Royalty Agreement



A royalty agreement is a contract for the use of someone else’s intellectual property in exchange for a commission or fee.

Uses

  • The owners of intellectual property wish to offer their intellectual property for use in exchange for payment
  • Purchasing limited use of intellectual property belonging to another.

Overview

If you are using someone else’s intellectual property, you may be required to execute a royalty agreement. A royalty agreement documents official permission for the use of someone else’s intellectual property in exchange for a pre-negotiated payment known as a royalty. Royalties can be flat fees, ongoing payments, commissions, or any payment arrangement that the parties find mutually agreeable.

Regardless of the form and type of payment, a royalty agreement gives one person or business the right to use intellectual property owned by a different person or business for their own commercial gain. Royalty agreements describe the specific terms and conditions under which intellectual property can be used in exchange for royalties. Many types of intellectually property are commonly licensed through royalty agreements. Franchises, for example, typically involve the licensing of a corporate parent’s business operations in exchange for a royalty. Music, film, and other media is also commonly licensed for royalties, as are copyrighted artistic images and photographs.

This royalty agreement provides a framework for how, when, and under what circumstances someone can use the ideas, art, or other intellectual property belonging to another. If you intend to use someone else’s intellectual property for your own commercial gain, use this interactive royalty agreement to organize the terms of payment for exchange.

Similarly, if you sell your intellectual property or provide creative services professionally, you can use this step-by-step guide to create a royalty agreement to present to all of your potential licensees.