The $26 million settlement between Universal City Studios and a class of Hollywood filmmakers has been tentatively approved. The filmmakers believed they had been underpaid based on miscalculated royalties associated with profits from home-video sales.
Unfortunately underpayment of royalties is all too common and many fail to properly manage their agreements. One critical tool against underpayment is a solid audit provision. Whether one is entitled to profit participation, royalties, or any other ongoing stream of payments involving any type of intellectual property, the right to audit and an upfront agreement on what the audit will entail can avoid the need for costly litigation to obtain that to which one is rightfully entitled. This related article contains suggestions for crafting your audit provision.