Exhibit 10.48
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND SEPARATELY FILED
WITH THE COMMISSION
PATENT LICENSE AGREEMENT
BETWEEN
INTERDIGITAL TECHNOLOGY CORPORATION
and
ERICSSON INC. AND TELEFONAKTIEBOLAGET LM ERICSSON
Dated and Effective January 1, 2003
PRIVILEGED AND CONFIDENTIAL
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.....................................................1
ARTICLE II LICENSE GRANT...................................................5
2.1. Grant........................................................5
2.2. Limitations on License Grant.................................5
ARTICLE III PAYMENTS/PAYMENT TERMS..........................................6
3.1. Prior Sales..................................................6
3.2. Covered Infrastructure Units License Fees....................7
3.3. Covered Terminal Unit Royalties..............................7
3.4. New Affiliates/Acquired Businesses...........................7
3.5. Payment; Currency Conversion.................................8
3.6. Taxes........................................................8
3.7. Mutual Acknowledgements......................................9
ARTICLE IV PASS-THROUGH LICENSE............................................9
ARTICLE V TERM/TERMINATION...............................................10
5.1. Term........................................................10
5.2. Termination for Default.....................................10
5.3. Other Termination Rights....................................10
ARTICLE VI DISPUTE RESOLUTION.............................................11
6.1. Agreement to Dispute Resolution Procedures..................11
6.2. Good Faith Negotiations.....................................11
6.3. Mediation of Disputes.......................................11
6.4. Arbitration of Disputes.....................................12
6.5. Interim Measures from the Courts in Aid of Arbitration......14
6.6. Mandatory Procedures........................................14
6.7. Performance to Continue.....................................14
6.8. Statute of Limitations......................................14
6.9. Relief From Stay............................................14
ARTICLE VII REPRESENTATIONS AND WARRANTIES.................................15
7.1. By ITC......................................................15
7.2. By Licensee.................................................15
7.3. By Both Parties.............................................17
7.4. Disclaimer..................................................17
ARTICLE VIII MISCELLANEOUS..................................................17
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PRIVILEGED AND CONFIDENTIAL
TABLE OF CONTENTS
(continued)
Page
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8.1. Confidentiality.............................................17
8.2. Licensee Identification on Covered Terminal Units...........17
8.3. Headings....................................................17
8.4. Audit.......................................................17
8.5. Governing Law/Venue.........................................18
8.6. Entire Agreement/Amendment..................................18
8.7. Acquisition of Licensee.....................................19
8.8. Affiliate Performance.......................................19
8.9. Waivers.....................................................19
8.10. Survival....................................................19
8.11. Severability................................................20
8.12. No Set Off..................................................20
8.13. Licensee Rights.............................................20
8.14. Notices.....................................................20
8.15. Limitation..................................................20
8.16. Personal Agreement..........................................21
8.17. Counterparts................................................21
8.18. Limitation of Liability.....................................21
ARTICLE IX RELEASE........................................................21
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PRIVILEGED AND CONFIDENTIAL
PATENT LICENSE AGREEMENT
THIS IS A PATENT LICENSE AGREEMENT (the "Agreement"), dated January 1,
2003, by and between InterDigital Technology Corporation ("ITC"), a Delaware
corporation having a mailing address of [**], and Ericsson Inc., a Delaware
corporation, having a mailing address of [**], and Telefonaktiebolaget LM
Ericsson, a Swedish corporation, having a mailing address of [**], (individually
and together, "Licensee").
BACKGROUND
ITC owns and has the right to license the ITC Patents (as defined below).
ITC, InterDigital and Ericsson Inc. are parties to a lawsuit (the
"Lawsuit") concerning the validity of certain of the ITC Patents and the alleged
infringement of those patents by Licensee's sales of Covered Products (as
defined below).
The parties entered into a settlement of the Lawsuit in connection with the
execution of this Agreement which provides, among other things, that ITC will
grant Licensee and its Affiliates a non-exclusive, worldwide royalty-bearing
license under the ITC Patents for Covered Products on the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
and intending to be legally bound, the parties agree as follows:
ARTICLE I
DEFINITIONS
"Affiliate" means a corporation or other legal entity of which more than
fifty percent (50%) of the voting stock is owned or effective control is held,
directly or indirectly, by Licensee or ITC, as the case may be. As used herein,
"effective control" shall mean that Licensee, (i) while holding less than a
majority of the voting stock or ownership of the entity, holds at or near the
maximum amount of equity ownership permitted by law (unless a lesser amount is
agreed to by ITC) and (ii) Licensee controls the operation and/or management of
the entity by (a) a majority control of the Board of Directors or equivalent
body, or (b) through substantial control of key technology. Such corporation or
other entity shall be considered an Affiliate of Licensee or ITC, as the case
may be, only so long as the requisite ownership of the voting stock or effective
control exists. For the purposes of this Agreement, based on the corporate
structures as of the Effective Date, (i) InterDigital shall not be considered an
Affiliate of ITC, and (ii) Sony Ericsson Mobile Communications AB shall not be
considered an Affiliate of Licensee.
"Acquired Business" has the meaning ascribed to it by Section 3.4 hereof.
"Acquisition Date" has the meaning ascribed to it by Section 3.4 hereof.
"CDMA2000" means a family of IMT-2000 standards, as amended from time to
time, being developed by the 3GPP2, which standards evolved from narrow band
CDMA technologies (e.g., TIA/EIA 95 and cdmaOne) and, include without limitation
CDMA2000 1X, CDMA 1X EV-DO, CDMA-2000 1X EV-DV and CDMA2000 3X.
** Material has been omitted and filed separately with the Commission.
PRIVILEGED AND CONFIDENTIAL
"Code Division Multiple Access" or "CDMA" means a method of digital spread
spectrum technology wireless transmission that allows a large number of users to
share access to a single radio channel by assigning unique code sequences to
each user thus permitting multiple simultaneous radio transmissions on the same
radio channel or frequencies.
"Combi-Units" means a Subscriber Unit that has substantial functionality
unrelated to voice and data communications such as: (a) a computer, or a fully
featured PDA, or (b) a handset-like device, but with one or more of the
following integrated functionalities: (i) an enhanced display (more than 4,000
colors), (ii) some meaningful PIM (personal information management)
functionality, (iii) enhanced multimedia capability which may include a camera
and/or, an ability to do video and audio streaming (real player), and/or the
ability to play music, (iv) memory stick or similar high function memory
transfer device and/or (v) enhanced wireless non-infrared connectivity (such as
802.11, ILink, fire wire/IEEE1394). For example, the Sony Ericsson P-800 would
be a Combi-Unit but a T68i would not since the T68i has an external camera, sold
separately.
"Covered Infrastructure Units" means Infrastructure Units designed or
adapted to operate in accordance with one or more of the Covered Standards.
"Covered Products" means Covered Terminal Units and Covered Infrastructure
Units.
"Covered Standards" means the following recognized digital cellular
standards or other digital cellular specifications for digital cellular
TDMA-based communications systems describing the air interface between
infrastructure equipment and terminal units: TIA/EIA 54/136, GSM, GPRS, EDGE,
PDC, PHS, and with respect to Covered Terminal Units additionally all other TDMA
standards, as amended or enhanced from time to time (including TDMA based 2.5G,
TDMA based 2.75G, TDMA based 2.8G, etc., but not Third Generation (other than
EDGE)); provided, that in no event shall "Covered Standards" be construed to
include any Excluded Standard.
"Covered Terminal Units" means Subscriber Units and End-User Devices
designed to operate in accordance with one or more Covered Standards. Covered
Terminal Units excludes Multi-Mode Products.
"Dispute" means any dispute, claim, or controversy arising out of or
relating to this Agreement.
"Dollar," "dollar" or "$" shall mean United States Dollar.
"EDGE" means the "Enhanced Data rates for GSM Evolution" standard, as
amended from time to time.
"Effective Date" means January 1, 2003.
"End-User Devices" means fully integrated wireless communications devices
(including software) designed for use by an end user in combination with another
device but without significant further physical integration into such device
being serviced by such integrated wireless communications device and providing
complete wireless communication capability under the applicable Covered
Standard. An example of an End-User Device is a PCMCIA card (which may include
an antenna) for simple insertion (generally by the end user) into a laptop
computer to provide wireless communication capability.
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PRIVILEGED AND CONFIDENTIAL
"Ericsson Family" means Ericsson Inc., Telefonaktiebolaget LM Ericsson,
each of their Affiliates, and the corporations or other legal entities of which
more than fifty percent (50%) of the voting stock is owned or control is held,
directly or indirectly, by Ericsson Inc. or Telefonaktiebolaget LM Ericsson.
"Ericsson Mobile Platform" shall mean a substantial comprehensive design
solution for a Covered Terminal Unit, which solution includes only software
development tools, test environments, type approval support, reference designs,
related software and firmware, and/or ASIC specifications. Such solutions may be
sold or licensed to third parties for their production or inclusion in Covered
Terminal Units.
"Ericsson Patents" means the following patents to the extent owned or
controlled by Ericsson or any of their Affiliates all patents (including utility
models and excluding design patents) issued and issuing on patent applications
entitled to an effective filing date prior to January 1, 2006. The term
"Ericsson Patents" shall also include any patent reissuing on any of the
aforesaid patents or patent applications. For the avoidance of doubt, if
Ericsson is acquired by or merged into a third party, the Ericsson Patents shall
exclude any patents not owned or controlled by Ericsson immediately prior to
such acquisition or merger.
"Excluded Standards" shall mean DECT, TETRA, CDMA-based 2G, CDMA-based
2.5G, CDMA-based 2.75G, CDMA-based 2.8G, etc. standards (including without
limitation TIA/EIA95) and Third Generation (including without limitation WCDMA
and CDMA2000) other than EDGE, and future standards (e.g., 4G), in each case as
amended from time to time. For the avoidance of doubt, a product shall not be
considered to operate in whole or in part in accordance with an Excluded
Standard solely on the basis that such product supports a service or feature of
an Excluded Standard (e.g. 384 kps on the downlink as specified in the Third
Generation standard) if such product (i) operates in accordance with a Covered
Standard, (ii) achieves the feature or service by operation in accordance with a
Covered Standard and not by operation in accordance with the air interface
protocol of an Excluded Standard, (iii) is not advertised, sold or substantially
designed as a Third Generation Product and (iv) does not operate on a frequency
spectrum that operates in accordance with an Excluded Standard.
"GPRS" means the standard developed for digital cellular networks (GSM,
DCS, PCS) promulgated by the European Telecommunications Standards Institute, as
amended from time to time, which utilizes a packet radio principle and can be
used for carrying end users' packet data protocol (such as IP and X.25)
information from/to GPRS terminals to/from other GPRS terminals and/or external
packet data networks technology.
"GSM" means the compatibility standard developed for the 900 MHZ
PanEuropean digital TDMA cellular mobile radio communication system, promulgated
by the European Telecommunications Standards Institute, as amended from time to
time, or the compatibility standard developed for PCS based on GSM but intended
for use in the 850 MHZ, 1.8 GHz and 1.9 GHz bandwidths ("DCS 1800-1900"), as
amended from time to time.
"InterDigital" means InterDigital Communications Corporation, having an
office at 781 Third Avenue, King of Prussia, PA 19406.
"Infrastructure Units" shall mean wireless network equipment including but
not limited to mobile switching centers, base station controllers, base
stations, positioning node equipment and operation and maintenance equipment.
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PRIVILEGED AND CONFIDENTIAL
"ITC Patents" means the following to the extent owned or controlled by ITC,
InterDigital or any of their Affiliates: all patents (including utility models
and excluding design patents) issued and issuing on patent applications entitled
to an effective filing date prior to January 1, 2007, if and for so long as ITC,
InterDigital or any of their Affiliates now has or hereafter obtains the right
to grant licenses to such patents or patent applications of (or within) the
scope granted to Licensee herein without such grant or Licensee's exercise of
rights thereunder resulting in the payment of royalties or other consideration
by ITC or its Affiliates to any third party. The term "ITC Patents" shall also
include any patent reissuing on any of the aforesaid patents or patent
applications.
"Joint Venture" means Sony Ericsson Mobile Communications AB.
"Knock-Down Unit" means a substantially complete Covered Terminal Unit Sold
to a third party in a partially or assembled form for final manufacturing,
packaging, sale and distribution to meet the local manufacturing requirements of
a particular country.
"Module" means a fully integrated wireless communications product,
including required ASICS, software and/or firmware, that is designed to operate
in accordance with an applicable Covered Standard and which is sold to a third
party for physical integration into other devices such as handsets, vending
machines, computers, laptop computers, sensing/telemetry applications, motor
vehicles and fixed wireless telephone systems. An example of a Module is the
GM-28 produced by Licensee.
"Multi-Mode Product" means a dual or Multi-Mode Terminal Unit operating in
accordance with both one or more Covered Standards and one or more Excluded
Standards (e.g., a handset with GSM and 3G capabilities).
"Payment" means monies for license fees, royalties and or other amounts
owed to ITC pursuant to this Agreement.
"PDC" means the RCR STD 27 compatibility standard developed in Japan known
as PDC or Personal Digital Cellular or Pan Asian Digital Cellular for TDMA
digital wireless mobile radio communication systems, as amended from time to
time.
"PHS" means the RCR STD 28 compatibility standard developed in Japan and
known as the Personal Handyphone Standard, as amended from time to time.
"Sale," "Sell," and "Sold" refer to the first sale, lease or other
disposition made by Licensee or a Licensee Affiliate on an arms-length basis to
any party that is not an Affiliate of Licensee.
"Subscriber Unit" means a radiotelephone, or a device with radiotelephone
capabilities (e.g. Personal Digital Assistant) whether fixed, mobile,
transportable, vehicular, portable or hand-held (or a Module therefore).
Subscriber Units shall include Modules, Combi-Units and Knock-Down Units.
"TDMA" means time division multiple access.
"Term" shall have the meaning ascribed to it by Article V of this
Agreement.
"Terminal Unit" shall mean an End User Device or Subscriber Unit that may
or may not operate in accordance with a Covered Standard.
"TETRA" means the standard for trunked radio systems promulgated by the
European Telecommunications Standards Institute, as amended from time to time.
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PRIVILEGED AND CONFIDENTIAL
"Third Generation" means any TDMA- or CDMA-based digital cellular mobile
radio telecommunication standards generally considered by the industry to be the
"third generation", whether adopted by any recognized standardizing body or
promoted by major telecommunications operators as de facto standards, but
excluding any standard designated herein as a Covered Standard. Examples of
current Third Generation standards under development, or related standardization
efforts, are the International Telecommunications Union - Radio efforts under
the label IMT-2000, the specifications being developed under the Third
Generation Partnership Projects (3GPP and 3GPP2), and comparable or related
standards adopted by ARIB, ETSI, TTA, TIA, T1P1, CWTS, as well as other
recognized standards development organizations.
"TIA/EIA 54/136" means the Cellular Dual Mode Mobile Station-Base Station
Compatibility Standards promulgated by the Electronics Industry Association and
the Telecommunications Industry Association, as amended from time to time, and
improved to include, among other things, a digital control channel, and formerly
known as IS-54 and IS-136.
"TIA/EIA 95," formerly known as "IS-95," means the Mobile Station-Base
Station Compatibility Standard for Dual-Mode Wideband Spread-Spectrum Cellular
Systems, as administered by the Telecommunications Industry Association and as
amended from time to time, including without limitation TIA/EIA 95A and TIA/EIA
95B.
"Transferee" has the meaning ascribed to it by Section 8.16(a) hereof.
"Transferred Business" has the meaning ascribed to it by Section 8.16(a)
hereof.
"Unlicensed Sales" means sales of Covered Products without (or outside of
the scope of) a license granted by ITC.
"Wideband CDMA" or "WCDMA" means a version of CDMA technology optimized for
high speed packet-switched data and high-capacity circuit switched capabilities.
"Wideband" refers to a communications channel with a user data rate higher
than a voice-grade channel; usually 64kpbs to 2mbps.
ARTICLE II
LICENSE GRANT
2.1. Grant. ITC hereby grants, and shall cause its Affiliates to grant, to
Licensee and Licensee's Affiliates a perpetual, non-exclusive, worldwide,
royalty-bearing license under the ITC Patents: (i) to design, use, lease, make,
have made, import, sell, and otherwise transfer Covered Products, including the
right to procure or produce components therefor, (ii) to practice a method or
process involved in the manufacture thereof, and (iii) to practice any method or
process involved in the use thereof.
2.2. Limitations on License Grant. The license granted hereunder excludes
the right to grant sublicenses and, except as expressly set forth in this
Agreement, the right to assign or otherwise transfer this Agreement or the
license granted hereunder.
(a) The license granted hereunder shall not include, by implication or
otherwise, any license for (i) any product other than Covered Products, (ii) any
Multi-Mode Product, or (iii) any ASICs, software, reference designs, or other
components except when used solely as a part and within the Covered Products
sold by Licensee and its Affiliates or as spare parts and enhancements therefor.
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PRIVILEGED AND CONFIDENTIAL
(b) The license granted in this Agreement shall extend to the
Affiliates of Licensee existing as of March 10, 2003. Licensee shall notify ITC
of entities that become Licensee Affiliates who engage in the lease,
manufacture, having made, sale or transfer of Covered Products during the Term,
in each case within the calendar quarter following the event giving rise to the
notice obligation. The provisions of Section 3.4 shall apply to entities that
become Licensee Affiliates during the Term, and the provisions of Section 8.16
shall apply to entities that cease to be Licensee Affiliates during the Term to
the extent relevant. Licensee represents that Attachment A to this Agreement
lists all of Licensee's Affiliates as of the Effective Date and as of the
execution date of this Agreement.
(c) Licensee hereby guarantees the full and prompt remittance of all
Payments and other amounts owed to ITC by Licensee and all Licensee Affiliates
pursuant to this Agreement, and each Licensee Affiliate's compliance with the
terms and conditions of this Agreement (including without limitation the
obligations imposed on such Affiliates by Sections 3.4 and 8.16 hereof).
(d) Only to the extent necessary to effectuate Licensee's or its
Affiliates use of its "have made" rights granted under Section 2.1 hereto,
Licensee or a Licensee Affiliate shall be authorized to grant sublicenses under
this Agreement to third parties operating under such "have made" right. Such
sublicense shall have the strictly limited purpose of effectuating that "have
made" grant, shall not authorize any activity beyond the "have made" activity,
shall be subject to the relevant terms of this Agreement, and shall not affect
the consideration required hereunder (which shall remain the responsibility of
Licensee and its Affiliates.)
(e) Licensee's or a Licensee Affiliate's Sale of any item of Covered
Product shall not convey any licenses or other rights to Covered Products made
by a third party for use in conjunction with Licensee's or the Licensee
Affiliate's Covered Products or otherwise except as provided in Section 2.2(c).
ARTICLE III
PAYMENTS/PAYMENT TERMS
3.1. Prior Sales.
(a) In partial consideration for the Release set forth in Article IX,
for past sales of Covered Products on or before December 31, 2001, Licensee
shall compensate ITC as follows:
(i) a nonrefundable payment of [**] Dollars ($[**]), such amount
to be payable as follows: [**].
(ii) Subject to the exercise by InterDigital of the option to
enter into a Reference Design License and Support Agreement pursuant
the Memorandum of Understanding between Ericsson Mobile Platforms and
InterDigital dated March 10, 2003, [**] Dollars ($[**]) of value
through the waiving of an Initial Fee, as further discussed in such
Memorandum of Understanding. The parties acknowledge and agree that it
shall not be considered a "failure of consideration" under this
Agreement if InterDigital fails to achieve full value from the waiver
contemplated by this Section 3.1(b)(ii) without regard to whether it
exercises the option contemplated by the Memorandum of Understanding.
(b) In further consideration for the Release set forth in Article IX,
for past sales of Covered Products during the year 2002, Licensee shall pay ITC,
on or before [**], a nonrefundable payment of [**] Dollars ($[**]).
** Material has been omitted and filed separately with the Commission.
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PRIVILEGED AND CONFIDENTIAL
3.2. Covered Infrastructure Units License Fees. In consideration for the
license granted herein with respect to Covered Infrastructure Units, Licensee
shall pay to ITC the following non-refundable annual license fees:
License Fee
-----------
2003.................................. $6,000,000
2004.................................. $6,000,000
2005.................................. $6,000,000
2006.................................. $6,000,000
Licensee shall pay the Six Million Dollar ($6,000,000) fee for 2003 on or
before [**]. For each of the calendar years 2004 through 2006, the Six Million
Dollar ($6,000,000) license fee for each year shall be paid in [**].
Licensee's obligation to pay the license fees established by this Section
3.2 shall be absolute, and shall not be subject to reduction or offset for any
reason, including without limitation the disposal by Licensee or any Licensee
Affiliate of any portion of the business to which this Agreement relates. Unless
this Agreement is sooner terminated, the license granted to Licensee under the
ITC Patents with respect to Covered Infrastructure Units as set forth (and
limited) under Article II shall be deemed fully paid up as of January 1, 2007
based on Licensee's remittance of all cash payments accruing under this
Agreement.
3.3 Covered Terminal Unit Royalties.
(a) In the event Licensee or a Licensee Affiliate:
(i) acquires an entity, or a business or assets of an entity
engaged or which becomes engaged in the manufacture, distribution or
sale of Covered Terminal Units; or
(ii) otherwise engages in the manufacture, distribution or Sale
of Covered Terminal Units;
then Licensee shall pay Royalties on each Sale of a Covered Terminal Unit in
accordance with, and its Covered Terminal Units business shall be governed by,
the provisions of Article III, Section 8.14 of that certain Terminal Unit
License Agreement between ITC and Joint Venture of even date herewith (the "JV
Agreement") in addition to the terms of this Agreement. In addition, the
definitions in the JV Agreement applicable to Article III and Section 8.14 of
the JV Agreement shall apply when applying those provisions in accordance with
this Section 3.3(a).
3.4. New Affiliates/Acquired Businesses. The provisions of this Section 3.4
shall apply if, after the Effective Date, Licensee or any other Licensee
Affiliate: (i) acquires or acquires effective control of a new Affiliate, or a
business or assets of an entity that is not then-currently an Affiliate,
involved in the manufacturing, distribution or sale of Covered Infrastructure
Units; or (ii) forms a new Affiliate or enters into a new Affiliate with a third
party, involved in the manufacture, distribution or sale of Covered
Infrastructure Units, the effect of which is to increase Licensee's manufacture
or sales capacity of Covered Infrastructure Units ((i) and (ii) each,
respectively, an "Acquired Business").
(a) In such event, with respect to Sales from and after the date of
acquisition "Acquisition Date," the Six Million Dollar ($6,000,000) annual
license fee set forth in Section 3.2 (or the then effective annual license fee,
if the annual fee had been increased pursuant to this Agreement) shall be
increased according to [**].
** Material has been omitted and filed separately with the Commission.
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PRIVILEGED AND CONFIDENTIAL
(b) If, and to the extent, the Acquired Business, prior to the
Acquisition Date, held a license granted by ITC, the Acquired Business'
then-existing agreement shall continue to apply as to products or standards
other than Covered Infrastructure Units and this Agreement shall apply as to
Covered Infrastructure Units.
(c) If and to the extent the Acquired Business, prior to the
Acquisition Date, made Unlicensed Sales of Covered Infrastructure Units, and
Licensee or any Licensee Affiliate, [**].
(d) Any formation of an Affiliate as a result of restructuring of
Licensee's or Licensee's Affiliate's businesses not involving third parties
shall be exempt from any of the provisions of this Section 3.4.
3.5. Payment; Currency Conversion. Payments made pursuant to this Article
III shall be made by wire transfer in Dollars to the following account or such
other account as ITC may specify by written notice:
[**]
Dollar denominated sales shall be reported as transacted. Other currency
denominated sales shall be reported based on the mathematical average foreign
currency/$U.S. conversion rate applicable during the period over which sales are
being reported, using the currency exchange rates given in the Wall Street
Journal - Currency Trading, Exchange Rates section or other source as the
parties may agree in writing or an exchange of writings.
3.6. Taxes. Licensee shall be responsible for all income, withholding taxes
and other taxes associated with Payments imposed by any jurisdiction other than
the United States and its political subdivisions, so long as ITC remains
domiciled in the United States. All Payments paid under this Agreement shall be
"grossed up" as required to meet Licensee's obligations under this Section 3.6
so that the net amount actually paid to ITC is equal to the Payments calculated
in accordance with this Agreement. If any such tax is required by the relevant
government, Licensee will furnish ITC with appropriate documentation evidencing
the payment of such tax as assessed by the appropriate authority of such
government.
3.7. Mutual Acknowledgements. Both parties acknowledge that:
(a) All Payments made pursuant to this Article III, Article VI and
Article VIII shall be nonrefundable.
(b) The parties have agreed to the Payments specified in this
Agreement as a matter of mutual convenience to the parties, regardless of which
of the ITC Patents may be involved.
(c) In the event of a bankruptcy or similar insolvency proceeding
filed by or against either Party: (i) Licensee's and Licensee's Affiliates'
continued rights under the licenses granted herein would convey substantial
financial and other benefits to Licensee, its Affiliates and their respective
businesses and creditors such that the Payments accruing hereunder would
constitute an Administrative Claim under 11 U.S.C. Sections 503(b) and 507 or
comparable non-U.S. provision; (ii) this Agreement shall be deemed to be an
executory contract under 11 U.S.C. Section 365 or comparable non-U.S. provision
because, inter alia, there remain substantial mutual obligations to be performed
by the parties hereto; and (iii) this Agreement shall not be assumable under 11
U.S.C. Section 365(c)(1) (or comparable non-U.S. provision) without ITC's
consent.
** Material has been omitted and filed separately with the Commission.
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PRIVILEGED AND CONFIDENTIAL
(d) [**].
ARTICLE IV
PASS-THROUGH LICENSE
Provided that this Agreement is not terminated at the time of Sale,
Licensee's and Licensee's Affiliates' customers will receive a pass-through
license for any such Sale (including lease) and use of Covered Products,
provided that such pass-through license shall not limit causes of action, claims
or remedies ITC may have hereunder against Licensee or Licensee's Affiliates,
for Licensee's or Licensee's Affiliates breach of this Agreement.
ARTICLE V
TERM/TERMINATION
5.1. Term. The Term of this Agreement shall be deemed to have commenced on
January 1, 2003 and, unless earlier terminated in accordance with this Article
V, shall terminate upon the expiration of the last-to-expire ITC Patent.
5.2. Termination for Default. This Agreement may be terminated by either
party with written notice, following thirty (30) days written notice of material
breach, provided, however, that in the case of a Dispute not involving failure
to make payments under Sections 3.1(a)(i), 3.1(b) and 3.2 the provisions of
Article VI will take precedence. Such termination will take effect at the end of
the notice period if the other party is in material breach of any of its
material obligations hereunder and fails to remedy the breach within the notice
period. Without limiting the foregoing, Licensee shall be in material breach of
this Agreement if (i) Licensee or any Licensee Affiliate fails to comply with
its reporting and Payment obligations hereunder, (ii) Licensee, any Licensee
Affiliate or any trustee in bankruptcy, receiver or other successor-in-interest
to Licensee or any Licensee Affiliate attempts to recover any Payments
previously made (including without limitation on the theory that such Payment
was a preference under 11 U.S.C. Section 547 or otherwise), or (iii) Licensee or
its successor-in-interest rejects this Agreement or fails, within sixty (60)
days of the filing of any voluntary or involuntary petition in bankruptcy by or
against Licensee under Section 365 of the U.S. Bankruptcy Code or any comparable
non-U.S. provision, to assume this Agreement. In the event of the occurrence of
(ii) or (iii), ITC shall be entitled to immediately terminate this Agreement
without notice. In the event of termination of this Agreement by ITC, all
Payments specified by Sections 3.1 and 3.2 of this Agreement and all other
Payments accruing hereunder shall become immediately due and payable, and
Licensee shall pay all such amounts in full within thirty (30) days of the
effective date of ITC's notice of termination.
5.3. Other Termination Rights.
(a) If, during the Term, Licensee or one or more of its Affiliates
institutes or actively participates as an adverse party in, or otherwise
provides material support to, any legal action anywhere in the world, the
purpose of which is to invalidate or limit the validity, scope or enforceability
of any of the ITC Patent Claims which reads on Covered Standards, and fails
within thirty (30) days of discovery or being notified of the same to terminate
or cause the termination of such legal action or fails within sixty (60) days of
discovery or being notified of the same to otherwise cure all of the adverse
effects of Licensee's or the Licensee's Affiliate's activities as described
above, ITC shall have the right to terminate this Agreement upon written notice
without first having to pursue the Dispute resolution procedures set forth in
Article VI. This Section 5.3 shall not prevent Licensee or its Affiliates from
providing truthful
** Material has been omitted and filed separately with the Commission.
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testimony or documents pursuant to a court order; provided, that Licensee shall
first provide ITC with notice of any request for such testimony or documents and
of any such court order and opportunity to oppose the participation of Licensee
or its Affiliates and/or seek confidential treatment for the same.
Notwithstanding the provisions above, ITC shall have no right to
terminate this Agreement pursuant to this Section 5.3 with regard to any legal
action initiated prior to the execution date of this Agreement in which Licensee
or its Affiliates participated, directly or indirectly, provided, that, if such
action is continuing, Licensee and its affiliates promptly withdraw from such
proceeding, discontinue any direct or indirect participation therein, and
provide reasonable assistance to ITC in dealing with any adverse material
effects resulting from such, to the extent permitted by law. In no event shall
anything in this Agreement be construed to impose liability on Licensee for any
damages which may result from Licensee's participation in such legal actions
prior to the execution date of this Agreement.
(b) This Agreement shall terminate automatically without action by
either party if, pursuant to the U.S. Bankruptcy Code (or comparable non-U.S.
law), Licensee as debtor-in-possession or any trustee in bankruptcy or other
successor-in-interest to Licensee rejects this Agreement pursuant to 11 U.S.C.
Section 365 (or comparable non-U.S. law).
ARTICLE VI
DISPUTE RESOLUTION
6.1. Agreement to Dispute Resolution Procedures. Any Dispute shall be
resolved in accordance with the procedures specified in this Article VI, which
shall be the sole and exclusive procedures for the resolution of any such
Disputes. Notwithstanding the foregoing, except as the parties may agree in
writing, neither party shall be compelled to submit to negotiation, mediation or
arbitration under this Article VI any dispute or other matter relating to
Licensee's alleged infringement of ITC's Third Generation patents.
6.2. Good Faith Negotiations. In the event of any Dispute, the parties
shall first attempt in good faith to resolve such Dispute promptly by
negotiation between senior level representatives who have authority to settle
the Dispute. Any party may give the other party written notice of any Dispute
not resolved in the normal course of business. Within 15 days after delivery of
the notice, the receiving party shall submit to the other a written response.
The notice and the response shall each include (a) a statement of the party's
position and a general summary of arguments supporting that position, and (b)
the name and title of the person(s) who will represent that party in the
negotiations. Within 30 days after delivery of the notice of Dispute, the
representatives of the parties shall meet in Washington, D.C., or some other
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to attempt to resolve the Dispute. All reasonable requests for
information made by one party to the other will be honored; however, no party is
required to provide confidential, trade secret, proprietary, or privileged
information excepting information that is required to be provided pursuant to
this Agreement. All negotiations pursuant to this clause are confidential and
shall be treated as compromise and settlement negotiations for purposes of
applicable rules of evidence. If a party refuses to negotiate as provided
herein, then any other party may immediately initiate arbitration as provided in
Article VI.
6.3. Mediation of Disputes. If any Dispute has not been resolved by
negotiation as set out above within 90 days of delivery of the notice of
Dispute, or if the parties failed to meet within 30 days of delivery of the
notice of Dispute, the parties shall endeavor to settle the Dispute by good
faith mediation. Upon the expiration of the negotiating period, any party may
give written notice of mediation. The parties shall attempt to agree upon a
qualified, neutral individual who shall serve as mediator. If the
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parties fail to agree upon a mediator within 15 days of delivery of the notice
of mediation, the mediator will be appointed by the American Arbitration
Association from its roster of neutral mediators. The mediation shall occur in
Washington, D.C. within 30 days after appointment of a mediator, or at such
other time and place as the parties may agree. Any Dispute which remains
unresolved 60 days after appointment of a mediator shall be settled by
arbitration in accordance with Section 6.4 of this agreement. If a party refuses
to participate in the mediation process as provided herein, any other party may
immediately initiate arbitration as provided in Section 6.4. The parties shall
bear the cost of the mediation equally between them. Each party shall be
responsible for its own attorneys' fees relating to the mediation. Other than
with respect to its occurrence or the failure to occur, the mediation is in all
respects confidential and shall be treated as compromise and settlement
negotiations for purposes of applicable rules of evidence. The mediator may not
serve as an arbitrator in any subsequent arbitration proceedings concerning the
Dispute.
6.4. Arbitration of Disputes. If any Dispute has not been resolved by the
non-binding procedures set forth in Sections 6.2 and 6.3 within the time periods
provided for therein, either party may submit the Dispute to arbitration
administered by the American Arbitration Association ("AAA") under its then
current ICDR International Arbitration Rules ("AAA International Rules"), and as
set forth in this Article. The arbitration proceeding shall take place in
London, UK, in English, before a panel of three (3) arbitrators, all of whom
shall be admitted to practice law in at least one jurisdiction in the United
States, and at least one of whom shall have substantial experience in the field
of patent licenses. The arbitration shall be commenced and conducted as follows:
(a) Three arbitrators, appointed in accordance with the AAA
International Rules, shall hear the Dispute. Any person who (or whose spouse) is
or has been an employee, officer, director, partner, legal counsel, consultant
to or agent of ITC, IDC or Licensee or any of their respective Affiliates shall
be deemed to be partial and to have a conflict of interest and may not be
appointed an arbitrator. Should an arbitrator die, resign, refuse to act, or
become incapable of performing his or her functions as an arbitrator, the AAA
may declare a vacancy on the Arbitral Tribunal. The vacancy shall be filled by
the method by which that arbitrator was originally appointed.
(b) The parties shall request that the arbitrators conduct the
arbitration proceeding in an expedited fashion in order to complete the
proceeding within one (1) year of the date upon which the arbitration was
initiated under the AAA Institutional Rules. The parties shall use their best
efforts to cooperate with the arbitrators to complete the proceeding within such
one (1) year period. However, the Arbitral Tribunal may extend this period for
good cause shown.
(c) The arbitration proceedings shall be governed by this Agreement,
the AAA International Rules, and by the procedural arbitration law of the site
of the arbitration, and by the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards. The Arbitral Tribunal shall determine
the matters at issue in the Dispute in accordance with the substantive law of
the State of New York and U.S. Federal patent law, without regard to conflicts
of law principles. The Arbitral Tribunal shall decide the issues submitted as
arbitrators at law only and shall base its award, and any interim awards, upon
the terms of this Agreement and U.S. Federal patent law and the laws of the
State of New York. The Arbitral Tribunal is not empowered to and shall not act
as amiable compositeur or ex aequo et bono.
(d) The Arbitral Tribunal shall take into account applicable
principles of legal privilege and related protections, such as those involving
the confidentiality of communications between a lawyer and a client and the work
product of a lawyer, and no party or witness may be required to waive any
privilege recognized at law. The Arbitral Tribunal shall issue orders as
reasonably necessary to protect the confidentiality of proprietary information,
trade secrets, and other sensitive information disclosed.
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(e) Pursuant to a schedule to be established by the Arbitral Tribunal,
the parties shall exchange those documents upon which the producing party may
rely in support of any claim or defense. The parties may further exchange
documents in response to written requests for disclosure of non-privileged
documents directly relevant to the determination of the issues presented for
determination by the Arbitral Tribunal. Any dispute regarding such requests for
disclosure or the adequacy of any party's disclosures shall be determined by the
Arbitral Tribunal consistent with the expedited nature of arbitration.
(f) Escrow. In the event of a Dispute, the party alleged to owe any
amount due under this Agreement ("Depositor") shall deposit into an interest
bearing account with a mutually agreed to independent escrow agent (appointed by
the Arbitration Panel in the event of a failure to agree), an amount equal to
[**]percent ([**]%) of the amount in dispute. The party requesting an escrow
("Claimant") shall make a showing to the Arbitration Tribunal that there are
facts to support the claimed amount. The deposit of any escrow monies shall be
made within thirty (30) days from such date that the Arbitral Tribunal has
declared that the Arbitration proceedings have commenced. Notwithstanding the
above, any amounts payable under this Agreement which are not disputed shall be
paid to the party to which they are owed and not escrowed pending resolution of
the arbitration proceedings. The escrow agent shall be empowered to release any
or all monies, including accrued interest, from the escrow account:
(i) to the Claimant only to the extent determined by a decision
made by the Arbitral Tribunal, and
(ii) to the Depositor any amount remaining upon resolution of all
of the Claimants' claims; or
(iii) as agreed to in writing and signed by each party.
The parties shall share the cost of the escrow agent equally.
(g) Awards. All awards shall be in writing and shall state the
reasoning upon which the award rests. Any award shall be made and signed by at
least a majority of the arbitrators. The Arbitral Tribunal is expressly
empowered to grant any remedy or relief available under the law, including but
not limited to specific performance of this contract or matters arising out of
or in connection therewith and injunctive relief against the unlicensed sale of
Covered Products. Judgment on the award may be entered in any court of competent
jurisdiction. Any judgment or order of specific performance shall be
enforceable, without opposition in any country. Both parties shall bear equally
the cost of the arbitration (exclusive of legal fees and expenses, all of which
each party shall bear separately). Any monetary award shall be payable in United
States dollars, free of any tax or other deduction. Any determination of the
arbitration shall be binding solely on the parties hereto. All Awards shall be
paid within ten (10) days of such Award as to escrowed funds and within thirty
(30) days of such Award as to non-escrowed amounts.
(h) The failure or refusal of any party, having been given due notice
thereof, to participate at any stage of the dispute resolution proceedings shall
not prevent the proceedings from continuing, nor shall such failure or refusal
impair the validity of the award or cause the award to be void or voidable, nor
shall it be a basis for challenge of the validity or enforceability of the award
or of the arbitration proceedings. If any party fails to fund the escrow or to
timely pay an advance on fees and
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costs ordered by the Arbitral Tribunal or the AAA within thirty (30) days after
the date set for such deposit, that party shall be deemed to be in default of
the Arbitration. The Tribunal and/or the AAA shall then determine whether the
funds on deposit for fees and costs are sufficient to satisfy the anticipated
estimated expenses for the proceeding to continue on an expedited basis without
the participation of the defaulting party. If so, the proceeding will continue
without the participation of the defaulting party, and the Tribunal may enter an
award on default. Prior to entering an award on default, the Tribunal shall
require the non-defaulting party to produce such evidence and legal argument in
support of its contentions as the Tribunal may deem appropriate. The Tribunal
may receive such evidence and argument without the defaulting party's presence
or participation. If the funds on deposit are deemed insufficient to satisfy the
estimated costs of continuing as provided herein, the non-defaulting party may
make all or part of the requested deposit in an amount sufficient to allow the
proceeding to continue without the participation of the defaulting party. If the
non-defaulting party chooses not to make the requested deposit, the Arbitral
Tribunal may suspend or terminate the proceedings.
(i) Unless the parties agree otherwise, the parties, the
arbitrator(s), and the AAA shall treat the dispute resolution proceedings
provided for herein, any related disclosures, and the decisions of the Arbitral
Tribunal, as confidential, except in connection with judicial proceedings
ancillary to the dispute resolution proceedings, such as a judicial challenge
to, or enforcement of, the arbitral award, and unless otherwise required by law.
6.5. Interim Measures from the Courts in Aid of Arbitration. At any time
after submission of a written notice of a Dispute, any party may request a court
of competent jurisdiction to grant interim measures of protection including
without limitation temporary, preliminary, and injunctive relief: (a) to prevent
the destruction of documents and other information or things related to the
Dispute, or (b) to prevent the wasting or hiding of assets. Such injunctive
relief shall be enforceable in any country and neither Licensee nor Licensee's
Affiliates shall oppose such enforcement.
6.6. Mandatory Procedures. The parties agree that any Dispute arising under
this Agreement shall be resolved solely by means of the procedures set forth in
this article, and that such procedures constitute legally binding obligations
that are an essential provision of this Agreement. If either party fails to
observe the procedures of this article, as may be modified by their written
agreement, the other party may bring an action for specific performance of these
procedures in any court of competent jurisdiction. In the event Licensee fails
to comply with an Arbitral award, ITC shall be entitled (notwithstanding the
other provisions of this Agreement) to petition any court of competent
jurisdiction for temporary, preliminary and permanent injunctions against the
exercise of the licenses granted by this Agreement. Such injunctive relief shall
be enforceable in any country, and neither Licensee nor any Licensee Affiliate
shall oppose such enforcement.
6.7. Performance to Continue. Licensee shall continue to perform its
undisputed obligations under this Agreement pending final resolution of any
Dispute arising out of or relating to this Agreement. Nothing in this article,
including the requirements to mediate and arbitrate Disputes, shall relieve
Licensee from its obligation to make undisputed Payments pursuant to Article III
of this Agreement during the pendency of such proceedings, or delay ITC's right
to terminate this Agreement in accordance with Section 5.2.
6.8. Statute of Limitations. The parties agree that all applicable statutes
of limitation and time-based defenses (such as estoppel and laches) shall be
tolled while the procedures set forth in this Article VI are pending. The
parties shall cooperate in taking any actions necessary to achieve this result.
6.9. Relief From Stay. Licensee, in the event Licensee becomes the subject
of a voluntary or involuntary petition in bankruptcy under the U.S. Bankruptcy
Code or any other insolvency statute, or
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any foreign counterpart thereof, hereby consents to the applicable tribunal's
grant of any ITC request of relief from any stays, automatic or otherwise, or
other orders, laws or regulations that may limit ITC's rights to enforce the
terms of this Agreement, including without limitation the right to terminate
this Agreement pursuant to Article V of this Agreement for Licensee's breach.
The parties agree that any Dispute under this Agreement would not be a core
proceeding under 28 U.S.C. Section 157, because, inter alia, this Agreement was
entered into prior to the commencement of any bankruptcy proceeding and not in
contemplation thereof. Therefore, in the event a bankruptcy or similar
insolvency proceeding is commenced by or against Licensee, Licensee will
continue to support and use best efforts to ensure the arbitration of any
Disputes arising under this Agreement as set forth herein.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1. By ITC. ITC hereby represents and warrants that:
(a) ITC is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has authority to enter into
this Agreement and perform its obligations hereunder. This Agreement constitutes
a valid and binding agreement of ITC enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement nor the consummation by ITC
of the transactions contemplated hereby, nor compliance by ITC with any of the
provisions hereof, will (i) constitute a violation of or default under any
contract, instrument, commitment, agreement, understanding, arrangement, or
restriction of any kind to which ITC is a party, or by which ITC may be bound,
or (ii) violate any rule, regulation, law, statute, ordinance, judgment, order,
writ, injunction, or decree of any court, administrative agency, or governmental
body applicable to ITC.
(b) ITC has the right to license the ITC Patents. ITC represents that
it has not, within the four (4) year period prior to the Effective Date,
assigned, sold, or otherwise conveyed to any third party any patent or patent
application. ITC makes no other representation or warranty with regard to the
validity of the ITC Patents or Licensee's ability to design, develop, use,
manufacture, have manufactured, market, distribute or sell Covered Products free
of infringement of third party intellectual property rights. ITC shall have no
obligation to maintain or prosecute ITC Patents.
(c) ITC shall not make any claim against Licensee or its Affiliates of
inducement to infringe or contributory infringement relating to any product or
component produced by third parties where the manufacture or sale of such
product or component may include technology provided by Licensee, or may have
otherwise been facilitated by Licensee or its Affiliates. Such agreement not to
assert claims shall be (i) personal to Licensee and its Affiliates, (ii) extend
to only Covered Products that, had they been manufactured by Licensee or its
Affiliates, would have been covered under the license granted herein, (iii) not
convey any license or any other rights to such third party, and (iv) not
prejudice or affect any infringement claim that ITC may have against such third
party.
(d) ITC shall not make any claim against Licensee or its Affiliates
for (i) direct infringement of the ITC Patents relating to the Sale or license
of software for the Ericsson Mobile Platform, or (ii) inducement, indirect or
contributory infringement of the ITC patents as regards a third party's use of
the Ericsson Mobile Platform, in each case where such Ericsson Mobile Platform
is used by a third party to produce Covered Terminal Units that, had they been
manufactured or Sold by Licensee or its Affiliates hereunder, would have been
licensed under this Agreement. This covenant not to assert shall be personal to
Licensee and its Affiliates and shall not convey a license, express or implied,
or any other rights to such third party or prejudice or affect any infringement
claim that ITC may have against any third parties.
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7.2. By Licensee. Licensee hereby represents and warrants that:
(a) Telefonaktiebolaget LM Ericsson is a corporation duly organized,
validly existing, and in good standing under the laws of Sweden and Ericsson
Inc. is a corporation duly organized, validly existing, and in good standing
under the laws of Delaware, U.S.A., and both have authority to enter into this
Agreement and perform its obligations hereunder, and to cause its Affiliates to
perform their respective obligations hereunder. This Agreement constitutes a
valid and binding agreement of Licensee enforceable in accordance with its
terms. Neither the execution and delivery of this Agreement nor the consummation
by Licensee of the transactions contemplated hereby, nor compliance by Licensee
with any of the provisions hereof, will (i) constitute a violation of or default
under any contract, instrument, commitment, agreement, understanding,
arrangement, or restriction of any kind to which Licensee is a party, or by
which Licensee may be bound, or (ii) violate any rule, regulation, law, statute,
ordinance, judgment, order, writ, injunction, or decree of any court,
administrative agency, or governmental body applicable to Licensee.
(b) Neither Licensee nor any other entity in the Ericsson Family
directly or indirectly controls or owns more than fifty percent (50%) of the
voting stock of the Joint Venture or any affiliate of the Joint Venture.
(c) Telefonaktiebolaget LM Ericsson, effective October 1, 2001,
transferred to the Joint Venture the Ericsson Family's Terminal Unit business.
(d) No entity owns or controls or is under common control with
Telefonaktiebolaget LM Ericsson.
(e) Licensee shall not, and shall ensure that its Affiliates do not,
assert Ericsson Patents against ITC, InterDigital or their affiliates for use,
lease, design, manufacture, have manufactured, import, sell and otherwise
transfer of non-voice-centric Covered Terminal Units such as PCMCIA cards, or
Modules sold for physical integration into non-voice centric products. Such
covenants to not assert shall be non-assignable, non-transferable and personal
to ITC, InterDigital and their Affiliates and subject to the following
conditions:
[**]
[**] [**]
---------------------- ----------------------
[**] [**]
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7.3. By Both Parties.
(a) Each party will take any and all actions necessary to ensure that
this Agreement becomes applicable to Acquired Businesses pursuant to Section 3.4
hereof and becomes applicable to Transferees pursuant to Section 8.16.
(b) Neither party shall present or submit this Agreement in whole or
in part or any summary thereof, in any mediation, arbitration, or legal
proceeding against the other party or its Affiliates relating to any product
other than Covered Products.
7.4. Disclaimer. THE WARRANTIES AND REMEDIES SET FORTH IN THIS AGREEMENT
CONSTITUTE THE ONLY WARRANTIES WITH RESPECT TO THIS AGREEMENT AND THE SUBJECT
MATTER HEREOF, AND THEY ARE IN LIEU OF ALL OTHER WARRANTIES WRITTEN OR ORAL,
STATUTORY, EXPRESS, IMPLIED OR OTHERWISE, INCLUDING WITHOUT LIMITATION THE
IMPLIED WARRANTY OF MERCHANTABILITY AND THE IMPLIED WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE.
ARTICLE VIII
MISCELLANEOUS
8.1. Confidentiality. Unless otherwise required by law, court order or by
the Court in connection with the Lawsuit, the parties shall maintain as strictly
confidential this Agreement and any proprietary information disclosed under, or
as a result of the negotiation or performance of, this Agreement, including
without limitation the terms of this Agreement (including the exhibits hereto).
Notwithstanding the foregoing, the parties agree that Licensee and ITC or
InterDigital may (i) issue a press release regarding the execution of this
Agreement, such press release to be reviewed and approved in advance by the
other party, such approval not to be unreasonably withheld or delayed and (ii)
respond to any questions relating to confidential aspects of this Agreement in a
manner agreed upon by the Parties. For the avoidance of doubt, the forecasts and
reports Licensee submits pursuant to Article III of this Agreement shall be
deemed the proprietary information of Licensee. Notwithstanding the foregoing,
the parties agree that Licensee and ITC or InterDigital may (i) disclose the
contents or the principal terms of this Agreement in confidence to other
licensees only to the extent required by most favored licensee clauses and to
satisfy SEC, NASDAQ, London Exchange, Stockholm Stock Exchange or other
statutory, regulatory or administrative requirements, or to comply with a court
order, or in mediation or arbitration between the parties pursuant to Article VI
herein, and (ii) disclose any other information necessary to satisfy SEC,
NASDAQ, London Exchange, Stockholm Stock Exchange or other statutory, regulatory
or administrative requirements, to comply with a court order, or in mediation or
arbitration between the parties. Disclosures pursuant to subsection (ii) of this
Section 8.1 shall be subject to the other party's advance review and comment,
which comments shall not be unreasonably withheld or delayed.
8.2. Licensee Identification on Covered Terminal Units. If Licensee begins
marking Covered Terminal Units for other patent holders, Licensee shall, and
shall cause its Affiliates to, affix on all products, packaging or instructions
(or if practicable, the product itself) a label indicating that the products are
manufactured or sold under license from ITC. ITC may designate certain ITC
Patents for inclusion on such label.
8.3. Headings. The headings of the several Articles and Sections are
inserted for convenience of reference only and are not intended to be part of or
affect the meaning or interpretation of this Agreement.
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8.4. Audit. Licensee shall (and shall cause its Affiliates to) keep books
and records adequate to accurately determine the Payments under this Agreement,
and retain such books and records for at least three (3) years after the
delivery of the Royalty report to which they relate. ITC shall have the right,
no more than once per calendar year, to have an independent certified public
accountant inspect all relevant books and records of Licensee and its Affiliates
on thirty (30) days' prior notice and during regular business hours to verify
the reports and Payments required to be made hereunder. Such independent
certified public accountant shall be selected by ITC and approved by Licensee.
Licensee shall respond to ITC's selection of the auditor within ten (10) days
and its approval shall not be unreasonably withheld. The auditor shall enter
into an appropriate nondisclosure agreement with Licensee, and shall disclose no
more information than is reasonably necessary to determine the Payments owed
hereunder. Should an underpayment in excess of [**] percent ([**]%) be
discovered, Licensee shall pay the cost of the audit. In any event, Licensee
shall promptly pay any underpayment together with interest at the compounded
annual rate of [**] percent ([**]%) from the due date. All information obtained
through such audit shall be deemed Licensee proprietary information pursuant to
Section 8.1 of this Agreement.
8.5. Governing Law/Venue. The validity and interpretation of this Agreement
shall be governed by New York law, without regard to conflict of laws
principles. The parties further irrevocably consent to exclusive jurisdiction of
the state and federal courts in the State of New York for the purposes of
enforcement of any final award granted by the Arbitral Tribunal. Such
enforcement shall be governed by the laws of the State of New York.
8.6. Entire Agreement/Amendment.
To the extent Licensee is licensed under another patent license agreement with
ITC under standards or covering products that differ from the Covered Standards
or Covered Terminal Units, the other patent license agreement shall remain in
full force and effect as to those differing standards and/or products. To the
extent Licensee was licensed under another patent license agreement with ITC
prior to the Effective Date for the Sale of Covered Terminal Units, the terms of
that prior agreement shall continue to apply up to but not including the
Effective Date. Otherwise, this Agreement and, to the extent referenced herein
the Patent License Agreement between ITC and the Joint Venture effective January
1, 2003, contain the complete and final agreement between the parties, and
supersedes all previous understandings, relating to the subject matter hereof
whether oral or written. This Agreement may only be modified by a written
agreement signed by duly authorized representatives of the parties.
8.7. Acquisition of Licensee. Notwithstanding the provisions of Section
8.16(a) of this Agreement, if Telefonaktiebolaget LM Ericsson is acquired by (i)
merger, consolidation or another business combination, or (ii) the sale of more
than 50% of its capital stock, all payments required under Sections 3.1(a)(i),
3.1(b) and 3.2 of this Agreement shall become immediately due and payable, and
Licensee shall pay all such amounts in full on or before the effective date of
the transfer. Conditioned on payment in full of the payments required in
3.1(a)(i), 3.1(b) and 3.2 of this Agreement on or before the effective date of
the transfer, this Agreement shall extend to (i) Sales of Covered Terminal Units
to the extent provided under and in accordance with the provisions of Section
3.3 and (ii) Sales of Covered Infrastructure up to an amount reflecting [**].
8.8. Affiliate Performance. Each party shall be responsible for all actions
required of its Affiliates hereunder and shall be liable to the other party for
any adverse action or failure to perform by such party's Affiliates hereunder.
8.9. Waivers. No waiver of any right, term or condition under this
Agreement shall be deemed effective unless in writing and signed by the party
charged with such waiver, and no waiver shall operate
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as a waiver of any future such right, term or condition or any other right, term
or condition arising under this Agreement.
8.10. Survival. All representations, acknowledgements, obligations,
responsibilities, terms or conditions involving performance subsequent to the
expiration or termination, repeal or rejection of this Agreement, or which
cannot be determined to have been fully performed until after such time, or
which by their nature are intended to survive shall be deemed to survive.
Without limitation, all payment obligations and acknowledgements herein and the
representations and warranties contained in Article VII hereof are intended to
survive and shall survive any such expiration or termination, repeal or
rejection.
8.11. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
8.12. No Set Off. Licensee agrees and acknowledges that it has no right to,
and shall not, attempt to set off amounts claimed to be owed based on any claim
that it has or may have in the future against InterDigital, ITC, or any of their
respective affiliates, except as specifically agreed to in writing by ITC,
against amounts owed hereunder.
8.13. Licensee Rights. Nothing in this Agreement shall be construed as
limiting the rights or granting rights pursuant to which the Licensee has
outside the scope of the license granted hereunder, or restricting or granting
the right of Licensee or any of its Affiliates to make, have made, use, lease,
Sell or otherwise dispose of any particular product or products not herein
licensed.
8.14. Notices. Any report, notice or other communication required or
permitted to be made or given to either party hereto pursuant to this Agreement
shall be sent to such party by registered airmail (except that registered or
certified mail may be used where delivery is in the same country as mailing),
postage prepaid, addressed to the respective party at its address as set forth
below, or to such other address as it shall designate by written notice given to
the other party, and shall be deemed to have been made, given or provided on the
date of receipt. The addresses:
(a) For ITC:
InterDigital Technology Corporation
[**]
Attention: President
(b) For Licensee:
Ericsson Inc.
[**]
Attention: Office of the General Counsel
Telefonaktiebolaget LM Ericsson
[**]
Attention: General Counsel
8.15. Limitation. Nothing in this Agreement shall be construed as: (a) an
agreement to bring or prosecute actions against third party infringers of the
ITC Patents; (b) conferring any license or right
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under any patent other than the ITC Patents; or (c) conferring any right to use
the ITC Patents outside the field of use defined by the license grant of this
Agreement.
8.16. Personal Agreement. This Agreement is personal to Licensee and,
except as provided for in this Section 8.16 or as ITC consents in writing in its
sole discretion, may not be assigned or transferred, nor may any license granted
hereunder be assigned or transferred, whether by operation of law or otherwise,
and any attempt to make any such assignment or transfer shall be null and void.
Without limitation, the provisions of this Section 8.16 shall apply to the sale
or other transfer by Licensee or any Licensee Affiliate to an unaffiliated third
party any part of the business or substantial assets involved in the
manufacture, distribution or sale of Covered Terminal Units.
(a) If Licensee or any Licensee Affiliate sells or otherwise transfers
to an unaffiliated third party (a "Transferee") or any Affiliate, any part of
the business or substantial assets, or control over any of the foregoing,
involved in the manufacture, distribution or sale of Covered Infrastructure
Units (Transferred Business): all amounts specified by Sections 3.1(a)(i),
3.1(b) and 3.2 (and any increases thereto according to Section 3.4 herein) of
this Agreement and all other Payments accruing hereunder shall continue to be
the responsibility and obligation of Licensee under the terms of this Agreement,
provided that at Licensee's reasonable request ITC shall accept payment of some
or all of the Payments from Transferee, the Transferee's license pursuant to
this Section 8.16(a) shall extend to:
(i) Sales of Covered Terminal Units to the extent provided under
and in accordance with the provisions of Section 3.3, and
(ii) Sales of Covered Infrastructure Units up to an amount
reflecting [**].
(b) Notwithstanding the aforesaid, the Transferee shall have the
option of notifying ITC within one hundred and eighty (180) days from the date
of such transfer of its intent to terminate this Agreement as it applies to the
Covered Infrastructure business conveyed to the Transferee, in which event it
will so terminate as to the Transferee only.
8.17. Counterparts. This Agreement may be executed in counterparts, which
taken together, shall constitute one Agreement and each party hereto may execute
this Agreement by signing such counterpart, provided that no party shall be
bound hereby until it has been executed and delivered by all parties hereto. A
facsimile signature of either party to this Agreement, or any amendment of this
Agreement, shall be deemed an original signature of such party and shall
manifest such party's intention to be bound by this Agreement or such amendment.
8.18. Limitation of Liability. IN NO EVENT, WHETHER AS A RESULT OF BREACH
OF CONTRACT, A WARRANTY, TORT LIABILITY (INCLUDING NEGLIGENCE) OR OTHERWISE
SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL,
INCIDENTAL, INDIRECT OR EXEMPLARY DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS
OF PROFITS, LOSS OF REVENUES OR LOSS OF CAPITAL.
ARTICLE IX
RELEASE
ITC on behalf of itself and InterDigital, on behalf of themselves and their
respective Affiliates, as of the Effective Date of this Agreement, hereby
irrevocably (except for Termination due to failure to remit payments (required
under 3.1(a)(i), 3.1(b) and 3.2) releases Licensee, its Affiliates, and their
respective customers, including any customers in the chain of possession of any
Covered Products from
** Material has been omitted and filed separately with the Commission.
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any and all claims from infringement of ITC Patents (including method claims),
which claims have been made, or which might be made at any time, with respect to
any Covered Products or components used therein, manufactured, used, leased,
Sold or otherwise transferred by or for Licensee or its Affiliates before the
Effective Date of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives.
INTERDIGITAL TECHNOLOGY CORPORATION TELEFONAKTIEBOLAGET LM ERICSSON
By: By:
-------------------------------- -------------------------------
Name: Name:
-------------------------------- -------------------------------
Title: Title:
-------------------------------- -------------------------------
Date: Date:
-------------------------------- -------------------------------
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
Date:
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ERICSSON INC.
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
Date:
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ATTACHMENT A
LIST OF AFFILIATES
[**]
** Material, consisting of six pages, has been omitted and filed separately with
the Commission.