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Eden Bioscience / CORNELL RESEARCH FOUNDATION - Exclusive License Agreement
EXHIBIT 10.1
EXCLUSIVE LICENSE AGREEMENT
THIS AGREEMENT, effective as of the first day of May 1995 (hereinafter "Effective Date"), by and between CORNELL RESEARCH FOUNDATION, INC., having offices at Cornell Business & Technology Park, 20 Thornwood Drive, Suite 105, Ithaca, New York 14850, hereinafter referred to as "FOUNDATION" and EDEN BIOSCIENCE CORPORATION, having offices at 5795 N.E. Minder, Poulsbo, Washington 98370, hereinafter referred to as "LICENSEE".
W I T N E S S E T H T H A T:
WHEREAS, United States Patent Application No. 08/200,724, entitled "Elicitors of the Hypersensitive Response in Plants" (CRF D-1172), was filed in the U.S. Patent & Trademark Office on February 2, 1994, a copy of which is appended as Exhibit A and Patent Application No. 08/200,724 is a continuation of U.S. Patent Application No. 07/907,935 filed on 1 September 1992 and the foreign equivalent PCT/US93/06243 was filed on 30 June 1993 covering all EPC countries and Japan; and
WHEREAS, United States Patent Application No. 08/062,024, entitled "Pseudomonas Syringae pv. syringae hrpz Gene (CRF D-1425), was filed in the U.S. Patent & Trademark Office on 17 May 1993, a copy of which is appended as Exhibit B and the foreign equivalent PCT/US94/05014 was filed on 5 May 1994 covering all EPC countries and Japan; and
WHEREAS, FOUNDATION intends to file a United States Patent Application entitled "Harpin-Induced Systemic Acquired Resistance (SAR) to Plant Pathogens," now Invention Disclosure CRF D-1654, a copy of which is appended as Exhibit C, and FOUNDATION intends to file foreign equivalents, where appropriate, of said Invention Disclosure; and
WHEREAS, FOUNDATION intends to file a United States Patent Application entitled "Erwina chrysanthemi Elicitor of the Hypersensitive Response in Plants," now Invention Disclosure CRF D-1732, a copy of which is appended as Exhibit D, and FOUNDATION intends to file foreign equivalents, where appropriate, of said Invention Disclosure; and
WHEREAS, the inventions disclosed and claimed in Exhibits A, B, C and D are, or will be assigned to FOUNDATION and FOUNDATION is a wholly owned subsidiary corporation of Cornell University and holds the ownership interests of patents issued on inventions made by Cornell University's staff and administers licenses in a manner consistent with the patent policy of Cornell University; and
WHEREAS, FOUNDATION represents that it is, or will be assignee of the above-identified patent applications and any patents issuing thereon and has the right to grant licenses under said patent applications and patents issuing thereon; and
WHEREAS, the work leading to the inventions disclosed and to be claimed in Exhibits A, B, C and D were supported in part by an agency of the U.S. Government,
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FOUNDATION is obligated to comply with the U.S. Office of Management & Budgets Circular No. A-124, or 37 CFR Part 401; and
WHEREAS, Drs. Steven Beer, Alan Collmer and their colleagues at Cornell University have developed proprietary biological materials and processes relating to the field of plant disease and some of these materials and processes are or will be claimed and covered in said patent applications of Exhibits A, B, C and D and other such materials and processes are not claimed in said patent applications but are proprietary to FOUNDATION; and
WHEREAS, LICENSEE is desirous of securing a license under the discoveries and inventions embodied in said patent applications and patents issuing thereon as well as the discoveries and inventions embodied in said related proprietary biological processes and materials to make, have made, use and sell Licensed Products in the United States and throughout the world; and
WHEREAS, FOUNDATION is willing to grant a license in said patent applications and any patents issuing thereon as well as the discoveries and inventions embodied in said related proprietary biological processes and materials to LICENSEE upon the terms and conditions hereinafter set forth; and
NOW, THEREFORE, in consideration of the covenants and obligations hereinafter set forth, the parties hereto hereby agree as follows:
I. DEFINITIONS
The following definitions will apply throughout this agreement:
1. Licensed Patent Application shall mean U.S. Patent Application Serial No. 08/200,724 attached as Exhibit A and any continuation, continuation-in-part, or divisional applications thereof as well as foreign counterparts thereof and U.S. Patent Application Serial No. 08/062,024 attached as Exhibit B and any continuation, continuation-in-part, or divisional applications thereof as well as foreign counterparts thereof and any U.S. Patent Application based on Invention Disclosure CRF D-1654 attached as Exhibit C and any continuation, continuation-in-part, or divisional applications thereof as well as foreign counterparts thereof and any U.S. Patent Application based on Invention Disclosure CRF D-1732 attached as Exhibit D and any continuation, continuation-in-part, or divisional applications thereof as well as foreign counterparts thereof.
2. Licensed Patent shall mean any U.S. Patents issuing from a Licensed Patent Application, and all reissues thereof as well as foreign counterparts thereof.
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3. Licensed Biological Material shall mean that biological material including genes, proteins and peptide fragments, expression systems, cells and antibodies developed in the Cornell University Laboratories of Drs. Steven Beer, Alan Collmer and their colleagues and which is directly related to the inventions described in Licensed Patents or Licensed Patent Applications and which is listed and described in Exhibit E or added to Exhibit E at a later time by written mutual agreement of the parties.
FOUNDATION and LICENSEE acknowledge that, to the best of their knowledge, said list of Exhibit E is complete.
4. Licensed Products shall mean any product or use claimed in a Licensed Patent Application or Licensed Patent or any product or use which incorporates or otherwise utilizes Licensed Biological Material.
5. License Year shall mean each twelve (12) month period beginning on the Effective Date of this Agreement first written above and thereafter on the anniversary date thereof.
6. LICENSEE shall mean the above named company and any of its affiliates in which it owns or controls at least 50% of the voting stock.
7. Net Sales Price shall mean [*].
II. GRANT
Subject only to the rights of and obligations to the U.S. Government as set forth in U.S. Office of Management & Budget Circular A-124 or 37 CFR Part 401;
The FOUNDATION hereby grants to the LICENSEE for the term set forth below and under the royalty basis set forth below, an exclusive license to the Licensed Patent Applications, Licensed Patents and Licensed Biological Materials to make, have made, use and sell Licensed Products in the United States and throughout the world. The term "exclusive license" as used hereinabove shall mean that FOUNDATION shall not issue a license to another, within the period of exclusivity set forth hereinafter or any agreed upon extension thereof. FOUNDATION shall not make, have made, use or sell Licensed Products. Cornell University researchers shall
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retain the royalty-free right to use Licensed Patent Applications, Licensed Patents and Licensed Biological Materials for internal research purposes and such use shall not prohibit such researchers from producing inventions and, if such inventions are made solely by said Cornell University researchers, such inventions shall be the property of FOUNDATION. If such inventions are made jointly by said Cornell University researchers and employees of LICENSEE, such inventions shall be the joint property of FOUNDATION and LICENSEE.
III. TO HAVE MADE
The right of LICENSEE to make Licensed Products includes the right to have made by contract with third parties within a country where LICENSEE is licensed and patent protection for Licensed Products exists or is pending. Such contractual arrangements with third parties shall be subject to and conditioned upon appropriate supervision and quality assurance and control of the third party by LICENSEE and the third party shall respect all rights of FOUNDATION and to supply all production of Licensed Products exclusively to LICENSEE or its designee(s).
IV. PAYMENTS MADE IN CONSIDERATION OF THE EXECUTION OF THIS LICENSE
AGREEMENT
FOUNDATION hereby acknowledges a payment, due upon approval of this Agreement by the Board of Directors of FOUNDATION (or at least by the Executive Committee of that Board), of four hundred thousand (400,000) equity shares of common stock in LICENSEE which amount equals seven and fourteen hundredths percent (7.14%) of LICENSEE'S total issued stock as of Effective Date, made by LICENSEE as a consideration for entering into this Agreement, which sum will not be considered as an advance payment on royalties due hereunder. It is understood by the parties that said equity shares in LICENSEE held by FOUNDATION shall be non-voting and FOUNDATION shall take no management role in LICENSEE.
If said approval by the Board of Directors of FOUNDATION is not obtained within six (6) months of the Effective Date, FOUNDATION and LICENSEE agree to renegotiate alternative financial terms as consideration for entering into this Agreement.
The parties acknowledge that LICENSEE may, upon termination of this Agreement, cancel said equity shares according to the following schedule:
1) Upon termination of this Agreement at any time up to [*] from
the Effective Date, LICENSEE may cancel up to [*] of the total
equity
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shares which were issued to FOUNDATION and approved by
FOUNDATION'S Board of Directors.
2) Upon termination of this Agreement at any time from [*] from
the Effective Date up to [*], LICENSEE may cancel up to [*]
of the total equity shares which were issued to FOUNDATION and
approved by FOUNDATION'S Board of Directors.
3) Upon termination of this Agreement at any time from [*] until
[*] LICENSEE may cancel up to [*] of the total equity shares
which were issued to FOUNDATION and approved by FOUNDATION's
Board of Directors.
4) Upon termination of this Agreement at any time from [*] to
[*], LICENSEE may cancel up to [*] of the total equity
shares which were issued to FOUNDATION and approved by
FOUNDATION'S Board of Directors.
5) Upon termination of this Agreement at any time from [*] to
[*], LICENSEE may cancel up to [*] of the total equity
shares which were issued to FOUNDATION and approved by
FOUNDATION'S Board of Directors.
6) Upon termination of this Agreement at any time after [*]
LICENSEE may not cancel any of the total equity shares which
were issued to FOUNDATION and approved by FOUNDATION'S Board of
Directors.
As additional consideration, LICENSEE will fund research activity in the Cornell University laboratories of Dr. Steven Beer and his colleagues at a level not less than [*] in License Year 1 and [*] in each of License Year 2 and License Year 3. Said funding shall be contingent upon a mutually agreed workplan and budget for said research activity and such amounts are inclusive of all costs including direct and indirect costs.
Any inventions made using the research funding, described above, provided to Dr. Beer and his colleagues by LICENSEE which are dominated by the claims of Licensed Patent Applications or Licensed Patents shall, to the extent possible considering FOUNDATION'S obligations to third parties, be subject to the terms and conditions of this Agreement and shall be included herein by letter amendment to this Agreement.
Any inventions made using the research funding provided to Dr. Beer by LICENSEE which are not dominated by the claims of Licensed Patent Applications or
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Licensed Patents shall not be subject to the terms and conditions of this Agreement. FOUNDATION shall provide LICENSEE the first opportunity to negotiate to obtain an exclusive license in such inventions and will not offer any third party any license having more favorable terms and conditions unless those terms and conditions have first been offered to and refused by LICENSEE.
V. FOREIGN PATENTS AND PAYMENT OF COSTS
As the opportunity to continue prosecution of foreign counterpart applications of United States Patent Applications No. 08/200,724 and No. 08/062,024 and to file foreign counterpart applications on the U.S. patent applications to be filed on Invention Disclosures CRF D-1654 and CRF D-1732 exists, LICENSEE may designate foreign countries where counterpart applications shall be filed. Title to such foreign patent applications shall be in FOUNDATION. LICENSEE agrees to pay for all expenses incurred in the preparation, filing, prosecution, renewal and continuation of Licensed Patents and Licensed Patent Applications in said designated countries including all taxes, official fees and attorney's fees, as well as a [*] administrative fee assessed by FOUNDATION. Notwithstanding the foregoing, LICENSEE may elect in writing to be released from its license in any of the Licensed Patents and Applications in foreign countries at any time after initial filing costs have been paid, in which event it shall thereafter have no obligation to reimburse FOUNDATION for any future expenses relating to such patent or patent application. Upon approval of this Agreement by the FOUNDATION's Board of Directors, LICENSEE shall reimburse FOUNDATION for all direct and documentable foreign patent costs incurred to date, plus said [*] administrative fee assessed by FOUNDATION.
VI. PAYMENT OF U.S. PATENT COSTS
Where renewal fees are due on a Licensed Patent in the United States and LICENSEE remains exclusively licensed or is the sole nonexclusive licensee, LICENSEE agrees to reimburse FOUNDATION for the costs of said renewal within thirty (30) days of Notice thereof to LICENSEE by FOUNDATION.
Where Licensed Patent Applications are pending in the United States LICENSEE agrees to pay all direct and documentable prosecution costs for such Licensed Patent Applications at least through an appeal to the U.S. Patents & Trademark Office Board of Appeals plus a [*] administrative fee assessed by FOUNDATION.
Notwithstanding the foregoing, LICENSEE may elect in writing to be released from its license in any of the Licensed Patents and Applications in the United States at any time after initial filing costs have been paid, in which event it shall thereafter have
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no obligation to reimburse FOUNDATION for any future expenses relating to such patent or patent application.
Upon approval of this Agreement by FOUNDATION's Board of Directors, LICENSEE shall reimburse FOUNDATION for all direct and documentable costs related to Licensed U.S. Patent Applications incurred to date, plus a [*] administrative fee assessed by FOUNDATION; such amount, including equivalent Foreign Patent costs described hereinabove is expected to approximate [*] as of the Effective Date.
VII. PATENT PROSECUTION MANAGEMENT
The parties acknowledge the importance of cooperating on the ongoing management of prosecution of Licensed Patent Applications. FOUNDATION agrees to utilize patent counsel selected by FOUNDATION and reasonably approved by LICENSEE for the purpose of filing and prosecuting Licensed Patent Applications. FOUNDATION further agrees to consult with LICENSEE in a timely manner concerning (i) the scope and content of Licensed Patent Applications (ii) the strategy and tactics of patent prosecution, (iii) content of proposed responses to official actions of the United States Patent and Trademark Office and foreign patent offices during prosecution of such patent applications and (iv) cost of patent prosecution. For purposes of this paragraph, "timely shall mean whenever possible, sufficiently in advance of any patent prosecution decision by the FOUNDATION so as to allow LICENSEE to meaningfully review such decision or written response and provide comments to FOUNDATION in advance of such decision or deadline so that LICENSEE's comments can be considered and incorporated into FOUNDATION's decision or written response.
Additionally, it is FOUNDATION's intent to transfer responsibility for management of patent prosecution and maintenance activity on Licensed Patent Applications and Licensed Patents to LICENSEE two (2) years from the Effective Date. Such transfer shall be contingent upon LICENSEE's agreement to utilize patent counsel selected by LICENSEE and reasonably approved by FOUNDATION for the purpose of filing and prosecuting Licensed Patent Applications and maintaining Licensed Patents. Upon such transfer, LICENSEE shall further agree to consult with FOUNDATION in a timely manner concerning (i) the scope and content of Licensed Patent Applications (ii) the strategy and tactics of patent prosecution and (iii) content of proposed responses to official actions of the United States Patent and Trademark Office and foreign patent offices during prosecution of such patent applications. For purposes of this paragraph, "timely" shall mean sufficiently in advance of any patent prosecution decision by the LICENSEE so as to allow FOUNDATION to meaningfully review such decision or written response and provide comments to
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LICENSEE in advance of such decision or deadline so that FOUNDATION's comments can be considered and incorporated into LICENSEE's decision or written response. Such transfer shall also be contingent upon LICENSEE's demonstration to FOUNDATION that it can and will comply with the following:
a) all documents related to the prosecution of Licensed Patent
Applications shall show Cornell Research Foundation as the
Assignee of record;
b) LICENSEE shall ensure that FOUNDATION be provided copies of all
correspondence and documents related to said patent prosecution
and maintenance management;
c) LICENSEE shall ensure that all maintenance fees on all Licensed
Patents be paid and that in no event shall Licensed Patents be
allowed to lapse for failure to pay such fees without the
concurrence of FOUNDATION on such lapse.
Although it is FOUNDATION's intention to allow LICENSEE to continue said responsibility for patent prosecution and maintenance for the duration of this exclusive license Agreement, FOUNDATION reserves the right to reassume such responsibility if it can show that LICENSEE's efforts are insufficient in carrying out such activities.
Should the exclusive license granted hereunder to LICENSEE become non-exclusive, FOUNDATION shall have the responsibility for filing, prosecuting and maintaining all Licensed Patent Applications and Licensed Patents at its own expense.
VIII. ROYALTIES AND MINIMUM ROYALTIES TO BE PAID DURING THE LICENSE AGREEMENT
LICENSEE will pay to the FOUNDATION a royalty of [*] of the Net Sales Price of Licensed Products made, used or sold by LICENSEE in the United States and throughout the world.
LICENSEE'S obligation to pay the [*] royalty rate upon each such product shall cease in a particular country:
(i) if the applicable claims in the Licensed Patent in any
particular country are held invalid by an unappealed or
unappealable decision of a court of competent
jurisdiction in that particular country, or
(ii) upon expiration of the last said Licensed Patent; or
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(iii) if FOUNDATION abandons its patent solicitation efforts
for all Licensed Patent Applications and no Licensed
Patent is in force.
Provided however, should no Licensed Patent issue and all Licensed Patent Applications are abandoned but LICENSEE utilizes a Licensed Biological Material to make, use or sell Licensed Products, LICENSEE will pay to FOUNDATION a royalty of [*] of the Net Sales Price of Licensed Products made, used or sold by LICENSEE in the United States and throughout the world.
Beginning with the fifth License Year, each License Year LICENSEE shall pay FOUNDATION a minimum annual royalty payment according to the following schedule:
[*]
Such payments shall be made quarterly throughout the License Year and such moneys will be considered as a credit for the royalties due for that License Year under this Agreement and the royalty reports should reflect the use of such credit. Such provision is to be construed as an annual minimum royalty payment requirement and none of the minimum royalty payments are refundable or applicable to succeeding License Years.
In License Years 5, 6 and 7, LICENSEE may credit the direct and documentable costs it has expended on research and development of transgenic organism applications of Licensed Patent Applications and Licensed Patents against up to [*] of minimum annual royalties owed for those License Years.
In the event LICENSEE is required to pay royalties to a third party in order to make, use or sell Licensed Products, FOUNDATION shall review the minimum annual royalty payment obligation described hereinabove and agrees to negotiate in good faith with LICENSEE to make adjustments in such payment obligations.
In any event, sales from non-transgenic plant applications must constitute at least [*] of the total minimum annual royalty payment obligation.
In the event that this Agreement is converted to a field-of-use exclusive license, non-exclusive license or semi-exclusive license in the field of transgenic organisms according to the "TERM" (IX) and "DUE DILIGENCE" (X) Sections hereinbelow, the minimum annual royalty payments described hereinabove shall be reduced by [*].
It is acknowledged and agreed that the minimum annual royalty payment shall be allocated between the field of non-transgenic applications and the field of transgenic organisms in the ratio of [*] of the minimum annual royalty payment is
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allocated to the field of non-transgenic applications and [*] is allocated to the field of transgenic organisms) and the sole remedy of FOUNDATION for nonpayment of either portion of such minimum annual royalty payment shall be (after notice of such nonpayment and opportunity to cure) termination of the license rights for the field of use to which the portion of the payment applies.
IX. FAVORED NATIONS
If FOUNDATION grants a non-exclusive license to others under a Licensed Patent Application or Licensed Patent, such licenses will not be granted at a royalty rate which is more favorable than the rate herein granted to LICENSEE unless such more favorable rates are extended to LICENSEE. This Favored Nations clause does not apply to license agreements which are in settlement of patent litigation.
X. ACCOUNTING AND PAYMENT SCHEDULE
Payment, reporting and financial accounting shall be on a quarterly basis and LICENSEE will deliver to the FOUNDATION within ninety (90) days after the end of each quarter of the License Year a report in writing setting forth sales of Licensed Products (including a negative report if appropriate) and will accompany such report with an appropriate payment of royalty or minimum royalty due for such period. LICENSEE will keep accurate records, certified by it, showing the information by which LICENSEE arrived at a royalty determination and will permit a person appointed by the FOUNDATION and acceptable to LICENSEE to make such inspection of said records as may be necessary to verify royalty reports made by LICENSEE.
Conversion from foreign currencies, if any, shall be based upon the conversion rate on the date that payment in due.
Payments which are delayed beyond the sixty (60) days after the end of the quarter in which they become due shall be subject to a [*] per annum interest charge.
XI. TERM
The aforesaid exclusive license under Licensed Patent Applications, Licensed Patents and Licensed Biological Material shall last for a period ending on the expiration date of the last to expire Licensed Patent or, should only Licensed Biological Materials be licensed, then for a period of fifteen (15) years from the date of this Agreement.
By mutual agreement of FOUNDATION and LICENSEE, this Agreement may be converted into a field-of-use exclusive license. Said field-of-use exclusive license
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would only rescind LICENSEE's rights to make, use and sell Licensed Products in the field of transgenic organisms.
XII. DUTY OF DILIGENCE
LICENSEE shall exercise reasonable due diligence to affect the introduction of Licensed Products into the commercial market as soon as practical. LICENSEE agrees to develop and exploit Licensed Products with reasonable diligence by manufacture and sale of Licensed Products for the duration of the term of this Agreement. LICENSEE further agrees to maintain quality control over Licensed Products and generally attend to proper, safe, fair, lawful and reasonable development and exploitation of the market for Licensed Products. Failure of LICENSEE to materially comply with the provisions of this Paragraph shall be considered a material breach of this Agreement.
LICENSEE's reasonable due diligence obligations shall include the expressed pursuit to affect introduction of Licensed Products into the field of transgenic organisms. In order for LICENSEE to retain the exclusive license in the field of transgenic organisms, LICENSEE must accomplish one of the following within [*] of the Effective Date:
[*]
[*]
[*]
In the event LICENSEE fails to accomplish at least one of the alternatives described above, FOUNDATION may, at its sole discretion, convert this Agreement to a field-of-use exclusive license which shall wholly rescind LICENSEE's rights to make, use and sell Licensed Products in the field of transgenic organisms. Alternatively, in the event LICENSEE fails to accomplish at least one of the alternatives described above, FOUNDATION may, at its sole discretion, convert this Agreement to a non-exclusive or semi-exclusive license in the field of transgenic organisms. In the event of such conversion from exclusive to said field-of-use exclusive or non-exclusive or semi-exclusive license, FOUNDATION shall be free to license others in the field of transgenic organisms.
XIII. INFRINGEMENT OF LICENSED PATENT RIGHTS BY THIRD PARTIES
In the event that any infringement of a Licensed Patent shall come to the attention of the FOUNDATION or LICENSEE, then FOUNDATION and LICENSEE
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12 shall duly inform each other. FOUNDATION, shall, in its sole discretion determine whether or not to prosecute a patent infringement action. If FOUNDATION determines and elects not to prosecute a patent infringement action, then LICENSEE may cause legal proceedings against the alleged infringer at its own expense and in the name of FOUNDATION, if necessary, if there is a showing of substantial likelihood of infringement and that no other action for infringement is pending at the time so that only one such lawsuit is pending at any time.
LICENSEE may defray the expenses of any such lawsuit to the extent of [*] of royalties payable by LICENSEE during the course of and directly related to such legal proceedings. Out of any damages or awards recovered by LICENSEE in such action conducted by LICENSEE, LICENSEE will first recover its expenses for conducting said litigation beyond the costs defrayed by withheld royalties. FOUNDATION will then recover all royalties up to the [*] of royalties payable by LICENSEE to FOUNDATION and withheld by LICENSEE to defray costs of such lawsuit. FOUNDATION will also recover any expenses which it incurred on behalf of the litigation. Any amount remaining belongs to LICENSEE, if LICENSEE conducts the litigation, provided that on such amount LICENSEE shall pay FOUNDATION a royalty as provided for in VIII above. If FOUNDATION conducts the litigation, at its own expense, out of any amount recovered, FOUNDATION shall first recover any expenses which it incurred on behalf of the litigation, next LICENSEE shall recover direct and documentable losses including opportunity costs caused by said infringement and any amount remaining shall belong to FOUNDATION.
In any proceedings, FOUNDATION shall be entitled to employ, at its own expense, counsel and control the course of litigation if, in FOUNDATION's sole discretion, LICENSEE's defense of patent rights is insufficient, or if LICENSEE fails to carry on vigorous prosecution of said patent rights.
In the event LICENSEE seeks, with justifiable cause, to prosecute more than one lawsuit at a time, FOUNDATION will not unreasonably withhold permission where such actions are conducted entirely at LICENSEE's expense including reimbursement of FOUNDATION's expenses incurred on behalf of such action.
In any action brought by LICENSEE, LICENSEE undertakes to indemnify for and hold FOUNDATION harmless from any damages, costs or expenses incurred by reason of such litigation.
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XIV. ASSIGNMENT
The rights and obligations of the LICENSEE are not assignable but with one exception which is that those rights and obligations may be assigned in connection with the sale of all or substantially all of the assets of LICENSEE to a third party.
XV. SUBLICENSING
LICENSEE may grant sublicenses under Licensed Patent Applications, Licensed Patents and Licensed Biological Material with prior approval of FOUNDATION, which approval shall not be withheld unless FOUNDATION can show a substantial likelihood that such sublicensee would not perform its obligations under sublicense agreement or that the sublicensee is an organization of a character such that FOUNDATION and Cornell University may encounter a substantial risk of substantial, long term and public criticism as a public institution for providing its proprietary technology to such an organization, e.g. more than internal student and/or faculty protestors and likely to cause long term problems. Upon written notification of FOUNDATION by LICENSEE of its intent to sublicense, FOUNDATION shall have thirty (30) days within which to notify LICENSEE of FOUNDATION's disapproval of such sublicense and to provide the reasons of such disapproval, after which such approval shall be deemed given. LICENSEE agrees that said sublicensees are obligated in writing to all terms and conditions of this Agreement beneficial to or protective of FOUNDATION and that LICENSEE shall guarantee compliance of the sublicense on all such provisions.
Sublicense royalty income may be credited against LICENSEE's minimum annual royalty payment obligations described in "ROYALTIES . . . Section VII, hereinabove.
XVI. TERMINATION
In the event FOUNDATION finds LICENSEE to be in substantial noncompliance with any of the material terms and conditions of this Agreement, FOUNDATION shall so notify LICENSEE in writing. LICENSEE shall have six months after receipt of such notification within which to remedy such noncompliance to the satisfaction of FOUNDATION. If LICENSEE does not remedy a material noncompliance within said six month period, FOUNDATION may terminate this License Agreement. Upon giving such notice, LICENSEE shall have no obligations for minimum royalties, patent expenses or research funding beyond the termination date.
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LICENSEE may terminate this License Agreement by giving notice of its intentions to do so six (6) months before termination.
Upon termination of this Agreement, any sublicensee that is not then in material breach shall have its sublicense converted to a direct license from FOUNDATION under the terms and conditions of this Agreement, as further limited and restricted by the terms of the original sublicense.
XVII. ARBITRATION AND JURISDICTION
All disputes over the meaning and interpretation of this Agreement shall be resolved by conciliation and mediation and if mediation is unsuccessful then disputes shall be finally settled by an Arbitrator selected by FOUNDATION and LICENSEE. If FOUNDATION and LICENSEE cannot agree on an Arbitrator, then disputes shall be resolved by an Arbitration Panel comprising one arbitrator appointed by FOUNDATION, one arbitrator appointed by LICENSEE, and a Chairman of the Arbitration Panel appointed by the first two arbitrators. Any such arbitration proceeding shall be conducted in accordance with generally accepted arbitration rules; shall be held in the State of New York, unless otherwise agreed by the parties; and judgment upon the arbitration award may be entered in any court having jurisdiction.
In order to initiate procedures for dispute resolution by conciliation, mediation and arbitration either party may give written notice to the other of intention to resolve a dispute, and absent satisfactory resolution, then to arbitrate. Such notice shall contain a statement setting forth the nature of the dispute and the resolution sought. If, within thirty (30) days of such notice a resolution by conciliation between the parties themselves or by mediation has not been achieved to the satisfaction of both parties, and if within sixty (60) days from said written notice an Arbitrator or Arbitration Panel has not been appointed with an arbitration schedule satisfactory to both parties, then either party may proceed with judicial remedies.
The FOUNDATION reserves the right and power to proceed with direct judicial remedies against LICENSEE without conciliation, mediation or arbitration for breach of the royalty payment and sales reporting provisions of this Agreement after giving written notice of such breach to LICENSEE followed by an opportunity period of thirty (30) days in which to cure such breach. In collecting overdue royalty payments and securing compliance with reporting obligations, FOUNDATION may use all judicial remedies available.
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