Considerations in Forensic Royalty AuditEngagements
Article by Natasha Perssico
Licenses are becoming an increasingly common means for intellectual property owners to reap some benefit from their inventions without having to manufacture a product or employ a process themselves. Therefore, the royalty audit is an important tool for licensors who want to successfully manage their intellectual property. This procedure serves to ensure that the licensor receives the agreed upon level of benefits (in the form of royalty payments) as outlined in the licensing agreement. Licensing agreements can be inherently complex contracts. Further, evidence from royalty audits shows that licensees perform very poorly in self-reporting royalties. When the potential for litigation or disputes over royalty amounts is possible, the royalty audit should be conducted by a forensic analyst who is experienced in reviewing and analyzing complex financial information.
