Product Royalty Agreement Template for Hong Kong

The Product Royalty Agreement is a critical commercial contract used when a product owner wishes to monetize their intellectual property by allowing another party to manufacture, distribute, or sell their products in exchange for royalty payments. This agreement type is particularly important in Hong Kong's dynamic commercial environment, where international trade and intellectual property licensing are common. The document addresses key aspects including royalty calculations, quality control, territorial rights, and compliance with Hong Kong regulations. It's especially relevant for cross-border transactions, given Hong Kong's position as a global business hub, and must comply with local laws including the Patents Ordinance, Trade Marks Ordinance, and relevant tax regulations. The agreement typically includes detailed provisions for protecting intellectual property rights, ensuring product quality standards, and establishing clear financial obligations.

1. Parties: Identifies and provides full details of the contracting parties (licensor and licensee)

2. Background: Explains the context of the agreement, including the licensor's ownership of the product rights and the licensee's desire to commercialize

3. Definitions: Defines key terms used throughout the agreement for clarity and precision

4. Grant of Rights: Specifies the scope of rights granted, including territory, exclusivity, and permitted uses

5. Product Specifications: Detailed description of the products covered under the agreement

6. Royalty Rates and Payments: Specifies royalty calculation methods, payment terms, currency, and reporting requirements

7. Quality Control: Sets standards for product quality and licensor's right to inspect and approve

8. Record Keeping and Audit Rights: Details the licensee's obligations for maintaining records and licensor's audit rights

9. Intellectual Property Protection: Addresses protection of IP rights, infringement actions, and cooperation requirements

10. Representations and Warranties: States parties' representations regarding authority, IP ownership, and other material facts

11. Term and Termination: Specifies agreement duration, renewal options, and termination circumstances

12. Post-Termination Obligations: Outlines parties' obligations after agreement termination

13. Confidentiality: Protects confidential information exchanged during the agreement

14. General Provisions: Standard contractual provisions including notices, assignment, governing law, etc.