Royalties for project when program is inseparable from large facility
Our client wants our company to develop a 3D interface for industry facility terminals to replace their old 2D one. My company is therefore looking to sell facility tailored interface programs to that client, each for a fixed price. Our client will then sell each one of those interface programs – exactly once – along with the facility it was uniquely designed for. It will very likely be impossible for our client to separate the price of the interface from the price of the facility when selling the combined product and I’m also not very optimistic, whether our client will be disclosing their revenue to us for royalty calculation purposes. They’re also not willing to pay the 5% themselves, so the “they license, we work for hire” model won’t work. How do we calculate royalty if the client 1. does not disclose his gross revenue or 2. is not able to separate the interface price from the facility price in the final sale? If there is no price difference between the 3D and the former 2D interface for the end user, is then the product to be considered as “free” for royalty calculation? Thanks in advance!
asked Jan 26 '16 at 02:14 PM in Legal & Licensing
Follow this question
Once you sign in you will be able to subscribe for any updates here