Explaining CAST’s Flexible IP Licensing

Flexible licensing is one element of the Better IP Experience CAST provides for every IP core customer.
What exactly does this mean?

The Typical IP Licensing Model

Many people new to purchasing digital IP expect that they “buy” the IP and then own a copy that they can use in their design. But IP is “licensed”, not sold. The IP remains the intellectual property of the developer, and customers are granted rights to use this IP for the design and manufacture of their product chips – either ASICs or FPGAs. This is a legal contract that binds the customer to the terms of the licensing agreement and how they will use the IP, while the customer owns the final manufactured product.

The Technology License Agreement at CAST has evolved over the past 32 years of business and follows industry standard terms and conditions (which CAST helped evolve). We negotiate the licensing terms with each customer to arrive at mutually acceptable stipulations.

One of the most important conditions of the license is how the IP can be used in the customer’s products. The most frequent license grant is for one instance of the IP to be integrated into the designer’s chip, with this chip going into one product.

For some IP providers, this single-product pricing is the only model they offer, with little or no deviation. For CAST, this single product price is simple — it comes right out of our price book — but applies to only about 85% of our over 2500 customers.

What about the other 15% of developers using CAST IP?

Accommodating Unusual Cases

With probably the most experienced IP sales team in the industry, there are a lot of other design usage scenarios that we’ve encountered over the years. There are no doubt even more to come that we haven’t even seen yet. Our approach has always been to strive to accommodate these cases and satisfy each customer’s particular needs.

For example, consider a company designing a product line, say new digital cameras. They develop a chip with an integrated CAST IP core that goes into one camera model, then modify that chip “slightly” for use in other camera models. So, this isn’t a single product anymore. Why would CAST care, since we are still getting paid for the IP?

The answer is that unlike many IP providers, we usually don’t charge royalties for each chip.

Alternative Licensing without Royalties

With a royalty license model, we would be paid an amount for each unit shipped by the customer, so the extra camera models would generate additional royalties. When we don’t charge royalties, the unit volume doesn’t matter: the IP price would be the same if the customer makes one spacecraft or if they make millions of phones. We address this by several different schemes depending on the customer’s preference.

We could sell X number of single product licenses, one for each type of camera, but this can be expensive.

Or we could offer a “family license” where the customer pays for the first camera and then a pre- determined price for each additional camera in the product line. This works well if the customer expects the product line to continue for a long time and doesn’t know how many camera models will be developed.

Or we could sell a “subscription license” where the customer pays each year for a certain number of single products and then has the option of renewing each year if they will continue to design new products using the IP. This suits companies who have a good idea of the initial number of products they will produce but lack visibility into the future.

Then there is the customer who doesn’t know if the whole product line will be successful. This is usually the case with a completely new product on the market. Here we might discuss a royalty model by which the customer would pay a fixed amount for each product sold. No one really likes a royalty model because it requires a lot of accounting to track what was produced and the payment of royalties at regular intervals. But this model does have its place and may be worth the overhead.

And then there are the start-ups who have no idea if their company and products will be successful. CAST has been working with start-ups since our beginning in 1993. We love to enable designers building new products and we work with them on a custom licensing scheme that makes sense for their financial situation.

There are also researchers. Why should they pay for a license if they aren’t going to production? Again, we have lots of experience with these customers and have several lower-cost or evaluation licenses that we can offer.

Going further, we have devised additional unique licenses, such as licensing by PCB instead of a chip, upgrading from an FPGA to a new technology or ASIC, and products with subsystems.

IP Licensing Terms to Suit Every Customer

In summary, CAST has developed very flexible licensing terms in collaboration with our customers over the years, resulting in mutually cost-effective solutions. Our competitors can’t come close to discussing licensing with as much understanding as CAST, and it is doubtful that the large IP providers will deviate from their single-project licensing structure at all.

Even with three decades of experience, we know there’ll most likely be a new design scenario around the corner where the customer has some unique situation we haven’t already encountered. In every case — and as our track record shows — we will work hard to get the customer the IP they need with terms that meet their particular situation. Isn’t that what you want for your IP provider?