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ARTICLE · 01 FEBRUARY 2006

Royalty Stacking: Tips for Licensors and Licensees

Freehills
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In order to bring a product to market, a licensee may need to obtain rights from various rights holders. As a result, a licensee may be faced with a ‘stack’ of royalties to pay. A licensee will want its licensor or licensors to share some of the burden of the stack by requesting a deduction of some or all of the royalties paid by a licensee to third parties, from amounts payable to its licensor.

AustraliaIntellectual Property

By Adam Liberman and Amalia Stone

In order to bring a product to market, a licensee may need to obtain rights from various rights holders. As a result, a licensee may be faced with a ‘stack’ of royalties to pay. A licensee will want its licensor or licensors to share some of the burden of the stack by requesting a deduction of some or all of the royalties paid by a licensee to third parties, from amounts payable to its licensor. A licensor will in turn want to minimise that burden.

It is rare for a court to consider the interpretation of provisions relating to royalty stacking. One such case did, however, recently occur in the UK.

Cambridge Antibody Technology v Abbott Biotechnology Ltd

 1

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