Payment Provisions
Section 6
Figure 7
Tip
Include reporting obligations on the part of the
licensee. Ensure the licensee is obliged to provide
details of all sales it makes (and possibly products
manufactured) using the IP and how the royalty
has been calculated – including appropriate breakdown sales figures. This is often sent at the same
time payment is made. You can ask for this on a
monthly, quarterly or even annual basis. You can
also specify that the licensee should produce any
figures you may require upon request.
Ask for a copy of an annual statement of sales
certified by auditors and a set of annual accounts
from the licensee.
Include a provision which permits either you
or your nominated accountant to inspect the
licensee's (and possibly any sub-licensees') records
and accounts, with a right to enter the licensee's
(and sub-licensees') premises if necessary in order
to do this.
If, following your check of any figures, it transpires
that the royalties which have been paid by the
licensee to you are not enough – include a
provision under which the licensee must pay the
difference plus interest and possibly your costs of
checking.
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