PRC §3810: (a) (1) “Award repayment or program reimbursement agreement,” including a “royalty agreement,” as specified in subdivision (b), means a method used at the discretion of the commission to determine and

(a) (1) “Award repayment or program reimbursement agreement,” including a “royalty agreement,” as specified in subdivision (b), means a method used at the discretion of the commission to determine and establish the terms of replenishment of program funds, including, at a minimum, repayment of the award to provide for further awards under this chapter. The award repayment or program reimbursement agreement may provide that payments be made to the commission when the award recipient, affiliate of the award recipient, or third party receives, through any kind of transaction, an economic benefit from the project, invention, or product developed, made possible, or derived, in whole or in part, as a result of the award. (2) An award repayment or program reimbursement agreement shall specify the method to be used by the commission to determine and establish the terms of repayment and reimbursement of the award. (3) The commission may require due diligence of the award recipient and may take any action that is necessary to bring the project, invention, or product to market. (4) Subject to the confidentiality requirements of Section 2505 of Title 20 of the California Code of Regulations, the commission may require access to financial, sales, and production information, and to other agreements involving transactions of the award recipient, affiliates of the award recipient, and third parties, as necessary, to ascertain the royalties or other payments due the commission. (b) A “royalty agreement” is an award repayment or program reimbursement agreement and is subject to all of the following conditions: (1) The royalty rate shall be determined by the commission and shall not exceed 5 percent of the gross revenue derived from the project, invention, or product. (2) The royalty agreement shall specify the method to be used by the commission to determine and establish the terms of payment of the royalty rate. (3) The commission shall determine the duration of the royalty agreement and may negotiate a collection schedule. (4) The commission, for separate consideration, may negotiate and receive payments to provide for an early termination of the royalty agreement. (c) (1) The commission may require that the intellectual property developed, made possible, or derived, in whole or in part, as a result of the award repayment or program reimbursement agreement, revert to the state upon a default in the terms of the award repayment or program reimbursement agreement or royalty agreement. (2) The commission may require advance notice of any transaction involving intellectual property rights.