• Royalties are payments made to creators or owners of intellectual property (IP) for the right to use their work. They represent financial compensation for, payment of, the use or distribution of IP, such as books, music, images, inventions, and software. Royalty payments are defined in licensing agreements and should benefit both the licensor and the licensee.

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• Reasonable royalties refer to the fair and appropriate compensation, or payment for, that an IP or IPR holder or trade secret owner is entitled to receive when their intellectual property is infringed upon or misappropriated. These royalties were created to compensate IP or IPR holders who could not prove actual damages through lost profits or otherwise.