In patent licensing practice, licensees tend to focus heavily on the front-end stages of a licensing transaction, including offer and counteroffer, negotiations, and execution of the license agreement. By contrast, relatively little attention is paid to post-execution compliance, particularly with respect to royalty reporting, royalty payments, and responding to audit requests. In some cases, licensees even lack a clear understanding of these ongoing contractual obligations.
This common tendency to prioritize execution over performance may result in a licensee falling into contractual non-compliance almost immediately after the agreement takes effect, thereby creating significant risks of future disputes. In practice, a successful licensing transaction depends not only on reaching mutually acceptable commercial terms, but also on effective post-execution compliance. In particular, the proper operation of audit provisions and the parties' ability to address audit-related compliance
