Legal Royalty Audit for Intellectual Property Revenue Streams

The key to augmenting the value of intellectual property is to create a reliable revenue stream. But how can the owner of a video game or app, a television show or film, a musical composition or literary work really know that they are being paid what was promised? Indeed, how can an owner of intellectual property be sure that their expectation for what they are supposed to be paid is even contained in the fine print of the royalty agreement’s underlying legal language?

In sum, we believe you should be asking some very basic questions:

• What is the source of funds from which royalties should be paid, and who controls it, e.g. your agent, broker, trustee or other fiduciary
• What is a ballpark of the anticipated revenue that you should be receiving from your apps, video and other digital platforms?
• If those numbers are not being met, do you have audit rights stemming from your contract or the applicable terms and conditions?
• Is the shortfall related to the fact that your royalties are being calculated by another party that only indirectly works for you?

The situation is, to say the least, less than optimal when you are receiving royalties under a contract or terms and conditions that you barely read and even if you did, had very little opportunity to negotiate.

Our Firm has Experience Handling Royalty Disputes

We have dealt with this a number of times and from many different angles. Some of the things the Nissenbaum Law Group has done in the area of audit rights for royalties include:

• drafting royalty contracts relating to new or existing items our clients own, such as music, video, apps, television, film, literary or other intellectual property vehicles, to provide robust review and audit provisions for our clients;
• negotiating modifications to royalty arrangements that do not appear to favor our clients;
• changing the escrow arrangements by which money is set aside for our clients so that they receive what they are entitled to in more quickly and efficiently;
• addressing the unique aspects of royalties that stem from intellectual property that our clients inherit through a will or are entitled to by virtue of a trust;
• handling lawsuits for our clients in which we assert a claim for profits from our clients’ intellectual property; and
• defending our clients against allegations that they are not entitled to royalties that actually do belong to them.

Our Firm Also Offers Flat Fee Legal Audit Consultations

In certain circumstances, our firm may offer a flat fee consultation in which our attorneys, in conjunction with a well-known forensic accounting firm, will review the underlying royalty agreements and financial statements to ascertain what was actually agreed to and whether or not there are concerns about how that arrangement is actually being implemented. To be clear, we limit this to a review of what arguably should be happening; it is not a formal financial audit. We will then issue a report (governed by the attorney/client privilege) that will detail our findings. Any additional services—such as an actual legal or financial audit—would be subject to an additional arrangement.

We consider this a win-win for the client. If we find that everything appears to be alright, that gives the client peace of mind; if we find that there are problems, it can result in an increase in revenue to which the client is entitled, but is not being paid. If all else fails, as set forth above, there are also legal remedies that can be pursued, as necessary. The point is that it is far better to find out whether there is a problem with royalty payments before the situation becomes so dire that it is beyond repair.

Please Contact Us if You Need Help

Please contact the Nissenbaum Law Group to schedule an appointment at 908-686-8000 or feel free to use the form to e-mail us. Kindly include as much information as possible to ensure that we are able to handle your request as quickly as possible.