If a Royalty Payment Provision is read as a condition to the grant of copyright license and there is nonpayment, the contract will be void and the licensor will be entitled to a statutory relief (for copyright infringement).
If a Royalty Payment Provision is read as a covenant and there is nonpayment, it will be considered a breach of contract, rather than infringement of copyright, entitling the licensee only to a contractual relief. (*statutory relief is usually significantly higher than the contractual relief.)
The courts generally considers a promise to pay royalties in a license agreement as covenant, therefore, to make the promise a condition, it should be clearly expressed as a condition. (ex. “Copyright license is ‘conditional upon’ successful payment of royalties.”)
THEREFORE, as a licensor, to secure a higher relief in case there is a nonpayment by the licensee, the Royalty Payment Provision should be drafted unambiguously to make the payment a condition for the copyright license.
Law in Style. 