Example: Royalty Reductions Sample Clauses
A Royalty Reductions clause defines circumstances under which the royalties owed by a licensee to a licensor may be decreased. Typically, this clause outlines specific events or conditions—such as the introduction of competing products, expiration of certain patents, or the need to pay third-party royalties—that trigger a reduction in the royalty rate. Its core practical function is to provide flexibility and fairness in royalty payments, ensuring that the licensee is not overburdened by payments when certain value-driving factors change or additional costs arise.
Example: Royalty Reductions. By way of illustration for Section 4.5 royalty payment reductions, for a particular Licensed Product, assume a royalty of (***) of Net Sales under another Medical School license and a payment of (***) of Net Sales to a third party. The reduction calculation would be as follows: The total (***) royalty rate in this Agreement would apply, and Company would reduce that rate by 50% of the (***) due to the third party, resulting in a (***) royalty to Medical School under this Agreement, and no royalties payable to the Medical School under the other Medical School license.