A product royalty agreement is a legal contract between two parties, where one party licenses the use of their product to another party in exchange for royalty payments.
If you are looking to create a product royalty agreement, it is important to understand the key components that such an agreement should contain. Below is a sample outline that can serve as a guide for creating your own product royalty agreement.
1. Introduction: Start the agreement by identifying the two parties involved. This should include their full names and addresses.
2. Product description: Describe the product that is being licensed in detail, including any relevant features or specifications.
3. Term: This section should outline the length of the agreement, including any renewal or termination clauses.
4. Royalties: Define the royalty percentage that the licensee will pay to the licensor for the use of the product. This section should also include details on how the royalties will be calculated, invoiced, and paid.
5. Licensor’s warranties and representations: The licensor should provide warranties and representations that they have the right to license the product, that it does not infringe on any third-party intellectual property, and that it is free from any defects.
6. Licensee’s obligations and restrictions: This section should outline the obligations of the licensee, such as maintaining the product and reporting sales. It should also include any restrictions on the use or distribution of the product.
7. Termination: Define the circumstances under which the agreement can be terminated, including breaches of the agreement or insolvency of either party.
8. Intellectual property ownership: It should clearly identify the intellectual property rights of both parties and specify any licenses to be granted or agreements to be executed for the right to use the intellectual property.
9. Governing law and dispute resolution: This section should specify the governing law of the agreement and provide details on how disputes between the parties will be resolved.
10. Confidentiality and non-disclosure: It should describe the confidential information that is relevant to the agreement.
11. Indemnification: This section should define the responsibilities of each party if legal action or damages arise from the agreement.
Overall, a product royalty agreement is a legally binding document that can help protect both the licensor and the licensee. By outlining the terms and conditions of the agreement, a product royalty agreement can provide clarity and prevent disputes. It is important to have a clear understanding of what the agreement entails before entering into the contract.
