A royalty is payment (i.e. a percentage of gross or net profit or a fixed amount per sale) for the use of property, especially copyrighted works, patented inventions, or natural resources. When you license your work, whether it is through a copyright or a patent, you retain legal ownership of your work. A royalty payment is made to you, as the legal owner of the property, by those who want to use your product to generate revenue for themselves, or some other benefit. The terms of your payment are negotiated and memorialized in a royalty agreement.
A real world example is the Windows operating system. In the 1980’s, software giant Microsoft invented the Windows operating system for personal computers. Since then, computer manufacturers such as IBM and Compaq have used the Windows operating system in their computers. To allow use of its product, Microsoft enters into a royalty agreement with these computer manufacturers, who then, pursuant to the agreement, pay a royalty to Microsoft to use its product.
Royalty disputes arise when you, as the legal owner and licensor of your work, believe that the terms of your royalty agreement have been breached by the licensee. For example, you may not get the royalty payment, or other benefit, that you originally agreed to. An attorney experienced in intellectual property can help you resolve your contract dispute, to ultimately receive the royalty benefits you believe you are entitled to.