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Software Royalty Agreement Template for England and Wales

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Key Requirements PROMPT example:

Software Royalty Agreement

"I need a Software Royalty Agreement for licensing my enterprise resource planning software to a UK-based distributor, with a 15% royalty rate on net sales and quarterly reporting requirements, to be effective from March 2025."

Document background
The Software Royalty Agreement is essential when a software owner wishes to license their software while retaining ownership and receiving ongoing compensation based on usage or revenue. This agreement, governed by English and Welsh law, establishes the commercial relationship between the licensor and licensee, detailing payment structures, usage rights, and compliance requirements. It's particularly crucial for protecting intellectual property rights while enabling commercial exploitation of software products.
Suggested Sections

1. Parties: Identification and details of contracting parties

2. Background: Context and purpose of the agreement

3. Definitions: Key terms used throughout the agreement

4. Grant of Rights: Scope of license and usage rights granted for the software

5. Royalty Payments: Payment terms, calculation methods, reporting requirements and payment schedules

6. Intellectual Property Rights: Ownership, protection and enforcement of IP rights

7. Warranties and Representations: Guarantees regarding software ownership, performance and compliance

8. Confidentiality: Protection of confidential information and trade secrets

9. Term and Termination: Duration of agreement, renewal terms and termination provisions

10. Liability and Indemnification: Limitations of liability and indemnification obligations

11. Governing Law and Jurisdiction: Applicable law and dispute resolution mechanisms

Optional Sections

1. Source Code Escrow: Terms for source code protection and access conditions

2. Territory Restrictions: Geographical limitations on software usage and distribution

3. Maintenance and Support: Terms for ongoing technical support and software maintenance

4. White Labeling: Terms for software rebranding and customization rights

5. Audit Rights: Rights to audit licensee's records and usage compliance

Suggested Schedules

1. Schedule 1 - Software Description: Detailed technical specifications and functionality description

2. Schedule 2 - Royalty Calculation Methods: Detailed formula, examples and calculation procedures

3. Schedule 3 - Reporting Templates: Standard forms and templates for royalty reporting

4. Schedule 4 - Service Level Agreement: Performance standards and support level specifications

5. Schedule 5 - Territory List: List of authorized territories for software distribution

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Relevant Industries
Relevant Teams
Relevant Roles
Industries

Copyright, Designs and Patents Act 1988: Primary legislation governing intellectual property rights in the UK, including software copyright protection and licensing

Copyright (Computer Programs) Regulations 1992: Specific regulations dealing with copyright protection for computer programs and software in the UK

Software Directive (2009/24/EC): EU directive retained in UK law post-Brexit that harmonizes copyright protection for computer programs

Contracts (Rights of Third Parties) Act 1999: Legislation governing how third parties may enforce terms of a contract

Unfair Contract Terms Act 1977: Controls the use of exclusion and limitation clauses in contracts

Consumer Rights Act 2015: Legislation protecting consumer rights in B2C contracts, including software licensing

UK GDPR: Data protection regulation governing the processing of personal data in the UK post-Brexit

Data Protection Act 2018: UK's implementation of data protection standards, working alongside UK GDPR

Privacy and Electronic Communications Regulations: Regulations governing privacy and electronic communications in the UK

Income Tax Act 2007: Legislation governing income tax implications of royalty payments

Corporation Tax Act 2009: Legislation governing corporate tax treatment of software royalties

Value Added Tax Act 1994: Legislation governing VAT treatment of software licenses and royalties

Competition Act 1998: Primary UK competition law legislation affecting licensing agreements

Technology Transfer Block Exemption Regulation: Retained EU law providing safe harbor for certain IP licensing agreements under competition law

Private International Law (Miscellaneous Provisions) Act 1995: Legislation governing choice of law rules in international contracts

Electronic Communications Act 2000: Legislation facilitating electronic commerce and electronic signatures

Electronic Commerce (EC Directive) Regulations 2002: Regulations governing electronic commerce and online contracting

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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