Royalty dispute

A royalty dispute is a disagreement over royalties owed under a licence or royalty agreement, such as how they are calculated, whether they were reported and paid correctly, whether audit rights were honoured, or whether the licence still applies. In BC it is usually a breach of contract claim, sometimes combined with a question about the validity or ownership of the underlying intellectual property or resource interest.

How BC law treats it

A royalty dispute is normally a contract claim governed by provincial law and heard in the Supreme Court of British Columbia, or by arbitration under the Arbitration Act, SBC 2020, c 2 if the licence so provides. Federal intellectual property statutes govern validity and infringement, and the Federal Court shares jurisdiction over those questions.

What it means for your business

Your royalty clause, reporting and audit provisions and dispute resolution clause will largely decide how a disagreement is resolved and where.

Risks and common mistakes

Waiting too long can be costly: most claims for unpaid royalties are subject to the two year basic limitation period under the Limitation Act, SBC 2012, c 13, running from when the claim is discovered.

For the full explanation, see our entry on Royalty agreement.

General information about British Columbia and Canadian law, current to October 2026. It is not legal advice.