TRADEMARK AGREEMENT
Trademark Agreement executed as of this 18th day of December, 1996 by and
between the Swiss Confederation represented by the Federal Military Department
represented by the Federal Defence Production Group ("BRBT") and Swiss Army
Brands, Inc. ("SABI") a corporation existing under the laws of the state of
Delaware, U.S.A.
WHEREAS, it is in the mutual interest of the parties, and of Swiss
manufacturers and other citizens of the Swiss Confederation that the trademark
SWISS ARMY be confined to a select number of high quality products manufactured
in Switzerland; and
WHEREAS, in the past certain persons have attempted to utilize the
trademark "SWISS ARMY" on products manufactured in Asia and on other
unauthorized goods, thereby misleading purchasers into believing that such
products represent the high quality of workmanship and materials present in
goods of Swiss manufacture; and
WHEREAS, SABI has sold over $650,000,000 of Swiss made products, the vast
majority of which was sold under the trademark SWISS ARMY; and
WHEREAS, SABI has expended over $25,000,000 in the development, protection
and promotion of the SWISS ARMY trademark and has developed a high level of
expertise in such protection; and
WHEREAS, the parties are desirous of protecting consumers and Swiss
manufacturers from misrepresentation as to the source of products bearing the
trademark SWISS ARMY; and
WHEREAS, the parties wish to further the mutual interests set forth above
while respecting existing rights; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained the parties hereto hereby agree as follows:
SECTION 1. Initial Payment.
In order to facilitate the purposes of this Agreement and in consideration
of the matters set forth in Section 5 of this Agreement and elsewhere, SABI
will, upon the execution of this Agreement, commit to the furtherance of its
purposes the amount of. Of this amount will be paid to BRBT at the time of the
signing to be used for such purposes as BRBT shall determine. The remaining will
be utilized during the first year of this Agreement by SABI to assist BRBT in
the registration of the BRBT Trademarks in various jurisdictions as well as to
assist BRBT in the policing of the BRBT Trademarks. In the event is not utilized
in such manner during the first year of this Agreement, SABI shall pay to BRBT
the difference between and the amount so utilized.
SECTION 2. Definitions. For purposes of this Agreement the following
definitions shall apply.
(a) Added American Categories shall have the definition ascribed to
that term in Section 5(d)(i) hereof.
(b) American Territories shall mean the United States, its territories
and possessions, Canada and the Caribbean. The Caribbean shall include
Bermuda and all islands, countries and territories within the area bounded
by 55 degrees west longitude, 85 degrees west longitude, 12 degrees north
latitude and 28 degrees north latitude provided that the Caribbean shall
not be deemed to include any portion of Mexico or the Countries located in
Central or South America.
(c) BRBT Trademarks shall mean the following: (i) Trademark No. 411
840 consisting of the words "Swiss Army" and the Swiss National Emblem
registered in Switzerland by BRBT and depicted on Schedule A hereto, (ii)
if assigned to BRBT pursuant to Section 4(a) hereof, the Wreath Trademark,
(iii) the trademark consisting solely of the words "Swiss Army," (iv) the
Subsequent Registrations, if any, and (v) any and all other trademarks at
any time owned by BRBT which include the words "Swiss Army" or words
confusingly similar thereto.
(d) Commercial Quantities shall mean products in a particular
Designated Category having been sold by a single manufacturer or importer
in normal channels of commerce and not solely for test marketing purposes.
(e) Wreath Trademark shall mean the trademark consisting of the words
"Swiss Army" and the wreath logo for which SABI, through a wholly-owned
subsidiary, has applied with the Swiss Federal Office for Intellectual
Property for registration which application is known as application no.
6250/1994.0, date of request 9/8/94 as depicted in Schedule A-1.
(f) The Designated Categories shall mean the following products which
SABI intends to market under the SABI Trademarks:
(i) Luggage;
(ii) small leather goods;
(iii) boots and footwear;
(iv) camping equipment;
(v) pens and pencils;
(vi) flashlights;
(vii) water purification products;
(viii) cosmetics and fragrances; and
(ix) apparel.
Each of the designations separately listed above shall be considered a
separate "Designated Category".
(g) First Quality shall mean products at least equal in workmanship
and materials to either the Watch Products or Knives currently sold by
SABI, Victorinox or Wenger.
(h) SABI shall mean Swiss Army Brands, Inc. and shall also include
Swiss Army Brand Ltd., a Delaware Corporation and a wholly-owned subsidiary
of Swiss Army Brands, Inc.
(i) SABI Trademarks shall mean the Registered SABI American Trademark
and the trademarks, including applications, held by SABI listed in Schedule
B hereto.
(j) Knives shall mean multi-blade pocket knives (including so-called
"multitools") manufactured or licensed by Victorinox or Wenger.
(k) Net Sales shall mean the gross selling price of licensed products
less V.A.T. and similar taxes or imposts, insurance, freight, discounts and
allowances actually given and returns actually received.
(l) Precise shall mean Precise Imports Corporation, a New York
Corporation which is Wenger's United States Distributor.
(m) Registered SABI American Trademark shall mean the trademarks
listed on Schedule C hereto.
(n) Reserved Products shall mean Watch Products, Knives, products in
the Added American Categories, and products in the Designated Categories
provided, in the case of products in the Designated Categories the right of
SABI to cause such product categories to become Added American Categories
has not expired (without giving effect to the operation of Subsection
5(d)(v)(B)).
(o) Standard Royalties shall mean an amount equal to 3% of the "Net
Sales".
(p) Subsequent Registrations shall have the meaning ascribed to that
term in Section 4(c) hereof.
(q) Swiss Manufacturers shall mean Victorinox and Wenger.
(r) Swiss Product shall mean any product which, under the laws of
Switzerland as presently constituted or as enacted in the future, or
according to normal Swiss standards, may be denominated "Swiss Made" or
"Made in Switzerland".
(s) Swiss Martial Trademark shall mean any words, trademarks or trade
names, other than "Swiss Army", consisting of two or more words or
syllables, one of which is "Swiss", "Switzerland" or a derivation thereof
and another of which is a word or phrase with a military connotation, e.g.
"Swiss Sailor", "Swisstrooper".
(t) Victorinox shall mean Victorinox A.G. of Ibach, Switzerland.
(u) Watch and Sunglass Products shall mean watches and other
timepieces as well as sunglasses which, in each case, are Swiss Products.
(v) Wenger shall mean Wenger S.A. of Delemont, Switzerland.
SECTION 3. Acknowledgement by SABI and BRBT.
(a) SABI acknowledges BRBT's ownership of the BRBT Trademarks in the
country of their registration or application and acknowledges that in the
country of their registration or application, BRBT has the exclusive right to
use the BRBT Trademarks and that any goodwill pertaining thereto belongs
exclusively to BRBT. SABI will not in any way directly or indirectly do or cause
to be done any act or thing contesting, challenging or in any way impairing or
intending to impair any right, title or interest of BRBT in connection with any
of the BRBT Trademarks in the country of its registration or application. It is
the declared intention of SABI to use all reasonable efforts to assist BRBT in
enforcing such rights.
(b) BRBT acknowledges SABI's ownership of the SABI Trademarks in the
countries of registration or application and acknowledges that SABI has the
exclusive right to use the SABI Trademarks in such countries and that the
goodwill pertaining thereto belongs exclusively to SABI. BRBT will not in any
way directly or indirectly do or cause to be done any act or thing contesting,
challenging or in any way impairing or intending to impair any right, title or
interest of SABI in connection with the SABI Trademarks in the countries of
their registration or application. It is the declared intention of BRBT to use
all reasonable efforts to assist SABI in enforcing such rights provided that
BRBT shall not be required to support SABI in enforcing exclusive rights to the
Swiss National Emblem, as distinguished from the words "Swiss Army" (whether or
not such words are used in conjunction with such emblem).
(c) BRBT and SABI recognize that the use of Swiss Martial Trademarks
represents an effort to capitalise upon the success of the trademark SWISS ARMY
and that such use can dilute the value of the trademark SWISS ARMY to the
detriment of the Swiss Confederation as well as of SABI and agree to cooperate
in preventing such use.
SECTION 4. Additional Registrations.
(a) Wreath Trademark. SABI shall assign to BRBT the Wreath Trademark
application, if required for the registration of such trademark, and BRBT agrees
to use its best efforts to obtain a registration pursuant thereto.
(b) Registration of "Swiss Army". BRBT agrees to promptly apply for a
trademark registration in Switzerland for the trademark consisting solely of the
words "Swiss Army" and use its best efforts to obtain a registration of that
mark.
(c) Subsequent Registrations. BRBT agrees to promptly apply for up to three
additional trademark registrations ("Subsequent Registrations") in Switzerland
for such trademarks requested by SABI consisting of the words "Swiss Army" and
such logo or depiction specified by SABI; provided that such trademark is not
violative of applicable law.
(d) Expansion of Coverage. BRBT will expand the products and services
covered by the BRBT Trademarks as set forth in Section 7 hereof.
SECTION 5. The American Territories.
(a) Knives. The parties acknowledge that Victorinox and Wenger have applied
for the registration of the trademark "Swiss Army" as applied to Knives in the
United States and hold common law rights to that trademark in the United States.
The parties are aware that the Swiss Manufacturers have licensed SABI and
Precise to use that trademark. Subject to the provisions of Section 12 hereof,
relating to costs, the parties declare their intention to assist the Swiss
Manufacturers, SABI and Precise in safeguarding those rights and in preventing
the use of "Swiss Army" on multi-blade pocketknives, multitools and other
products which are not Swiss Products.
(b) Watch and Sunglass Products. As previously herein stated, BRBT
recognizes the rights of SABI in the Registered SABI American Trademark,
including, without limitation, its rights in respect of the Registered SABI
American Trademark as applied to Watch and Sunglass Products. BRBT will use all
reasonable efforts to assist SABI and its licensees in strengthening and
protecting those rights in the American Territories and assist SABI in
preventing the unauthorized use of SWISS ARMY.
(c) BRBT Cooperation. In furtherance of the general purposes of this
Agreement to strengthen the trademarks and to prevent the unauthorized use of
SWISS ARMY on products that are not Swiss Products, BRBT agrees:
(i) It will not apply for registration, license or otherwise facilitate the
use of any of the BRBT Trademarks in the American Territories except as provided
herein; and
(ii) At SABI's request and expense, it will register any BRBT Trademark
requested to be registered in the American Territories. Upon such registration,
and without further documentation, SABI shall hold a perpetual royalty free
(subject to the requirement to make the payments otherwise required by Section
1) exclusive license applied to Watch and Sunglass Products.
(d) Designated Categories and Other Products.
(i) If within three years of the date of this Agreement SABI and/or its
licensees shall sell in the American Territories, Commercial Quantities of Swiss
Products in any one or more of the Designated Categories SABI shall so notify
the BRBT and upon such notification such category or categories shall become
"Added American Categories".
(ii) If requested by SABI (and only if so requested) BRBT will, at SABI's
expense, register any BRBT Trademark requested to be registered in the American
Territories in respect of any Added American Category and will grant to SABI a
perpetual royalty free exclusive license to use the BRBT Trademarks in the
American Territories and the rights and obligations of the parties with respect
thereto shall be the same as those applying to Watch and Sunglass Products.
(iii) In the event that within 24 months of any Designated Category
becoming an Added American Category, SABI and/or its licensees shall sell in the
American Territories in Commercial Quantities Swiss Products in another of the
Designated Categories and shall so notify BRBT, such additional Designated
Category shall become an Added American Category.
(iv) In recognition of SABI's legally established trademark rights in the
American Territories and in part consideration for the payment referred to in
Section 1 hereof BRBT agrees that it will not grant any rights to any of the
BRBT Trademarks in the American Territories to any person other than SABI or
permit any person other than SABI to use SWISS ARMY on any products in the
Designated Categories except as set forth in the immediately following
subsection.
(v) BRBT may grant licenses to use the BRBT Trademarks in the American
Territories on products other than Reserved Products provided that:
(A) BRBT has determined that the grant of rights to such person or entity
will (x) enhance and not reduce the value of SWISS ARMY as applied to Swiss
Products already being sold under that trademark, (y) not detract from the
purpose of this Agreement to prevent the use of SWISS ARMY on non-Swiss
products, and (z) increase, over the long term, the amount of Swiss Products
sold in the American Territories and elsewhere. In making such determination
BRBT shall give priority to upholding the image of SWISS ARMY as being
associated with prestige, quality and wholesomeness and shall also consider the
market at which the product sought to be licensed is aimed. In making such
determination the objections made by SABI or any other person authorized to use
SWISS ARMY pursuant to this Agreement shall be given great weight, and
(B) such rights are granted after SABI has received notification of BRBT's
intention to license that category to another party and been granted the right
for an additional period of 18 months to cause that category to become an Added
American Category by making sales in Commercial Quantities.
(vi) In the event BRBT grants any rights to a party other than SABI
pursuant to Section 5(d)(v) above, SABI shall offer such party a license of the
appropriate Registered SABI American Trademark upon mutually agreeable terms and
conditions. Any royalties received by SABI under this subsection, net of
enforcement and other expenses, shall be paid to BRBT.
SECTION 6. Geographical Areas Outside of the American Territories.
(a) Knives. Except as set forth in Section 5(a) above, this Agreement shall
not apply in any way to the use of "SWISS ARMY" on knives outside of the
American Territories.
(b) Watch and Sunglass Products. Subject to any now existing legal rights
of others, BRBT hereby agrees that at SABI's request it will grant to SABI an
exclusive perpetual license for Watch and Sunglass Products at the Standard
Royalty in such jurisdictions as SABI shall request and will, at SABI's request
(and only at SABI's request) and expense, register any BRBT Trademark requested
to be registered in such jurisdictions where it is not already registered. Upon
such request and without further documentation, SABI shall hold a perpetual Z
exclusive license applied to Watch and Sunglass Products. The parties will also
cooperate in preventing the unauthorized use of SWISS ARMY on Watch and Sunglass
Products.
(c) Designated Categories and Added American Categories. As to each
jurisdiction outside of the American Territories BRBT will, at SABI's request,
grant to SABI an exclusive license at the Standard Royalty to use the BRBT
Trademarks in such territory on products in the Designated Categories or Added
American Categories and will register any BRBT Trademark requested to be
registered, at SABI's request (and only at SABI's request) and expense, in
respect of such products. Upon such request and without further documentation
SABI shall hold a perpetual exclusive license applied to such products, provided
that SABI and/or its licensees sell goods in that category in such jurisdiction
in Commercial Quantities within 18 months after such registration. In the event
SABI and/or its licensees do not make sales in Commercial Quantities within 18
months after such registration, BRBT may consider granting a license of the BRBT
Trademarks to another party pursuant to Section 6(d)(ii) below.
(d) Other Products.
(i) If BRBT wishes to grant to any person other than SABI a license to use
any BRBT Trademark on any product other than a Reserved Product, it shall first
offer to SABI an exclusive license to the BRBT Trademarks on such product in
such territory at the Standard Royalty. Such license shall be perpetual provided
that SABI and/or its licensees sells goods in that category in Commercial
Quantities in such jurisdiction within 18 months after receiving such
notification.
(ii) If SABI does not accept that offer or fails to make such sales, BRBT
may consider granting a license to the other applicant. In deciding whether to
grant such license to such other applicant BRBT shall first determine that the
grant of rights to such person or entity will (A) enhance and not reduce the
value of SWISS ARMY as applied to Swiss Products already being sold under that
trademark, (B) not detract from the purpose of this Agreement to prevent the use
of SWISS ARMY on non-Swiss products, and (C) increase, over the long term, the
amount of Swiss Products sold worldwide. In making such determination BRBT shall
give priority to upholding the image of SWISS ARMY as being associated with
prestige, quality and wholesomeness and shall also consider the market at which
the product sought to be licensed is aimed. In making such determination the
objections made by SABI or any other person authorized to use SWISS ARMY
pursuant to this Agreement shall be given great weight.
SECTION 7. Expansion of Classes.
At the request of SABI, BRBT will expand the products and services covered
by the BRBT Trademarks through additional registrations.
SECTION 8. Terms of License.
(a) In the event of any grant of a license in respect of any BRBT Trademark
whether to SABI or to any other party, the following provisions shall apply:
(i) Such products including products sold by licensees of SABI's rights
hereunder, shall be Swiss Products of First Quality.
(ii) The licensee shall, upon request, submit a reasonable number of
samples to BRBT to determine whether such products are of First Quality. In the
event that BRBT determines that such products are not of First Quality, BRBT
shall so notify the licensee, giving full particulars so that the licensee may
cause such products to be of First Quality.
(iii) In respect of any license for which Standard Royalties must be paid,
such royalties shall be paid no later than the end of the calendar quarter
following the calendar quarter in which the relevant sales were made. Each such
payment shall be accompanied by a report setting forth in reasonable detail the
amount of Net Sales and the method by which the standard royalty was computed.
(iv) Notwithstanding anything herein to the contrary, the license of any
BRBT Trademark shall not be deemed to include, and expressly excludes, the Swiss
National Emblem.
(b) In the event of any grant of a license in respect of any BRBT trademark
to SABI, SABI may take such action as it deems appropriate under all the
circumstances to cause any infringement found to exist to be terminated. Any
suits on account thereof shall be controlled by SABI and shall be prosecuted
wherever possible in the name of SABI and by its counsel; and the expenses of
such suit shall be borne by SABI.
SECTION 9. Disputes.
Any dispute arising in connection with this Agreement shall be resolved by
arbitration, the seat of arbitration being Bern, Switzerland. The arbitral
tribunal shall consist of three arbitrators and the arbitration shall be
governed by the rules of the Intercantonal Arbitration Convention, March
27/August 29, 1969, excluding the rules of chapter 12 (International
Arbitration) of the Swiss Private International Law Act, December 18, 1987.
SECTION 10. Notices.
Any notices or other communications required or permitted to be sent under
this Agreement shall be duly given if sent by registered mail return receipt
requested or by facsimile transmission confirmed by mail within three (3)
business days of such transmission and addressed as follows:
(a) If to BRBT:
Defence Procurement Agency
Legal Department
Kasernenstrasse 19
CH-3003 Bern, Switzerland
Attention: Thomas Kopp, Esq.
Corporate Legal Counsel
FAX: 0041-031-324-60-56
(b) If to SABI:
Swiss Army Brands, Inc.
One Research Drive
Shelton, Connecticut 06484-6226
Attention: The President
SECTION 11. Use on Munitions and Weapons.
SABI will not utilize any BRBT Trademark or the words "Swiss Army" in
connection with munitions or weapons.
SECTION 12. Costs.
Elsewhere in this Agreement it is provided that certain registrations
requested by SABI shall be made at the expenses of SABI and not at the expense
of BRBT. Without lessening the authority of such statements but for greater
clarity it is further provided nothing in this Agreement shall require BRBT to
expend in connection with the BRBT Trademarks or otherwise in respect of this
Agreement any sums, for registration or otherwise, other than out of royalties
actually received hereunder. The cost of any registrations effectuated at the
request of SABI shall be borne entirely by SABI.
SECTION 13. Swiss Martial Trademarks.
(a) Mr. Louis Dominique Manigley and/or L.D.M. Engineering, Ltd.
(collectively and including their respective affiliates, "Mr. Manigley") claims
certain rights to use the trademark "Swiss Air Force" in connection with the
sale of watches. Some or all of the rights so claimed are disputed by SABI,
which is currently engaged in litigation in the United States with Mr. Manigley.
BRBT takes no position concerning that dispute and, anything herein to the
contrary notwithstanding, BRBT shall have no obligation to assist SABI in any
way concerning such dispute.
(b) Except for this Agreement and for a prior agreement between Mr.
Manigley and the Air Force branch of the Swiss Military Department relating to
the trademark "Swiss Air Force", which is not affected by this Agreement:
Neither the Swiss Military Department nor any other branch of the Swiss
Government has granted any rights to use or register, nor approved the use or
registration by any person of any Swiss Martial Trademark and no such Swiss
Governmental body will do so during the term of this Agreement. SABI and BRBT
will use their best efforts to prevent the use of Swiss Martial Trademarks. The
immediately preceding sentence shall not apply to "Patrouille Suisse" in the
French language.
SECTION 13A. Termination of Lines of Product.
If: (a) SABI or its affiliates, assignees or licensees has sold under a
license granted pursuant to this Agreement in Commercial Quantities goods in any
"General Product Category" (as defined below) and thereafter,
(b) such sales cease so that such goods are not sold in Commercial
Quantities by any such persons for a consecutive period of three years then BRBT
may terminate this license as to that General Product Category as follows:
(i) BRBT may notify SABI in writing of its intent to terminate and this
Agreement shall terminate for that General Product Category unless during the
180 day period after receipt of such notice, sales in Commercial Quantities are
resumed.
(ii) For purposes of this section, the term "General Product Category"
shall refer to a general group of products such as "timepieces" or "leather
goods" (rather than to specific product designations such as "ladies
wristwatches" or "attache cases").
(c) Nothing in this Section 13A shall operate directly or indirectly to
require SABI to grant any licenses of any SABI Trademark.
SECTION 14. Cooperation Concerning Trademark Infringement.
Each of the parties shall inform the other promptly in writing of (a) any
infringement of any BRBT Trademark or the Registered SABI American Trademark of
which they shall become aware, (b) any challenge by any party to either party's
use of SWISS ARMY, and (c) any proceeding instituted or threatened by or any
claim by any third party of any rights in SWISS ARMY. Subject to Section 12
above relating to cost, the parties hereto shall cooperate and take such action
as reasonably requested by the other party to protect the BRBT Trademarks and
the Registered SABI American Trademark from infringement.
SECTION 15. Miscellaneous.
(a) This Agreement shall be covered by and interpreted by the laws of
Switzerland provided that matters related to trademark rights in a particular
country shall be covered by and interpreted in accordance with the trademark
laws of such country. In the event of a conflict between versions of this
Agreement, the English version shall govern.
(b) This Agreement is the sole agreement between and among the parties
relating to the subject matter hereof and merges and supersedes any and all
agreements between them relating thereto. This Agreement may not be altered or
amended except by a writing duly executed on behalf of the party against whom
such alteration or amendment is sought to be applied.
(c) In the event of the sublicensing of the Agreement by SABI, the
sublicensee must, as a condition of executing any rights hereunder, agree in
writing to abide by the provisions hereof relating to quality, origin and
royalties.
(d) Nothing in this Agreement shall prevent SABI from sublicensing or
otherwise permitting Precise or others to exercise rights herein granted to SABI
nor prevent the use by SABI of trademarks now being used by it nor require
either party hereto to prevent the use by Precise of trademarks now being used
by it provided that SABI has agreed in writing to such use. Notwithstanding
anything herein to the contrary, SABI shall not be required to do anything
pursuant to this Agreement which would constitute a breach or violation of that
certain license agreement dated June 30, 1992 between SABI and Precise.
(e) The Federal Military Department may change the identity of its
representative under this Agreement, in which case the benefits and obligations
of BRBT shall devolve upon that designee.
THE SWISS CONFEDERATION Represented by
The Federal Military Department
Represented by:
FEDERAL DEFENCE PRODUCTION GROUP
Represented by:
/s/ Toni J. Wicki
Toni J. Wicki
Chief of Armament
/s/ Rene Huber
Rene Huber
General Manager Central Administration
SWISS ARMY BRANDS, INC.
By: /s/ Peter W. Gilson
Peter W. Gilson
Authorized Signatory