(1) Any royalty derived from sources within one of the
territories by a resident of the other territory who is subject to
tax in that other territory in respect thereof and is not engaged
in trade or business in the first-mentioned territory through a
permanent establishment situated therein, shall be exempt from tax
in that first-mentioned territory; but no exemption shall be
allowed under this paragraph in respect of so much of any royalty
as exceeds an amount which represents a fair and reasonable
consideration for the rights for which the royalty is paid.
(2) In this paragraph the term `royalty` means any royalty or
other amount paid as consideration for the use of, or for the
privilege of using, any copyright, patent, design, secret process
or formula, trade-mark, or other like property, but does not
include a royalty or other amount paid in respect of the operation
of a mine or quarry or of other extraction of natural
resources.
