The transfer of rights in many things, particularly intellectual property rights and the entities in which they subsist is seldom absolute. In many cases, the rights are licensed, not assigned. Licensing represents a useful and profitable way of exploiting the value in things.
Payment under such contracts can take many forms, however a particularly popular form is that of royalties. Royalty payments work well for both parties in the transaction. The owner of the rights or the entity being licensed receives payment each time his property is exploited for gain by the licensee, whilst at the same time, the licensee only pays when they gain.
This position is not absolute as many royalty agreements will contain provisions which provide for a minimum return for the owner which the licensee must provide irrespective of their actual income. Nevertheless, provided both parties have exercised due diligence and have gone into the transaction with their eyes open, both parties should benefit.
Royalty Payments will take the form of a percentage of income generated by the licensee’s activities pertaining to the subject matter of the royalty agreement. In addition to these regular payments, an initial advance will often be required which must be recouped before the payment of royalties commences. Certain parties may also desire a one-off initial fee, often at the commencement of the agreement.
Simply-docs has now created a new set of Royalty Agreements, based on our popular licence agreements. The new documents have been designed to cater for the licensing of copyright, trade marks and patents. A specific Author’s Agreement has been created, in addition to a standard royalty contract which is sufficiently flexible to cover a broad range of subject-matter (including that detailed in the other documents in this category).
The contents of this Newsletter are for reference purposes only and do not constitute
legal advice. Independent legal advice should be sought in relation to any specific