Free US Law Dictionary

Royalties

Royalties (sometimes, running royalties) are usage-based payments made by one party (the "licensee") to another (the "licensor") for ongoing use of an asset, sometimes an intellectual property (IP) right.

Royalties can be determined as a percentage of gross or net sales derived from use of the asset or a fixed price per unit sold. [1][2][3][4][5][6][7] but there are also other modes and metrics of compensation. A royalty interest is the right to collect a stream of future royalty payments, often used in the oil industry and music industry to describe a percentage ownership of future production or revenues from a given leasehold, which may be divested from the original owner of the asset.[8]