

Press, Volume XCVIII, Issue 28822, 17 February 1959, Page 12

Royalty Payments

The contention of the Minister of Industries 'and Commerce (Mr Holloway) that his department cannot support royalty payments for overseas rights “which would not result in “some direct advantage to the “ national economy ” is certainly arguable. The Government in ordinary times should not deliberately depreciate the value of the individual’s money by dictating how he should spend it. In a national crisis it might be -contended that the Government has a duty to protect the currency by all sorts of expedients that are bad in principle, such as import control. Mr Holloway might thus be able to defend interference with any or all royalty payments with some show of logic. But what is not arguable is his naive belief that in advance he can pluck any figure out of the air,- anything beyond which is not * an advantage to “the national economy”. How can he be -sure such an arbitrary figure makes sense in any instance?' For example, if the right to use an overseas process reduces the cost of an

article by 50 per cent, or doubles its value,< then a royalty of 20 per cent., instead of outraging Mr Holloway, should make him very happy. Similarly, if a process makes no saving on" producing an article, or produces an article the public do not want, it is clearly not Worth a royalty of even half of 1 per cent. Individual examination of royalty payments by Mr Holloway’s department might be all very well if the public could have much, confidence in the ability of his officers to assess the value of patent rights. We see no reason for such confidence. It is much easier to believe in the business acumen of those who pay the royalties. They are not likely to pay more than the rights are worth; nor are the public likely to buy goods if the prices are inflated by unreasonable royalty payments. Mr Holloway had better be careful before he starts dictating to overseas experts about the value of their rights, or he win do New Zealand manufacturing a great disservice.