Royalty Licence Template for England and Wales

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Key Requirements PROMPT example:

Royalty Licence

"I need a Royalty Licence agreement to license my software patent to a manufacturing company in Germany, with quarterly royalty payments of 5% of net sales and a minimum annual payment of £50,000, starting from March 2025."

Document background
A Royalty Licence is essential when one party wishes to monetize their intellectual property by allowing others to use it in exchange for payments. This agreement, governed by English and Welsh law, defines the scope of permitted use, payment terms, and obligations of both parties. It's commonly used for licensing patents, trademarks, copyrights, and other intellectual property rights. The document includes detailed provisions for calculating and paying royalties, reporting requirements, quality control measures, and termination rights.
Suggested Sections

1. Parties: Identification and details of the licensor and licensee, including registered addresses and company numbers

2. Background: Context of the agreement, ownership confirmation of IP rights, and purpose of the licence

3. Definitions: Defined terms used throughout the agreement including Licensed IP, Territory, Royalties, Net Sales

4. Grant of Rights: Scope of licence, territories covered, and permitted uses of the licensed IP

5. Royalty Payments: Payment terms, calculation methods, payment frequency, and reporting requirements

6. Duration and Termination: Term of licence, renewal provisions, and circumstances for termination

7. Warranties and Indemnities: Legal promises regarding IP ownership and protection against claims

8. Confidentiality: Obligations regarding confidential information shared during the agreement

9. Governing Law and Jurisdiction: Specification of English and Welsh law as governing law and jurisdiction for disputes

Optional Sections

1. Quality Control: Standards and requirements for licensed products or services, including approval processes

2. Minimum Performance Requirements: Minimum sales targets, revenue requirements, or other performance metrics

3. Sub-licensing Rights: Terms and conditions under which the licensee may grant sub-licences

4. Marketing and Promotion: Requirements and restrictions regarding marketing of licensed products

5. Audit Rights: Rights of licensor to audit licensee's books and records

Suggested Schedules

1. Schedule 1 - Licensed IP: Detailed description of intellectual property being licensed including registration numbers

2. Schedule 2 - Royalty Rates: Detailed breakdown of royalty rates, calculation methods, and payment thresholds

3. Schedule 3 - Territories: List of geographical territories where licence is valid

4. Schedule 4 - Reporting Template: Standard format for royalty reporting and calculations

5. Schedule 5 - Quality Standards: Detailed quality requirements and specifications for licensed products

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Clauses
Industries

Copyright, Designs and Patents Act 1988: Primary legislation governing copyright, designs, and patents in the UK, essential for defining the intellectual property rights being licensed

Trade Marks Act 1994: Legislation governing trademark protection and licensing in the UK, relevant if the royalty agreement involves trademark usage

Patents Act 1977: Core legislation for patent protection and licensing in the UK, crucial if the royalty agreement involves patented inventions

Registered Designs Act 1949: Legislation protecting and governing the licensing of registered designs in the UK

Unfair Contract Terms Act 1977: Regulates unfair terms in contracts and limits the extent to which liability can be excluded in contracts

Consumer Rights Act 2015: Relevant if the licence agreement involves consumer relationships, protecting consumer rights and regulating unfair terms

Competition Act 1998: Ensures licensing agreements do not create anti-competitive effects or abuse market dominance

Enterprise Act 2002: Provides framework for competition law and market regulation affecting licensing arrangements

Technology Transfer Block Exemption Regulation: Retained EU law providing safe harbor for certain IP licensing agreements from competition law restrictions

Income Tax Act 2007: Governs the taxation of royalty income for individuals in the UK

Corporation Tax Act 2009: Regulates the taxation of royalty income for companies in the UK

Value Added Tax Act 1994: Determines VAT treatment of royalty payments and licensing transactions

Private International Law (Miscellaneous Provisions) Act 1995: Relevant for international licensing arrangements, determining applicable law and jurisdiction

UK GDPR and Data Protection Act 2018: Governs the processing of personal data that may be involved in the licensing arrangement

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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