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A license and royalty agreement is a contract between a licensor and licensee where a license is authorized in exchange for royalty payments. The first portion of the contract entails that the licensor authorizes the licensee the use their intellectual property for-profit. In exchange, the licensee agrees to pay a certain dollar amount or percentage per sale in royalties to the licensor. This agreement alllows licensees to generate a profit for their businesses while also ensuring that licensors aren't denied compensation for their property.
The license and royalty agreement includes information about what is being licensed, for how long, and what the royalty payments are. It also outlines how royalty payments should be made and on what payment schedule.
Below is a list of common sections included in License And Royalty Agreements. These sections are linked to the below sample agreement for you to explore.
PATENT LICENSE AND ROYALTY AGREEMENT
Effective as of June 16, 2008, (“Effective Date”), MARK BRUK, an individual having a place of residence at #302 - 738 Broughton Street, Vancouver, British Columbia, Canada V6G3A7 (“BRUK”), and KUNEKT CORPORATION, a Nevada corporation having a principal place of business at 112 North Curry Street, Carson City, Nevada, U.S.A. 89703-4934 (“LICENSEE”), agree as follows:
WHEREAS, BRUK is the inventor and owns all right, title and interest in and to the Invention and the Licensed Patent application, which Invention is in the field of financial account cards.
WHEREAS, BRUK desires to have the Invention perfected and marketed at the earliest possible time in order that products resulting therefrom may be available for public use and benefit.
WHEREAS, LICENSEE desires a license under said Invention and/or Licensed Patent(s) to develop, manufacture, use, and sell the Licensed Products and Related Services in the Licensed Field of Use.
WHEREAS, BRUK is willing to grant a license under the License Patent in accordance with the terms and conditions set forth in this Agreement.
WHEREAS, LICENSEE is willing to pay to BRUK a Patent Royalty in accordance with the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions hereinafter set forth, the parties hereby agree as follows:
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“Invention” means the system and methods defined in the Licensed Patent.
“Licensed Field of Use” means all fields of use.
“Licensed Patent” means any Letters Patent issued upon BRUK’s United States Patent Application, “METHOD AND SYSTEM FOR PROCESSING FINANCIAL TRANSACTIONS USING MULTIPLE FINANCIAL ACCOUNTS”, Serial Number #11/809,031, filed with the United States Patent and Trademark Office on May 31, 2007; or any foreign patents corresponding thereto, and/or any divisions, continuations, or reissue thereof.
“Licensed Products and Related Services” means any product and/or service, or part thereof, in the Licensed Field of Use, the manufacture, use, offer for sale, sale, or import of which: (a) is covered by a valid claim of an issued, unexpired Licensed Patent directed to the Invention. A claim of an issued, unexpired Licensed Patent shall be presumed to be valid unless and until it has been held to be invalid by a final judgment of a court of competent jurisdiction from which no appeal can be or is taken; or (b) is covered by any claim being prosecuted in a pending application directed to the Invention.
“LICENSEE” means LICENSEE and its Affiliates. “Affiliate” means any person, corporation, or other business entity which controls, is controlled by, or is under common control with LICENSEE; and for this purpose, “control” of a corporation means the direct or indirect ownership of more than fifty percent (50%) of its voting stock, and “control” of any other business entity means the direct or indirect ownership of greater than a fifty percent (50%) interest in the income of such entity.
2. LICENSE GRANT
BRUK hereby grants to LICENSEE exclusive worldwide rights to the Licensed Patent, in the Licensed Field of Use, to make, have made, use, offer for sale, sell, lease, rent and export Licensed Products and Related Services for a term commencing as of Effective Date and ending on the expiration of the last to expire of the Licensed Patents.
Transfer or sublicensing of the Licensed Patent by LICENSEE is prohibited under the terms of this Agreement, except where BRUK has approved, in his sole discretion, such transfer or sublicensing by separate written agreement.
Future Expenses – All future expenses in respect of the Licensed Patent shall be paid by LICENSEE during the term of this Agreement.
Patent Maintenance Fees – All maintenance costs for issued Licensed Patents shall be paid by LICENSEE during the term of this Agreement. LICENSEE shall have the right to notify BRUK that it has no further interest in any particular patent requiring prosecution or maintenance payments, and BRUK may then elect to make the maintenance payments himself or abandon the patent.
3. COMMERCIAL APPLICATION (DILIGENCE)
LICENSEE agrees to use all reasonable efforts and diligence to proceed with the development, manufacture, and sublicensing of the Licensed Products and Related Services, and to diligently develop markets for the Licensed Products and Related Services.
4. PATENT ROYALTIES AND QUARTERLY REPORTS
Patent Royalty Amounts – As consideration for the grant of exclusive rights to the Licensed Patent, LICENSEE will pay to BRUK twenty–five (25) percent of the gross revenues derived from the use, offer for sale, sell, lease, rent and export of Licensed Products and Related Services (the “Patent Royalty”).
Annual Minimum Patent Royalty Amounts – The grant of exclusive rights to the Licensed Patent is subject to an “Annual Minimum Patent Royalty Payment” of $50,000 for the initial one (1) year period commencing upon the issuance of a United States patent in respect of BRUK’s United States Patent Application, “METHOD AND SYSTEM FOR PROCESSING FINANCIAL TRANSACTIONS USING MULTIPLE FINANCIAL ACCOUNTS”, Serial Number #11/809,031 (the “Initial Term”). The Annual Minimum Patent Royalty Payment in subsequent years shall increase by one hundred (100) percent from the previous one (1) year period. For greater certainty, the Annual Minimum Patent Royalty Payment in the 2nd year will be $100,000. LICENSEE shall, at the commencement of the Initial Term and each subsequent one (1) year renewal term (if applicable), make the Annual Minimum Patent Royalty Payment to BRUK. BRUK shall draw against the Annual Minimum Patent Royalty Payment for any and all Patent Royalties due to BRUK for the period for which the Annual Minimum Patent Royalty Payment was made.
Quarterly Patent Royalty Reports – LICENSEE agrees to provide BRUK, within thirty (30) days after the end of each calendar quarter and within ten (10) days after the expiration or termination of this Agreement, a report of the gross revenues derived from the use, offer for sale, sell, lease, rent and export of Licensed Products and Related Services, by country (if applicable) (“Quarterly Patent Royalty Reports”). LICENSEE shall commence providing BRUK such Quarterly Patent Royalty Reports within thirty (30) days following the end of the first calendar quarter in the Initial Term. The Quarterly Patent Royalty Reports will quantify the gross revenues derived from the use, offer for sale, sell, lease, rent and export of Licensed Products and Related Services, by country (if applicable), accrued during the previous quarter explaining the basis for such calculations. In the calendar quarter in which LICENSEE has exhausted the Annual Minimum Patent Royalty Payment, LICENSEE shall include with the Quarterly Patent Royalty Report payment for all Patent Royalties accrued for the immediately preceding quarter that are in excess of the Annual Minimum Patent Royalty Payment. Unless otherwise instructed by BRUK, these payments will be made by check directly to BRUK at the address set out in Section 8.
Auditable Records – LICENSEE shall keep true, accurate and consistent records containing regular entries relating to the gross revenues derived from the use, offer for sale, sell, lease, rent and export of Licensed Products and Related Services, by country (if applicable). These records shall be available for examination during normal business hours by accountants representing BRUK, who shall be entitled to perform an audit and to make copies and extracts and to receive any explanations that may reasonably be requested. BRUK is responsible for payment of the accountant’s fee, except that LICENSEE shall be responsible for such fees in the event an examination discloses a discrepancy in BRUK’s favor of more than five (5) percent of the payment of total fees due under this Agreement.
5. NEGATION OF WARRANTIES