Royalty Licence Agreement Template for England and Wales

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Key Requirements PROMPT example:

Royalty Licence Agreement

"I need a Royalty Licence Agreement for licensing our new software technology to manufacturers in Europe, with quarterly royalty payments of 5% of net sales and minimum annual guarantees, to be effective from March 2025."

What is a Royalty Licence Agreement?

The Royalty Licence Agreement is essential when businesses seek to monetize their intellectual property through licensing arrangements. This document, governed by English and Welsh law, establishes the commercial and legal framework for intellectual property exploitation, including detailed provisions for payment calculations, reporting obligations, and quality control measures. It is commonly used across various industries where intellectual property forms a significant business asset, from technology to entertainment sectors. The agreement provides legal certainty for both parties while ensuring appropriate compensation for the use of valuable intellectual property rights.

What sections should be included in a Royalty Licence Agreement?

1. Parties: Identification and details of the licensor and licensee

2. Background: Context of the agreement and ownership of intellectual property

3. Definitions: Key terms used throughout the agreement

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

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

6. Duration and Termination: Term of agreement and circumstances for termination

7. Warranties and Representations: Legal assurances regarding IP ownership and right to license

8. Confidentiality: Protection of confidential information exchanged during the agreement

9. Governing Law and Jurisdiction: Specification of applicable law and courts for dispute resolution

What sections are optional to include in a Royalty Licence Agreement?

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 for granting sub-licenses to third parties

4. Audit Rights: Right to audit licensee's books and records for royalty verification

5. Marketing and Promotion: Requirements for marketing the licensed products/services and use of trademarks

What schedules should be included in a Royalty Licence Agreement?

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

2. Schedule 2 - Royalty Calculation: Detailed methodology for calculating royalties, including rates and base calculations

3. Schedule 3 - Reporting Template: Standard format for royalty reports and payment calculations

4. Schedule 4 - Territory: List of countries/regions where licence applies

5. Schedule 5 - Quality Standards: Detailed quality control requirements and specifications

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 scope of intellectual property rights being licensed

Trade Marks Act 1994: Key legislation for trademark protection and licensing in the UK, including provisions for trademark registration and enforcement

Patents Act 1977: Fundamental legislation governing patent rights and their exploitation in the UK, including licensing provisions

Registered Designs Act 1949: Legislation protecting registered design rights and their commercial exploitation through licensing

Unfair Contract Terms Act 1977: Controls the use of exclusion and limitation clauses in contracts, affecting liability provisions in licence agreements

Consumer Rights Act 2015: Relevant for B2C licensing arrangements, providing consumer protection measures

Competition Act 1998: Governs anti-competitive behavior and affects restrictions that can be imposed in licence agreements

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

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

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

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

Private International Law (Miscellaneous Provisions) Act 1995: Relevant for international licensing arrangements and choice of law provisions

UK GDPR: Data protection legislation affecting processing of personal data in licensing arrangements

Data Protection Act 2018: UK's implementation of data protection requirements, supplementing UK GDPR

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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