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LSDefine
Simple English definitions for legal terms
reasonable royalty
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A quick definition of reasonable royalty:
A reasonable royalty is a payment made to someone who owns the rights to something, like a book or an invention, for each time it is used or sold. If there is no set price for the royalty, a court will decide what a fair amount would be. The amount should be enough to make the person who owns the rights happy, but also allow the person using it to make a reasonable profit. This is often used to figure out how much someone should pay if they are accused of using something without permission.
A more thorough explanation:
A reasonable royalty is a payment made to the holder of intellectual property rights, such as a patent or copyright, for the use of their invention or creation. It is the amount that a licensee would be willing to pay while still making a reasonable profit from its use.
For example, if a company wants to use a patented technology, they would negotiate with the patent holder to determine a reasonable royalty for the use of that technology. If they cannot come to an agreement, a court may determine a remedy for infringement based on what a reasonable royalty would have been.
The reasonable-royalty standard often serves as the measure of damages in a claim of patent, copyright, or trademark infringement, or for misappropriation of trade secrets. In deciding what royalty is reasonable in a trade-secrets suit, courts consider the unique circumstances of the case, as well as industry standards and practices.