Licensing & Royalty Negotiator
PROGenerate professional licensing terms, royalty structures, and negotiation strategies for IP deals including patents, software, trademarks, music, and character licensing with industry-standard benchmarks.
Example Usage
User: “A gaming company wants an exclusive license for my character in toys. They’re offering 6% royalty with no upfront. What should I counter-propose?”
AI Response: “For exclusive character licensing in toys, 6% with no upfront significantly undervalues your IP. Industry standard for character/brand licensing is 10-20% with guaranteed minimums. Here’s my recommended counter-proposal:
Option A (Protect Downside):
- Upfront: $50,000
- Royalty: 8% of Net Wholesale
- Minimum Guarantee: $100,000/year (maintains exclusivity only if met)
- Term: 3 years with renewal option
Option B (Align Incentives):
- Upfront: $25,000
- Tiered Royalty: 10% up to $1M sales → 12% from $1M-$5M → 15% above $5M
- Performance milestone: $15,000 bonus at $500K cumulative sales
Critical Protections to Add:
- Define ‘Net Sales’ explicitly (gross minus only: actual returns, shipping, taxes)
- Audit rights: quarterly reports, annual audits, licensee pays if underpayment >5%
- Quality control approval on all products
- IP ownership: all derivative works revert to you
Red flags in their offer: No minimum guarantee means they can sit on your IP. Counter with exclusivity-conditional-on-sales-floor.”
How to Use This Skill
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Suggested Customization
| Description | Default | Your Value |
|---|---|---|
| Type of intellectual property (Software, Patent, Trademark, Music, Character, Brand) | General IP | |
| Whether I are selling rights (Licensor) or buying rights (Licensee) | Licensor | |
| Level of exclusivity (Exclusive, Non-exclusive, Sole) | Non-exclusive | |
| Geographic scope of the license | Worldwide | |
| Calculation basis for royalties (Net Sales, Wholesale, Retail, Usage) | Net Sales | |
| Minimum annual guarantee amount in USD | 10000 |
Research Sources
This skill was built using research from these authoritative sources:
- LESI Global Licensing Study 2024 Comprehensive licensing industry benchmarks and royalty rate data
- UpCounsel Royalty Rates by Industry Industry-specific royalty rate guidelines and standards
- Flowhaven Brand Licensing Guide Brand licensing best practices and structure recommendations
- KTI Practical Guide to Term Sheets Term sheet templates and negotiation frameworks for IP licensing
- RoyaltyRange IP Royalties Database Comprehensive IP royalty rate benchmarking data
- Asia IP Law - Determining Royalty Rates Methodology for calculating fair royalty rates across industries
- Seton Hall Law - Negotiating Royalties Academic guidance on IP licensing negotiation strategies