Issue link: https://htpgraphics.uberflip.com/i/246988
Payment Provisions Negotiation Tip Section 6 If you are struggling to obtain the royalty percentage you want – you may be able to negotiate a higher amount on the basis that a sliding scale is introduced and it will reduce upon achievement of certain volumes/milestones. Royalty Stacking In some cases your licensee may be selling a product, which not only incorporates the IP licensed from you, but also a number of other components licensed from others. If a particular product has so many licensed-in components, there may come a point at which the profit margin for the product is so eroded that it is no longer economically viable. It is common in these situations to see a maximum overall royalty level set which, when reached, triggers a reduction pro rata across all the royalty-bearing components. Accounts and Records Bank Details Don't forget to put your bank details into the licence – the licensee needs to be clear when and to whom they are making the payments. Keep the flexibility for you to change it if you tell the licensee. What if the licensee pays late? You may want to include a provision which states that interest will be payable on late payments. A common percentage usually agreed upon is around 4% above the base rate of your bank or LIBOR (London Inter-Bank Offered Rate). Alternatively, you can rely on rights under the Late Payment of Commercial Debts (Interest) Act 1998 which is 8% above the base rate of the Bank of England at the time of writing. This should act as a deterrent to ensure that the licensee does not fall behind with royalty payments and, if it has any sub-licensees, that such sub-licensees will not make any late payments either. However, it must represent a fair assessment of your expected loss and not be a penalty. 45