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Sectors: Computer Hardware
Governing Law: California , View California State Laws
Effective Date: July 01, 1997
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This Intercompany Intellectual Property License Agreement (the "Agreement") is by and between Immersion Corporation, a California corporation, with an office at 2158 Paragon Drive, San Jose, California (hereinafter "Immersion") and MicroScribe, LLC, a California limited liability company, with offices in San Jose, California (hereinafter "Licensor"), is entered into effective as of July 1, 1997 (the "Effective Date").

A. Licensor is the owner of certain intellectual property rights related to 3D digitizing.

B. The parties desire that Licensor grant a license to Immersion for the MicroScribe Technology under the MicroScribe Intellectual Property Rights to enable Immersion to manufacture, market and sell 3D digitizing technology products, on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the promises and agreements set forth below and the other consideration cited herein, the parties agree as follows.


In this Agreement the following words and expressions shall have the following meanings:

1.1 AFFILIATES means any corporation or business entity which is controlled by, controls, or is under common control of a party. For this purpose, the meaning of the word "control" shall include, without limitation, direct or indirect ownership of more than fifty percent (50%) of the voting shares of interest of such corporation or business entity.

1.2 MICROSCRIBE INTELLECTUAL PROPERTY RIGHTS means the patents, copyrights, trademarks, trade secrets, know-how, mask work rights and all other intellectual property rights related to the MicroScribe Technology, including without limitation the issued patents and patent applications described in Exhibit A ("MicroScribe Intellectual Property"), and any continuations, continuations in-part, divisional applications, revisions and/or re-examinations based on the foregoing.

1.3 MICROSCRIBE TECHNOLOGY means certain three dimensional ("3D") digitizing technology, including but not limited to, a mechanical digitizing arm used to input three dimensional data into a computer, and related digitizing software applications (including InScribe and Vertisketch for Lightwave) and digitizing software drivers, in object code and source code form, which technology is currently used commercially in a product line sold under the MicroScribe trademark as such product is further described in Exhibit B ("MicroScribe Technology").

1.4 NET RECEIPTS means the gross receipts received by Immersion upon any sales of Royalty Bearing Products to unaffiliated third parties, less any actual returns and/or credits. Net Receipts shall not include freight, insurance and taxes. No other costs incurred in the manufacture, sale, distribution, or exploitation of Royalty Bearing Products shall be deducted from gross receipts in the calculation of Net Receipts. If Royalty Bearing Products are bundled with other items sold by Immersion and are not invoiced separately, royalties will be paid based on Immersion's then-current average sales price for each such Royalty Bearing Product when sold as a separate item (averaged for the applicable Quarter in which the Net Receipts are received by Immersion for the country in which the sale was made) in like quantities in arms length transactions to unrelated third parties.

1.5 ROYALTY BEARING PRODUCT means a 3D digitizing technology product which either incorporates or utilizes the MicroScribe Technology and/or would otherwise infringe the MicroScribe Design Patent [****] without a license.


2.1 DELIVERY. Licensor will deliver the MicroScribe Technology within five (5) days of the Effective Date of this Agreement.

2.2 GRANT OF LICENSE. Subject to the terms of this Agreement, Licensor grants to Immersion a worldwide, nonexclusive license under any MicroScribe Intellectual Property Rights owned or licensable by Licensor, to use, reproduce, modify, and create derivative works based upon the MicroScribe Technology in order to develop, use, make, and have made 3D digitizing technology products, and to sell, offer to sell, lease, license, import, demonstrate, perform, display, market and distribute such 3D digitizing technology products, with the further right to sublicense such rights through multiple tiers of sublicenses.

2.3 TRADEMARK LICENSE. Licensor hereby grants to Immersion a nonexclusive, worldwide license, to use in connection with marketing Royalty Bearing Products, the trademark(s) used by Licensor ("Marks") to identify the MicroScribe Technology and Immersion agrees to use such Marks on and in connection with the Royalty Bearing Products. Immersion acknowledges that all use of the Marks will inure to the benefit of Licensor. At Licensor's reasonable request, Immersion shall provide Licensor with samples of Immersion's use of Licensor's trademarks. Immersion agrees to abide by Licensor's reasonable written trademark policies as issued and provided to Immersion from time to time. In any case where the Marks are not used in compliance with Licensor's trademark policies and such use has been approved in writing by Licensor, upon receipt of written notice from Licensor, Immersion will promptly correct the non-compliance and submit samples of compliant use to Licensor for approval.


3.1 ROYALTY. Immersion shall pay Licensor a royalty based on a percentage of the Net Receipts for each Royalty Bearing Product sold by Immersion to unrelated third parties in arms

* Certain information on this page has been omitted and filed separately with

the Commission. Confidential treatment has been requested with respect to the

omitted portions.

length transactions, in accordance with the royalty schedule attached as Exhibit C ("Royalty Schedule").

3.2 PAYMENTS AND REPORTS. The royalties to be paid by Immersion to Licensor hereunder shall be due [****] after the close of each calendar quarter. Royalty reports setting forth the royalty calculation shall be included with such payments.

3.3 AUDIT RIGHTS OF ROYALTY PAYMENTS. Licensor shall have the right, at Licensor's expense, to have an independent auditor mutually agreed upon by Licensor and Immersion audit the Net Receipts and the royalty payments of Immersion on an annual basis, unless such audit reveals any underpayment of royalties in an amount greater than [****] of actual royalties due for any Year, in which case Immersion shall promptly remit an amount equal to the underpayment and shall pay the reasonable costs of such audit. Such audit shall be preceded by at least thirty (30) business days advance written notice and shall be performed during normal business hours by the auditor. The auditor shall have
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