Make sure you agree on how royalties will be calculated and what percentage of revenue or another metric (e.g., industry standard, flat fee, etc.) will be used to determine the amount. Don’t forget to indicate how it will be calculated (e.g., net or gross revenue).
Licensee will pay Licensor a royalty of (insert number) % of the (insert net or gross) revenue Licensee receives from the sale (insert any other reason) of any (product or service) that use, incorporates, or is/are based on the Patent, less any taxes. For purposes of clarity, the Royalty amount will be computed on revenue received by Licensee and all its affiliates.
Licensee will furnish a notice of each sale or revenue received related to a product or service using the Patent in writing.
Licensor will then provide Licensee with an invoice for the applicable royalties within (insert number, e.g., 7, 15) days before the close of each calendar quarter. Licensee will pay Licensor within (insert number) days of receipt of such invoice.
All payments will be free and clear of, and without reduction for, any taxes, levies, duties, withholdings, or deductions.
All payments will be made in (insert currency) via (insert mode of payment) to the designated account.
Licensee will be responsible for all costs associated with the (insert mode of payment).
A penalty of (insert number, e.g., five, ten, fifteen)% of the total amount owed shall be imposed for every (insert days, e.g., five, fifteen, thirty) days the payment is late.