License agreements usually offer the possibility to have the licensee’s accounts audited when the licensor suspects that the licensee has manufactured and sold more products than were reported and paid.
Auditing is an effective tool but expensive and confrontational, and can be difficult to use in some jurisdictions. It is, therefore, useful to create incentives for licensees to report correctly and not rely only on the threat of auditing.
Through our Market Education and IP Awareness services we encourage the licensee’s customers to demand proof that products are licensed, reported, and that royalties have been paid.
One-Red developed its unique Per-Batch Licensing System for license programs that need the strongest possible incentives against under-reporting. The Per-Batch Licensing System makes it very easy to determine that products are licensed and royalty paid for all parties throughout the supply chain and minimizes the risk of underreporting.