Licence payments

There are various forms of licence payments that are often applied in combination:

• Initial payment
• Minimum (royalty) payment, e.g. USD 25.000 p.a.
• Regulary annual royalty payment (e.g. 5% of net sales)
• Milestone payments (e.g. for first sale of product)

Since the licnsor has in interest that the licensee truly enteres business and generates revenues, both parties oftentimes negotiate "diligence milestones", e.g. operational targets that the licenssee should strive to achieve.

In case of sublicence agreements it is often customary to

• Share sublicence fees with the original licensor (e.g. 40% of sublicence fees go to licensor)