Questions and Answers

What is a Royalty Audit?

A Royalty Audit is carried out on behalf of the owner of Intellectual Property (IP) who has licensed that IP to a third party in exchange for payments based on usage (usually called “royalties”). The royalty audit is used to the check that the licensee is paying the correct royalties.

Why do I need a Royalty Audit?

The royalty and licensing process is a very complex one and even the best run firms make mistakes. This complexity makes it possible for less scrupulous licensees to deliberately understate the level of royalties due.

When do I need a Royalty Audit?

At least once during the lifecycle of a third party IP licence and perhaps as often as every two to three years, the owner of the IP should commission a company such as Bevis and Co to carry out a Royalty Audit.

When to call in Bevis and Co?

If you own Intellectual Property (IP) which you licence to a third party for a one off payment or for scheduled payments not linked to usage in any way, you should be able to manage without us.

But

• If you have never licensed IP and are considering doing so, you should call us. We can give you advice, introduce you to a specialist lawyer and help you set up the systems you may need to manage the activity.
• If you licence IP to a third party for a fee based on usage (a royalty payment) you should talk to us. Our job is to help you maximise your royalty income.

What is Compliance Checking?

A Compliance Check is a “desk top audit” comparing details on incoming royalty statements with the terms of the licence to ensure the third party is complying with the terms.

When is a Compliance Check Needed?

Whenever we undertake a Royalty Audit we normally first carry out a Compliance Check.

If you licence intellectual property to a third party and receive a royalty payment related to usage, we would recommend that you introduce a regular Compliance Checking programme.

A regular programme of compliance checks will identify problems early and it signals to the licensee that you are managing the licence. It will also identify when a full Royalty Audit might be appropriate.