At our company, we engage in services around UX and next generation man-machine-interfaces. As consultants and “work-for-hire” service providers, we understand that according to EULA 4-2 we can use UE4 without royalty owed.
Nevertheless, we would like to clarify what scenario would affect our clients, if they choose to use samples / prototypes that have been developed by us using your technology. Within our context, the use will be internally (eg. Data visualization) and not as a dedicated product that will be sold.
Can you please clarify that scenario?
Whether a Product (as defined under the EULA) is royalty-bearing depends on what kind of Product it is (see the royalty exclusion list). But for the purposes of this answer, let’s assume a royalty is owed on a Product. If your work is work-for-hire, which it sounds like it is, there is no royalty on your consulting fees. However, if your client then goes and sells the Product commercially, a royalty is owed. As you are our licensee, rather than your client, you are the one that owes the royalty. However, your client can subsequently become a licensee and then they can have the royalty obligation. If I were in such a position, I would want my client to be contractually obligated to take a UE4 license in the event that they commercialize so that they bear the royalty obligation.
Because you state that a royalty is owed on a commercially sold product, I would like to specify our service:
Our customers are focused on the technical industry and thus they produce no entertainment software.
One of the services we render is that we create product visualizations which support them to do marketing of their products and services. Another service is that we provide visualization (or consulting services / work-for-hire) that might be used or integrated as components in user interface of other software or the terminals of machine/hardware products.
So we provide our customers interactive visualizations (no games or commercially available solutions) which can be used for marketing and trade fairs, or as part for integration into another software product or machine/hardware product (which is being developed by the customer).
Are such use cases covered by the royalty exclusion list?
Royalty isn’t limited to entertainment products. The question is whether the Product (again as defined under the EULA) has direct revenue and whether such revenue falls into an exclusion. Internal only use or marketing only use has no revenue, so no royalty. You also mention “integration into another . . . product” - that makes the new combined product a Product under the EULA so royalty could apply.