A royalty is a payment made to someone for the use of something, an asset, that they have created or own. For example a musician who writes a song is paid a royalty each time the song is played on the radio, or each time another musician plays the song. The owner can allow other people to use their asset by paying a license or a franchise. The amount paid is usually a percentage of the all the money made from using the asset, the gross, or from the just the profit, the net. Another way is to set a fixed price, for example a set amount for each book or recording. There are many other ways that the royalty fee can be calculated and paid. A royalty interest is the right to collect a stream of future royalty payments.
A license agreement defines the terms for these payments. The agreement can also set conditions for how, where and when an asset can be used. License agreements can also be regulated. A government of a country might receive royalty payments for mining, or extracting oil, and would protect its interest in the agreement with laws.
References[change | change source]
- "Focus: Tax and Intellectual Property – April 2004". Allens Arthur Robinson. Retrieved 2007-09-13.
- "Royalty (definition)". law.com. Retrieved 2007-09-13.
- United Nations Industrial Development Organization (1996). Manual on Technology Transfer Negotiation. Vienna: United Nations Industrial Development Organization. ISBN 92-1-106302-7.
- Guidelines for Evaluation of Transfer of Technology Agreements, United Nations, New York, 1979
- Licensing Guide for Developing Countries: A Guide on the Legal Aspects of the Negotiation and Preparation of Industrial Property Licenses and Technology Transfer Agreements Appropriate to the Needs of Developing Countries. Geneva: World Intellectual Property Organization. 1977. ISBN 92-805-0395-2.
- UNIDO International Workshop on Technology Transfer Negotiation and Plant Level Technology Needs Assessment, 7–8 December 1999, New Delhi.
- Dave Tyrrell. "Intellectual Property & Licensing". Vertex. Retrieved 2007-09-14.
- "Royalty interest (definition)". Schlumberger. Retrieved 2007-09-13.