Licensing
What are minimum royalties and milestone payments?
The short answer
Minimum royalties are guaranteed annual payments regardless of sales; milestones are payments triggered by events like regulatory approval or first commercial sale. They matter because the dominant structure is percentage-of-sales — 93% of royalty deals — which pays you nothing if the licensee never actually sells anything.
The full picture
Without minimums, a licensee can sit on your patent for years — whether from changed priorities, internal politics, or quiet competitive burial — and owe you nothing. A minimum royalty clause converts shelf time into either real payments or a trigger to terminate and take your patent elsewhere.
Milestones solve the development-gap problem: in pharma, medtech, and industrial deals, years can pass between signing and first sale. Payments at prototype, approval, and launch keep the deal alive for you during that desert. Structuring these protections is standard practice for experienced licensors — and one of the first things we check when owners bring us a draft term sheet.
Where does your patent stand?
The Beyond the Patent Commercialization Score answers that — a professional, factor-by-factor read on your patent's licensing, sale, build, and partner potential.
Related questions
General information for patent owners — not legal advice. Read the disclaimer.