In the licensing model, royalties are typically paid to which party?

In the licensing model, royalties are typically paid to which party?

• A. Licensor
• B. Licensee
• C. Distributor
• D. Customer

Answer: (A)

Royalties are ongoing payments for the use of someone else’s intellectual property under a license. The person who owns that IP and grants the permission—the licensor—receives these payments. The party obtaining the rights is the licensee, who pays the royalties to the licensor. Distributors handle getting the product to market and typically don’t receive IP royalties, while customers buy the product and don’t pay royalties to the IP owner.

Royalties are ongoing payments for the use of someone else’s intellectual property under a license. The person who owns that IP and grants the permission—the licensor—receives these payments. The party obtaining the rights is the licensee, who pays the royalties to the licensor. Distributors handle getting the product to market and typically don’t receive IP royalties, while customers buy the product and don’t pay royalties to the IP owner.