Royalty Payments Clause for Intellectual Property License (Long Form with Declining Royalty Rate)

Summary

This Royalty Payments Clause for IP Licenses provides detailed royalties with a declining royalty rate. It provides for a royalty at a first rate up to specified dollar amount of annual net sales of licensed products and a second (reduced) rate on annual net sales in excess of that amount. It also includes detailed provisions as to the frequency and method of payment, tax withholding, licensee record keeping obligations, licensor audit rights, and licensor termination rights upon default or non-compliance. It may be used as a starting point in drafting a detailed royalty payments clause for any type of IP license, including a patent, trademark, or copyright license.