The royalties clause in a contract outlines the percentage or fixed amount paid to a party, usually the creator or owner, for the use or sale of their intellectual property or product. It specifies the payment terms, frequency, and conditions under which royalties are calculated and distributed.
In consideration of the Purchase Price paid to Producer hereunder, during the Royalty Period, Producer hereby agrees to pay (or direct payment from all applicable third parties, including Distributor and/or Artist) all Royalties from the following Revenue Sources, as applicable hereunder, in connection with the Portfolio as follows...
In consideration for the granting of the licence, the Licensee shall pay royalties to the Union for the exploitation of the Technology and the Patents, in accordance with the mechanisms and principles described in the following paragraphs.
Royalties are payments made to individuals or entities for the ongoing use of their assets, intellectual properties, or resources. These are typically calculated as a percentage of the revenue generated from the use of the asset, or a fixed price per unit sold or produced. Common assets that earn royalties include music, books, patents, and natural resources.
You should consider using royalties in scenarios where you wish to grant permission for the use of an asset you own, while also continuing to receive compensation for its use. This is particularly common in:
When writing a royalties agreement, ensure it contains the following key elements:
Example: “The Licensee agrees to pay the Licensor a royalty of 10% of the net sales value of all products sold that incorporate the licensed patent.”
Royalties are typically included in various types of contracts, such as:
These contracts ensure that the creators or original owners of an asset receive ongoing compensation while allowing others to benefit from the asset’s use.
Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
A royalty payment clause specifies the terms under which one party (the licensee) compensates another party (the licensor) for the use of intellectual property, such as patents, copyrights, or trademarks. This clause typically outlines the percentage or fixed amount to be paid, the calculation method, the payment schedule, and any applicable terms or conditions impacting the payment structure, ensuring both parties agree on financial rights and responsibilities.
The "Rule of 60" is a guideline often used in retirement plans, where an employee becomes eligible for a pension or early retirement benefits once their age combined with years of service equals 60. This rule aims to reward long-serving employees by allowing them to retire earlier with full or partial benefits.
A "Rule of Construction" clause in a contract establishes guidelines for interpreting the terms and provisions within the agreement. This clause can specify that the contract should not be interpreted against the party that drafted it, ensuring a fair and neutral interpretation.
Try our AI contract analysis and extract important clauses and information from existing contracts.
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