Running Royalties (IP & Technology Glossary)

Summary

A running royalty provision is a common compensation structure for intellectual property (IP) licenses. Under such a provision, the licensee pays a periodic amount to the licensor based on some defined volume of commercial activity, such as actual sales or production of the licensed technology. Payment is made over time, rather than in a lump sum. Typically, the licensee will create royalty reports, which are used to generate the amount of royalties owed for a particular time period.