Assessing the Need for Forensic Investigations

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Units – The standard of measurement used in the IP Licensing Agreement and remains consistent throughout. Royalties may be set at minimum or maximum sales requirements.
Initial Payments – The amount a licensee must pay to implement the agreement is called an initial payment. It is paid regardless of future sales or any consequences.
Term & Termination Clause – This defines the duration of the agreement as well as the conditions under which it may be terminated before the term or upon completion of the term.
Performance Clause – A performance clause lists the minimum requirements Costa Rica Phone Number Library /sales that the licensee must meet to keep the agreement valid. It is important to establish such a benchmark to ensure that the licensor is able to monetize its IP effectively.
Type of Licensing – A license may be exclusive or non-exclusive in nature depending on the other terms that may be determined. For example, exclusive agreements almost always include a performance clause so that the licensee commercializes the product.
Applications – The agreement may contain limitations on how the product is used. Patents may be granted for research only and not for commercial use, copyrights may be limited to printing books rather than audiobooks, etc.
Accounting Definitions – Accounting practices, especially when calculating net sales, vary from company to company. Be aware of the practices followed by the licensee before drafting an agreement.
Deductions – Any amount that reduces the royalty base is referred to as a deduction. Customer returns, discounts, operating expenses, etc. fall under deductions.