Emily's R&D
SOLUTIONS
Revenue Share Agreement
Fixed royalty
n
It may be a risky ploy for Lakeland to go for a fixed royalty rate at this
stage as it does not know what the Foreground IP might be. It may
be more valuable. It could say the rate is to be agreed or if NWP and
Lakeland cannot agree on independent expert will agree.
Net sales
n
NWP has stated that the royalty will be a percentage of 'net sales'. It is
important to know what this means. It often means the sales price after
tax and other specified items have been deducted but you have to check
the definition. Lakeland should ensure that it knows exactly what this
means before it agrees to it.
n
NWP has specified that various costs will be deducted before the royalty
is calculated. It is likely that NWP is seeking to deduct these as it has to
pay for the costs associated with delivering products to its customers,
insurance or other associated charges. Lakeland should remember that the
more deductions it allows NWP to make, the less royalty it will receive.
The deductible costs are very broad. Lakeland has no control over them.
It should try to limit these deductions.
Period
n
There is no reason why Lakeland's royalties should not continue for the
period of the licence, which could be 20 years. It may be 10 years or so
before a product gets to market.
61
