Royalty Law and Legal Definition

Royalty is the payment or compensation paid for the use of copyrighted works, patented inventions, or natural resources. Royalty may usually be a stated percentage of sales, expressed as a percentage of receipts from using the property or as a payment for each unit produced. Royalties are personal property and devolves to heirs on the death of the person. Inventors, authors, movie makers, scriptwriters, music composers, musicians and other creators contract with the manufacturers, publishers, movie production companies and distributors, as well as producers and distributors for a license to manufacture and/or sell the product, who pay a royalty to the creator based on a percentage of funds received. Schedule for royalty payments may be specified in the contract. In the event of unauthorized use of a patented work, either purposely or by mistake, such user could be found liable to the creator for all profits on the basis of copyright or patent infringement, which usually is far more than a royalty.