The Software Royalty Agreement serves as a critical legal framework for software licensing transactions in Indonesia, establishing the commercial relationship between software owners and those seeking to use or distribute their software. This document is essential when a software owner wishes to monetize their intellectual property through a royalty-based model while retaining ownership rights. It must comply with Indonesian legal requirements, particularly the Copyright Law No. 28 of 2014 and electronic transaction regulations. The agreement covers crucial elements such as license scope, royalty calculations, payment terms, territorial restrictions, and compliance with local technology transfer regulations. It's particularly important for cross-border transactions where foreign software owners license their products to Indonesian entities, requiring careful consideration of Indonesian investment laws and tax regulations.
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1. Parties: Identifies and provides full details of the licensor and licensee, including registration numbers and addresses
2. Background: Establishes the context of the agreement, including ownership of the software and intention to license
3. Definitions: Defines key terms used throughout the agreement, including technical terms, 'Software', 'Intellectual Property Rights', 'Territory', and 'Net Sales'
4. Grant of Rights: Specifies the scope of the license, including territory, exclusivity, and permitted uses of the software
5. Royalty Payments: Details the royalty calculation method, payment frequency, currency, and payment mechanisms
6. Reporting and Audit Rights: Establishes licensee's obligations for sales reporting and licensor's audit rights
7. Intellectual Property Protection: Confirms ownership of IP rights and obligations regarding protection and enforcement
8. Confidentiality: Defines confidential information and parties' obligations regarding its protection
9. Term and Termination: Specifies agreement duration, renewal terms, and grounds for termination
10. Post-Termination Obligations: Outlines obligations and rights of parties after agreement termination
11. Representations and Warranties: States parties' warranties regarding authority, ownership, and software functionality
12. Governing Law and Dispute Resolution: Specifies Indonesian law as governing law and outlines dispute resolution process
13. General Provisions: Includes standard clauses like force majeure, notices, and assignment rights
1. Source Code Escrow: Required when source code access needs to be guaranteed under specific conditions
2. Localization Rights: Needed if the licensee will translate or adapt the software for local market
3. Maintenance and Support: Include if the licensor will provide ongoing technical support and updates
4. Minimum Performance Requirements: Used when setting minimum sales or revenue targets for licensee
5. Sub-licensing Rights: Include if licensee is permitted to sub-license the software
6. Export Control: Required for software with international distribution restrictions
7. Data Protection: Necessary when software processes personal or sensitive data
8. Insurance Requirements: Include when specific insurance coverage is required from either party
1. Schedule A - Software Description: Detailed technical specifications and functionality of the licensed software
2. Schedule B - Royalty Rates: Detailed breakdown of royalty rates, including any volume-based variations
3. Schedule C - Territory Definition: Specific geographical areas or markets covered by the license
4. Schedule D - Reporting Template: Standard format for periodic sales and royalty reports
5. Schedule E - Technical Requirements: Minimum technical specifications for software operation
6. Appendix 1 - Authorized Users: List of authorized users or user categories if license is restricted
7. Appendix 2 - Support Services: Details of any included technical support or maintenance services
8. Appendix 3 - Quality Standards: Required quality standards for software implementation and operation
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