EXHIBIT 10.14
[LOGO OF DOLBY LABORATORIES LICENSING CORPORATION]
L3D-ACPE
DIGITAL AUDIO SYSTEM LICENSE AGREEMENT
INTERNET CODERS
PATENT LICENSE
AN AGREEMENT
------------
BY AND BETWEEN
--------------
Dolby Laboratories Licensing Corporation and Liquid Audio, Inc.
(hereinafter called "LICENSOR") (hereinafter called "LICENSEE")
of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile telephone number of LICENSOR (Sections 4.05 and 8.04): (▇▇▇) ▇▇▇-▇▇▇▇
LICENSOR's bank and account number for wire transfer of royalty payments
(Section 4.05):
Bank: ▇▇▇▇▇ Fargo Bank
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ U.S.A.
Account Name: Dolby Laboratories Licensing Corporation
Account Number: 4001-191451
ABA Number: ▇▇▇▇▇▇▇▇▇
Identification of bank with respect to whose prime rate interest is calculated
on overdue royalties (Section 4.06): ▇▇▇▇▇ Fargo Bank
Facsimile telephone number of LICENSEE (Section 8.04): (▇▇▇) ▇▇▇-▇▇▇▇
Address of LICENSEE for communications not otherwise specified (Section 8.04):
SIGNATURES:
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On behalf of LICENSOR On behalf of LICENSEE
By /s/ [SIGNATURE ILLEGIBLE] By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------- -----------------------------------
Place SAN FRANCISCO Place San Francisco
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Date 3 May 1996 Date 3 May 1996
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Witnessed By: Witnessed By:
/s/ [SIGNATURE ILLEGIBLE] /s/ [SIGNATURE ILLEGIBLE]
--------------------------------- -------------------------------------
Effective Date of Agreement: 3 May 1996 Initial Payment: None
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▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
DOLBY SAN FRANCISCO, CALIFORNIA 94103-4813 ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Telephone ▇▇▇-▇▇▇-▇▇▇▇ Telephone ▇▇▇▇-▇▇▇▇▇▇
Facsimile ▇▇▇-▇▇▇-▇▇▇▇ Facsimile 1793-842101
Signal Processing and Noise Reduction Systems
DIGITAL AUDIO SYSTEM LICENSE AGREEMENT
INTERNET CODERS - PATENT LICENSE
INDEX
-----
Preamble
I. DEFINITIONS
Section 1.01 - "LICENSOR"
Section 1.02 - "LICENSEE"
Section 1.03 - "Application"
Section 1.04 - "Patent"
Section 1.05 - "Related Application"
Section 1.06 - "Related Patent"
Section 1.07 - "Scheduled Patents"
Section 1.08 - "AC-3 Digital Audio System Specifications"
Section 1.09 - Section Deleted
Section 1.10 - "Licensed Device"
Section 1.11 - "Licensed Product"
Section 1.12 - "Patent Rights"
Section 1.13 - Section Deleted
Section 1.14 - "Confidential Information"
Section 1.15 - "Non-Patent Country"
Section 1.16 - Section Deleted
Section 1.17 - Licensee's Modified AC-3 Specification
Section 1.18 - Internet
II. LICENSES GRANTED
Section 2.01 - Licenses Granted to LICENSEE
Section 2.02 - Limitation of Licenses Granted
III. OTHER OBLIGATIONS OF THE LICENSEE AND LICENSOR
Section 3.01 - Section Deleted
Section 3.02 - Section Deleted
Section 3.03 - Section Deleted
Section 3.04 - Patent Enforcement
Section 3.05 - Section Deleted
Section 3.06 - Patent Marking
Section 3.07 - Section Deleted
Section 3.08 - Section Deleted
Section 3.09 - License Notice
IV. PAYMENTS
Section 4.01 - Initial Payment
Section 4.02 - Royalties
Section 4.03 - Section Deleted
Section 4.04 - Royalty Applicability
Section 4.05 - Royalty Payments and Statements
Section 4.06 - Royalties in Non-Patent Country
Section 4.07 - Books and Records
Section 4.08 - Rights of Inspecting Books and Records
V. ARTICLE DELETED
VI. TERMINATION AND EFFECT OF TERMINATION
Section 6.01 - Expiration of Agreement
Section 6.02 - Termination for Cause
Section 6.03 - Option to Terminate in a Non-Patent Country
Section 6.04 - Effect of Termination
VII. LIMITATIONS OF RIGHTS AND AUTHORITY
Section 7.01 - Limitation of Rights
Section 7.02 - Limitation of Authority
Section 7.03 - Disclaimer of Warranties and Liability; Hold Harmless
Section 7.04 - Limitation of Assignment by LICENSEE
Section 7.05 - Compliance with U.S. Export Control Regulations
VIII. MISCELLANEOUS PROVISIONS
Section 8.01 - Language of Agreement; Language of Notices
Section 8.02 - Stability of Agreement
Section 8.03 - Public Announcements
Section 8.04 - Address of LICENSEE and LICENSOR for all
Other Communications
Section 8.05 - Applicable Law
Section 8.06 - Choice of Forum; Attorneys' Fees
Section 8.07 - Construction of Agreement
Section 8.08 - Captions
Section 8.09 - Singular and Plural
Section 8.10 - Complete Agreement
Section 8.11 - Severability
Section 8.12 - No Conflict Representation and Warranty
Section 8.13 - Execution
Appendix A - Scheduled Patents
Appendix B - Dolby AC-3 Digital Audio System
Appendix C - Preliminary Specifications for Dolby AC-3 System
Appendix D - Deleted
Appendix E - Royalty rates
DIGITAL AUDIO SYSTEM LICENSE AGREEMENT
INTERNET CODERS - PATENT LICENSE
WHEREAS, LICENSOR is engaged in the field of audio signal processing
systems and has developed signal processing systems useful for audio recording
and playback and for other applications;
WHEREAS, LICENSOR's signal processing systems have acquired a reputation
for excellence and LICENSOR's trademarks have acquired valuable goodwill;
WHEREAS, LICENSOR has licensed over 160 companies to make, use and sell
consumer audio hardware incorporating LICENSOR's signal processing systems and
marked with LICENSOR's trademarks; and
WHEREAS, LICENSOR has developed the model AC-3 digital audio system which
uses a new technique for encoding and decoding of audio frequency data in
digital form with a substantially reduced bit-rate while maintaining a high
quality decoded audio signal;
WHEREAS, LICENSOR represents and warrants that it has rights to grant
licenses under LICENSOR's patents and patent applications;
WHEREAS, LICENSEE is engaged in the development, marketing and sale
(including licensing) of software products for the purpose of delivering high
quality audio content over the Internet;
WHEREAS, LICENSEE believes it can develop a substantial demand for software
products marked with LICENSOR's trademarks used to encode or decode audio
signals using a modified version of LICENSOR's model AC-3 digital audio system;
WHEREAS, LICENSEE desires a partially exclusive license to develop, market
and sell professional and consumer encoding and decoding software products using
a modified version of LICENSOR's model AC-3 digital audio system based on
LICENSOR's patents and patent applications; and
WHEREAS, LICENSOR is willing to grant such a license under the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, it is agreed by and between LICENSOR and LICENSEE as
follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.01 - "LICENSOR" means Dolby Laboratories Licensing Corporation, a
------------------------
corporation of the State of New York, having a place of business as indicated on
the title page of this Agreement, and its successors and assigns.
Section 1.02 - "LICENSEE" means the corporation identified on the title
------------------------
page of this Agreement and any subsidiary thereof of whose ordinary voting
shares more than 50% are controlled directly or indirectly by such corporation,
but only so long as such control exists.
Section 1.03 - "Application" means an application for the protection of an
---------------------------
invention or an industrial design; references to an "Application" shall be
construed as references to applications for patents for inventions, inventors'
certificates, utility certificates, utility models, patents or certificates of
addition, inventors' certificates of addition, utility certificates of addition,
design patents, and industrial design registrations.
Section 1.04 - "Patent" means patents for inventions, inventors'
----------------------
certificates, utility certificates, utility models, patents or certificates of
addition, inventors' certificates of addition, utility certificates of addition,
design patents, and industrial design registrations.
Section 1.05 - "Related Application" means an Application, whether
-----------------------------------
international or in the same or another country or region, which
(1) is substantially the same as (e.g., it does not include any new matter
in the sense of the United States Patent Law) an Application or Patent listed in
Appendix A, entitled "Scheduled Patents and Applications," which is attached
hereto and forms an integral part of this Agreement (for example, without
limiting the foregoing, a continuation Application, a corresponding Application,
an Application to reissue, or a re-filed Application), or
(2) is substantially only a portion of (e.g., it contains less than an
Application or Patent listed in Appendix A and, it does not include any new
matter in the sense of the United States Patent Law) an Application or Patent
listed in Appendix A (for example, a divisional Application, or a corresponding
or re-filed Application in the nature of a divisional Application).
Section 1.06 - "Related Patent" means:
-------------------------------------
(1) a Patent granted on an Application listed in Appendix A,
(2) a Patent granted on a Related Application,
(3) a reissue of a Patent of Sections 1.06(1) or 1.06(2), and
(4) a reexamination certificate of a Patent of Sections 1.06(1), 1.06(2),
or 1.06(3).
Section 1.07 - "Scheduled Patents" means the Applications and Patents
---------------------------------
listed in Appendix A together with Related Applications and Related Patents.
Applications and Patents which contain not only common subject matter but
also additional subject matter going beyond the disclosure of Applications and
Patents of this Section 1.07 (for example, without limiting the foregoing, a
continuation-in-part Application, or a corresponding or re-filed Application in
the nature of a continuation-in-part Application) shall be deemed to be
Scheduled Patents only with respect to that portion of their subject matter
common to the Applications and Patents of this Section.
Section 1.08 - "AC-3 Digital Audio System Specifications" means the
--------------------------------------------------------
specifications for the AC-3 digital audio system, comprising the claims and
teachings of the Scheduled Patents, the AC-3 Digital Audio System operating
parameters as specified in Appendix B entitled "Dolby AC-3 Digital Audio
System," and the "Preliminary Specifications for Dolby AC-3 System" as specified
in Appendix C, and any applicable modifications, improvements or enhancements
owned or licensable by LICENSOR. Appendices B and C are attached hereto and form
an integral part of this Agreement.
Section 1.09 - Section Deleted
------------
Section 1.10 - "Licensed Device" means a Digital Audio circuit or software
-------------------------------
implementation having AC-3 Digital Audio System Specifications, whether made in
discrete component, integrated circuit, or other forms, for encoding or decoding
one audio channel into a digital AC-3 bit stream. A circuit counts as one
"Licensed Device" for each audio channel it can simultaneously encode or decode.
Section 1.11 - "Licensed Products" shall mean:
---------------------------------
Software products and documentation, which conform to LICENSEE's Modified
AC-3 Specification, and which can be any of the following:
(1) an encoder used to prepare audio content to be sent over the Internet;
(2) a decoder used to decode audio content received from the Internet; or
(3) a combined encoder/decoder package to prepare and/or decode audio
content to be sent over and/or received from the Internet.
Section 1.12 - "Patent Rights" means:
------------------------------------
(1) the Scheduled Patents; and
(2) such Patents and Applications directed to Licensed Products that
LICENSOR may own or gain rights to license during the term of this Agreement and
which LICENSOR may agree to include in the Patent Rights without payment of
additional compensation by LICENSEE.
The Patent Rights do not include such other Applications and Patents as
LICENSOR does not agree to include in the Patent Rights without payment of
additional compensation by LICENSEE.
Section 1.13 - Section Deleted
------------------------------
Section 1.14 - "Confidential Information" means non-technical proprietary
----------------------------------------
information of LICENSOR or LICENSEE, including, without limiting the foregoing,
marketing information, product plans, business plans, royalty, and sales
information.
Section 1.15 - "Non-Patent Country" means a country in which there do not
----------------------------------
exist, with respect to a Licensed Product, any Scheduled Patents including any
pending Application or unexpired Patent, which, but for the licenses herein
granted, are (or in the case of an Application, would be if it were an issued
Patent) infringed by the manufacture, and/or use, lease or sale of such Licensed
Product.
Section 1.16 - Section Deleted
------------------------------
Section 1.17 - "LICENSEE's Modified AC-3 Specification" shall mean
------------------------------------------------------
modifications, developed by LICENSEE to the AC-3 Digital Audio System
Specifications, to provide for variable data rates.
Section 1.18 - "Internet" shall mean data networks using the "Internet
------------------------
Protocol" (commonly known as "IP")
ARTICLE II
LICENSES GRANTED
----------------
Section 2.01 - Licenses Granted to LICENSEE
-------------------------------------------
LICENSOR hereby grants to LICENSEE:
a personal, non-transferable, indivisible, and non-exclusive license
throughout the world under the Patent Rights, subject to the conditions set
forth and LICENSEE's performance of its obligations, including paying royalties
due, to make Licensed Products, and to use, lease and sell the same.
Section 2.02 - Limitation of Licenses Granted
---------------------------------------------
Notwithstanding the license granted under Section 2.01:
(1) no license is granted to lease, sell, transfer, or otherwise dispose of
any part of a Licensed Product, including, without limiting the foregoing, a
semiconductor chip specially adapted for use in a Licensed Product, which part
(a) is a material part of an invention which is the subject of a Scheduled
Patent and which part is not a staple article or commodity of commerce suitable
for substantial noninfringing use or (b) is not a spare part solely for the
repair of a Licensed Product manufactured by Licensee under this Agreement;
(2) no license is granted under this Agreement to lease, sell, transfer, or
otherwise dispose of any partially assembled products, products in kit form, and
knocked-down or semi-knocked-down products;
(3) no license is granted under this Agreement to copy any of LICENSOR's
own hardware designs;
(4) no license is granted under this Agreement with respect to LICENSOR's
A-type, B-type, C-type, SR or S-type noise reduction systems;
(5) no license is granted under this Agreement with respect to LICENSOR's
Consumer Surround Decoder Systems;
(6) no license is granted under this Agreement to use any Licensed
Trademark in connection with offering for sale or in advertising and/or
informational material relating to any Licensed Product;
(7) no right is granted with respect to LICENSOR's trade name "Dolby
Laboratories" except with respect to the use of said tradename on and in
connection with Licensed Products in the license notice required by Sections
3.01(6) and 3.09, respectively; and
(8) no right to grant sublicenses is granted under this Agreement, other
than end-user licenses to the Licensed Products.
ARTICLE III
OTHER OBLIGATIONS OF THE LICENSOR AND LICENSEE
----------------------------------------------
Section 3.01 - Section Deleted
------------------------------
Section 3.02 - Section Deleted
------------------------------
Section 3.03 - Section Deleted
------------------------------
Section 3.04 - Patent Enforcement
---------------------------------
LICENSEE shall immediately inform LICENSOR of all infringements, potential
or actual, which may come to its attention, of the Patent Rights. It shall be
the exclusive responsibility of LICENSOR, at its own expense, to terminate,
compromise, or otherwise act at its discretion with respect to such
infringements. LICENSEE agrees to cooperate with LICENSOR by furnishing, without
charge, except out-of-pocket expenses, such evidence, documents and testimony as
may be required therein.
Section 3.05 - Section Deleted
------------------------------
Section 3.06 - Patent Marking
-----------------------------
LICENSEE shall ▇▇▇▇ each Licensed Product in the form, manner and location
specified by LICENSOR, with one or more patent numbers of Patents in such
countries under which a license is granted under this Agreement.
Section 3.07 - Section Deleted
------------------------------
Section 3.08 - Section Deleted
------------------------------
Section 3.09 - License Notice
-----------------------------
On all Licensed Products, LICENSEE shall acknowledge that the Licensed
Products are manufactured under license from LICENSOR. The following notice
shall be used by LICENSEE on an exposed surface, such as the back or the bottom,
or if distributed online, in the "About.." (or equivalent) menu of all Licensed
Products: "AC-3 digital audio system manufactured under license from Dolby
Laboratories Licensing Corporation". Such notice shall also be used in all
instruction and servicing
manuals unless such acknowledgment is clearly and unambiguously given in the
course of any textual descriptions or explanations.
Section 3.10 - Section Deleted
------------------------------
Section 3.11 - Section Deleted
------------------------------
ARTICLE IV
PAYMENTS
--------
Section 4.01 - Initial Payment
------------------------------
LICENSEE shall promptly upon the Effective Date of this Agreement pay
LICENSOR the sum specified on the title page and shall pay all local fees,
taxes, duties, or charges of any kind and shall not deduct them from such sum
due unless such deductions may be offset against LICENSOR's own tax liabilities.
Section 4.02 - Royalties
------------------------
Subject to the provisions of Section 4.05, LICENSEE shall pay to LICENSOR
royalties on Licensed Products which are used, sold, leased, or otherwise
disposed of by LICENSEE, except for Licensed Products returned to LICENSEE by
customers of LICENSEE, other than in exchange for an upgraded product, on which
a credit has been allowed by LICENSEE to said customers. The royalty payable
shall be based on the number of Licensed Devices, hereinbefore defined,
contained in Licensed Products, which are used, sold, leased or otherwise
disposed of by LICENSEE in successive calendar quarters from the effective date
hereof, based on the schedule given in Appendix E of this Agreement.
The royalty payment provisions of this Section shall not be applicable so
long as the royalty payment provisions of the companion license agreement
entitled "Digital Audio System License Agreement - Internet Coders - Source
Code, Trademark and Know-How License", executed concurrently with this
Agreement, are applicable and royalties thereunder are being paid by LICENSEE.
Section 4.03 - Section Deleted
------------------------------
Section 4.04 - Royalty Applicability
------------------------------------
A Licensed Product shall be considered sold under Section 4.02 when
invoiced, or if not invoiced, delivered to another by LICENSEE or otherwise
disposed of or put into use by LICENSEE, except for
consignment shipments, which will be considered sold when the payment for such
shipments is agreed upon between LICENSEE and customer.
Section 4.05 - Royalty Payments and Statements
----------------------------------------------
LICENSEE shall render statements and royalty payments as follows:
(1) LICENSEE shall deliver to the address shown on the cover sheet of this
Agreement or such place as LICENSOR may from time to time designate, quarterly
reports certified by LICENSEE's chief financial officer or the officer's
designate within 30 days after each calendar quarter ending with the last day of
March, June, September and December. Alternatively, such reports may be
delivered by facsimile by transmitting them to LICENSOR's facsimile telephone
number shown on the cover sheet of this Agreement or such other number as
LICENSOR may from time to time designate. Royalty payments are due for each
quarter at the same time as each quarterly report and shall be made by wire
transfer in United States funds to LICENSOR's bank as identified on the cover
sheet of this Agreement or such other bank as LICENSOR may from time to time
designate. LICENSEE shall pay all local fees, taxes (other than taxes on
LICENSOR's income or profits), duties, or charges of any kind and shall not
deduct them from the royalties due unless such deductions may be offset against
LICENSOR's own tax liabilities.
Each quarterly report shall:
(a) state the number of each model type of Licensed Products leased, sold,
or otherwise disposed of by LICENSEE during the calendar quarter with respect to
which the report is due;
(b) state the number of Licensed Devices in each model type of Licensed
Product; and
(c) contain such other information and be in such form as LICENSOR or its
outside auditors may prescribe. If LICENSEE claims less than full product
royalty (under Section 4.06) or no royalty due (under Section 6.03), LICENSEE
shall specify the country in which such Licensed Products were made, the country
in which such Licensed Products were sold, and the identity of the purchasers of
such Licensed Products.
(2) Any remittance in excess of royalties due with respect to the calendar
quarter for which the report is due shall be applied by LICENSOR to the next
payment due.
(3) LICENSEE's first report shall be for the calendar quarter in which
LICENSEE sells its first Licensed Product.
(4) LICENSEE shall deliver a final report and payment of royalties to
LICENSOR certified by LICENSEE's chief financial officer or the officer's
designate within 30 days after termination of this Agreement throughout the
world. Such a final report shall include a report of all royalties due with
respect to Licensed Products not previously reported to LICENSOR. Such final
report shall be supplemented at the end of the next and subsequent quarters, in
the same manner as provided for during the term of the Agreement, in the event
that LICENSEE learns of any additional royalties due.
(5) LICENSEE shall pay interest to LICENSOR from the due date to the date
payment is made of any overdue royalties or fees, including the Initial Payment,
at the rate of 2% above the prime rate as is in effect from time to time at the
bank identified on the cover page of this Agreement, or another major bank
agreed to by the LICENSOR and LICENSEE in the event that the identified bank
should cease to exist, provided however, that if the interest rate thus
determined is in excess of rates allowable by any applicable law, the maximum
interest rate allowable by such law shall apply.
Section 4.06 - Royalties in Non-Patent Country
----------------------------------------------
If a Licensed Product is manufactured in a Non-Patent Country and used,
sold, leased or otherwise disposed of in a Non-Patent Country, be it the same or
a different Non-Patent Country, no royalties for the manufacture, use, sale,
lease or other disposal of the Licensed Products in such Non-Patent Country or
Countries shall be payable. This provision shall not apply and full royalties
shall be payable under Section 4.02:
(1) when Licensed Products are manufactured in any country which is not a
Non-Patent Country or are used, sold, leased or otherwise disposed of in any
country which is not a Non-Patent Country, be it the same country as the country
of manufacture or a different country; or
(2) when LICENSEE knows or has reason to know that the Licensed Products
manufactured in a Non-Patent Country and used, sold, leased or otherwise
disposed of in a Non-Patent Country are destined for use or for sale, lease or
other disposal in a country which is not a Non-Patent Country and LICENSOR deems
such sale to be for the purpose of defeating the royalty provisions of this
agreement.
Section 4.07 - Books and Records
--------------------------------
LICENSEE shall keep complete books and records of all sales, leases, uses,
returns, or other disposals by LICENSEE of Licensed Products for three years
after the relevant accounting period.
Section 4.08 - Rights of Inspecting Books and Records
-----------------------------------------------------
LICENSOR shall have the right, through a professionally registered
accountant at LICENSOR's expense, for three years after the relevant accounting
period, to inspect, examine and make abstracts of the said books and records
insofar as may be necessary to verify the accuracy of the same and of the
statements provided for herein but such inspection and examination shall be made
during business hours upon reasonable notice and not more often than once per
calendar year. LICENSOR agrees not to divulge to third parties any Confidential
Information obtained from the books and records of LICENSEE as a result of such
inspection unless such information (a) was known to LICENSOR prior to its
acquisition by LICENSOR as a result of such inspection; (b) becomes known to
LICENSOR from sources other than directly or indirectly from LICENSEE; or (c)
becomes a matter of public knowledge other than by breach of this Agreement by
LICENSOR.
ARTICLE V
ARTICLE DELETED
---------------
ARTICLE VI
TERMINATION AND EFFECT OF TERMINATION
-------------------------------------
Section 6.01 - Expiration of Agreement
--------------------------------------
Unless this Agreement already has been terminated in accordance with the
provisions of Section 6.02, this Agreement shall terminate with the termination
of the companion license agreement entitled "Digital Audio System License
Agreement - Internet Coders - Source Code, Trademark and Know-How License",
executed concurrently with this Agreement.
Section 6.02 - Termination for Cause
------------------------------------
At the option of LICENSOR, in the event that LICENSEE breaches any of its
material obligations under this Agreement, subject to the conditions of Section
6.04, this Agreement shall terminate upon LICENSOR's giving sixty (60) days
advance notice in writing, effective on dispatch of such notice, of such
termination, giving reasons therefor to LICENSEE, provided however, that, if
LICENSEE, within the sixty (60) day period, remedies the failure or default upon
which such notice is based, then such notice shall not become effective and this
Agreement shall continue in full force and effect. Notwithstanding the
sixty (60) day cure period provided under the provisions of this Section 6.02,
interest due under Section 4.05 shall remain payable and shall not waive,
diminish, or otherwise affect any of LICENSOR's rights pursuant to this Section
6.02.
Section 6.03 - Option to Terminate in a Non-Patent Country
----------------------------------------------------------
Subject to the provisions of Section 6.04, unless this Agreement already
has been terminated in accordance with the provisions of Section 6.01 or Section
6.02, LICENSEE shall have the option to terminate its license under this
Agreement with respect to a Non-Patent Country at any time after three years
from the Effective Date of this Agreement. Said option to terminate with respect
to such country shall be effective when LICENSOR receives LICENSEE's written
notice of its exercise of such option and shall be prospective only and not
retroactive.
Section 6.04 - Effect of Termination
------------------------------------
Upon termination of the Agreement, as provided in Sections 6.01 or 6.02, or
upon termination of the license under this Agreement with respect to a Non-
Patent Country in accordance with the option set forth in Section 6.03, with
respect to such country only, all licenses granted by LICENSOR to LICENSEE under
this Agreement shall terminate, all rights LICENSOR granted to LICENSEE shall
revest in LICENSOR, and all other rights and obligations of LICENSOR and
LICENSEE under this agreement shall terminate except that the following rights
and obligations of LICENSOR and LICENSEE shall survive to the extent necessary
to permit their complete fulfillment and discharge:
(1) LICENSEE's obligation to deliver a final royalty report and supplements
thereto as required by Section 4.05;
(2) LICENSOR's right to receive and LICENSEE's obligation to pay royalties,
under Article IV, including interest on overdue royalties, accrued or accruable
for payment at the time of termination and interest on overdue royalties
accruing subsequent to termination;
(3) LICENSEE's obligation to maintain books and records and LICENSOR's
right to examine, audit, and copy as provided in Sections 4.07 and 4.08;
(4) any cause of action or claim of either party accrued or to accrue
because of any breach or default by the other party;
(5) LICENSOR's obligations with respect to Confidential Information under
Section 4.08;
(6) LICENSEE's obligations to cooperate with LICENSOR with respect to
Patent enforcement under Section 3.04, with respect to matters arising before
termination;
(7) LICENSEE's and LICENSOR's obligations regarding public announcements
under Section 8.03; and
(8) LICENSEE shall be entitled to fill orders for Licensed Products already
received and to make or have made for it and to sell Licensed Products for which
commitments to vendors have been made at the time of such termination, subject
to payment of applicable royalties thereon and subject to said Licensed Products
meeting LICENSOR's quality standards, provided that LICENSEE promptly advises
LICENSOR of such commitments upon termination.
The portions of the Agreement specifically identified in the sub-parts of
this Section shall be construed and interpreted in connection with such other
portions of the Agreement as may be required to make them effective.
ARTICLE VII
LIMITATIONS OF RIGHTS AND AUTHORITY
-----------------------------------
Section 7.01 - Limitation of Rights
-----------------------------------
No right or title whatsoever in the Patent Rights is granted by LICENSOR to
LICENSEE or shall be taken or assumed by LICENSEE except as is specifically laid
down in this Agreement.
Section 7.02 - Limitation of Authority
--------------------------------------
Neither party shall in any respect whatsoever be taken to be the agent or
representative of the other party and neither party shall have any authority to
assume any obligation for or to commit the other party in any way.
Section 7.03 - Disclaimer of Warranties and Liability; Hold Harmless
--------------------------------------------------------------------
LICENSOR has provided LICENSEE the rights and privileges contained in this
Agreement in good faith. However, nothing contained in this Agreement shall be
construed as (1) a warranty or representation by LICENSOR as to the validity or
scope of any Patent included in The Patent Rights; (2) a warranty or
representation that the AC-3 Digital Audio System technology, Patent Rights, or
any Licensed Device, Licensed Product, or part thereof embodying any of them
will be free from infringement of
Patents, copyrights, trademarks, service marks, of other proprietary rights of
third parties; or (3) an agreement to defend LICENSEE against actions or suits
of any nature brought by any third parties.
LICENSOR disclaims all liability and responsibility for property damage,
and personal injury, whether or not foreseeable, that may result from the
manufacture, use, lease, or sale of Licensed Devices, Licensed Products and
parts thereof, and LICENSEE agrees to assume all liability and responsibility
for all such damage and injury.
LICENSEE agrees to indemnify, defend, and hold LICENSOR harmless from and
against all claims (including, without limitation, product liability claims),
suits, losses and damages, including reasonable attorneys' fees and any other
expenses incurred in investigation and defense, arising out of LICENSEE's
manufacture, use, lease, or sale of Licensed Devices, Licensed Products, or
parts thereof, or out of any allegedly unauthorized use of any trademark,
service ▇▇▇▇, Patent, copyright, process, idea, method, or device (excepting the
Licensed Patent Rights) by LICENSEE or those acting under its apparent or actual
authority, except for claims that the Licensed Products, or the manufacture,
use, lease or sale thereof, solely to the extent the same incorporate or conform
to the AC-3 Digital Audio System Specifications, infringe any patent, copyright,
trademark, service ▇▇▇▇ or other proprietary right of third parties.
In no event will either party be liable for any lost profits, lost data, or
any form of incidental, consequential or punitive damages of any kind (whether
or not foreseeable).
Section 7.04 - Limitation of Assignment by LICENSEE
---------------------------------------------------
The rights, duties and privileges of LICENSEE hereunder shall not be
transferred or assigned by it either in part or in whole without prior written
consent of LICENSOR. However, LICENSEE shall have the right to transfer its
rights, duties and privileges under this Agreement in connection with its merger
and consolidation with another firm or the sale of its entire business to
another person or firm, provided that such person or firm shall first have
agreed with LICENSOR to perform the transferring party's obligations and duties
hereunder.
Section 7.05 - Compliance with U.S. Export Control Regulations
--------------------------------------------------------------
(1) LICENSEE agrees not to export any technical data acquired from LICENSOR
under this Agreement, nor the direct product thereof, either directly or
indirectly, to any country in contravention of United States law.
(2) Nothing in this Agreement shall be construed as requiring LICENSOR to
export from the United States, directly or indirectly, any technical data or any
commodities to any country in contravention of United States law.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
------------------------
Section 8.01 - Language of Agreement; Language of Notices
---------------------------------------------------------
The language of this Agreement is English. If translated into another
language, this English version of the Agreement shall be controlling. Except as
may be agreed by LICENSOR and LICENSEE, all notices, reports, consents, and
approvals required or permitted to be given hereunder shall be written in the
English language.
Section 8.02 - Stability of Agreement
-------------------------------------
No provision of this Agreement shall be deemed modified by any acts of
LICENSOR, its agents or employees or by failure to object to any acts of
LICENSEE which may be inconsistent herewith, or otherwise, except by a
subsequent agreement in writing signed by LICENSOR and LICENSEE. No waiver of a
breach committed by either party in one instance shall constitute a waiver or a
license to commit or continue breaches in other or like instances.
Section 8.03 - Public Announcements
-----------------------------------
Neither party shall at any time heretofore or hereafter publicly state or
imply that the terms specified herein or the relationships between LICENSOR and
LICENSEE are in any way different from those specifically laid down in this
Agreement. LICENSEE shall not at any time publicly state or imply that any
unlicensed products use the AC-3 Digital Audio System Specifications. If
requested by one party, the other party shall promptly supply the first party
with copies of all public statements and of all publicity and promotional
material relating to this Agreement, the AC-3 Digital Audio System
Specifications, and Licensed Products.
Section 8.04 - Address of LICENSEE and LICENSOR for all Other
----------------------------------------------
Communications
--------------
Except as otherwise specified in this Agreement, all notices, reports,
consents, and approvals required or permitted to be given hereunder shall be in
writing, signed by an officer of LICENSEE or
LICENSOR, respectively, and sent postage or shipping charges prepaid by
certified or registered mail, return receipt requested showing to whom, when and
where delivered, or by Express mail, or by a secure overnight or one-day
delivery service that provides proof and date of delivery, or by facsimile,
property addressed or transmitted to LICENSEE or LICENSOR, respectively, at the
address or facsimile number set forth on the cover page of this Agreement or to
such other address or facsimile number as may from time to time be designated by
either party to the other in writing. Wire payments from LICENSEE to LICENSOR
shall be made to the bank and account of LICENSOR as set forth on the cover page
of this agreement or to such other bank and account as LICENSOR may from time to
time designate in writing to LICENSEE.
Section 8.05 - Applicable Law
-----------------------------
This Agreement shall be construed in accordance with the substantive laws,
but not the choice of law rules, of the State of California.
Section 8.06 - Choice of Forum; Attorneys' Fees
-----------------------------------------------
To the full extent permitted by law, LICENSOR and LICENSEE agree that their
choice of forum, in the event that any dispute arising under this agreement is
not resolved by mutual agreement, shall be the United States Courts in the State
of California and the State Courts of the State of California.
In the event that any action is brought for any breach or default of any of
the terms of this Agreement, or otherwise in connection with this Agreement, the
prevailing party shall be entitled to recover from the other party all costs and
expenses incurred in that action or any appeal therefrom, including without
limitation, all attorneys' fees and costs actually incurred.
Section 8.07 - Construction of Agreement
----------------------------------------
This Agreement shall not be construed for or against any party based on any
rule of construction concerning who prepared the Agreement or otherwise.
Section 8.08 - Captions
-----------------------
Titles and captions in this Agreement are for convenient reference only and
shall not be considered in construing the intent, meaning, or scope of the
Agreement or any portion thereof.
Section 8.09 - Singular and Plural
----------------------------------
Throughout this Agreement, words in the singular shall be construed as
including the plural and words in the plural shall be construed as including the
singular.
Section 8.10 - Complete Agreement
---------------------------------
This Agreement contains the entire agreement and understanding between
LICENSOR and LICENSEE with respect to its subject matter and merges all prior or
contemporaneous oral or written communication between them. Neither LICENSOR nor
LICENSEE now is, or shall hereafter be, in any way bound by any prior,
contemporaneous or subsequent oral or written communication except insofar as
the same is expressly set forth in this Agreement or in a subsequent written
agreement duly executed by both LICENSOR and LICENSEE.
Section 8.11 - Severability
---------------------------
Should any portion of this Agreement be declared null and void by operation
of law, or otherwise, the remainder of this Agreement shall remain in full force
and effect.
Section 8.12 - No Conflict Representation and Warranty
------------------------------------------------------
Each party represents and warrants to the other that such first party is
not a party to any agreement, and is not subject to any statutory or other
obligation or restriction, which might prevent or restrict it from performing
all of its obligations and undertakings under this License Agreement, and that
the execution and delivery of this Agreement and the performance by such first
party of its obligations hereunder have been authorized by all necessary action,
corporate or otherwise.
Section 8.13 - Execution
------------------------
IN WITNESS WHEREOF, the said LICENSOR has caused this Agreement to be
executed on the cover page of this Agreement, in the presence of a witness, by
an officer duly authorized and the said LICENSEE has caused the same to be
executed on the cover page of this Agreement, in the presence of a witness, by
an officer duly authorized, in duplicate original copies, as of the date set
forth on said cover page.
APPENDIX A - SCHEDULED PATENTS
The Scheduled Patents shall mean the following patents and patent applications:
PATENTS
-------
Country Patent Number
------- -------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ 1,239,701
Canada 2,026,213
Taiwan 52,047
Taiwan 53,726
Taiwan 56,006
United States of America 4,790,016
United States of America 4,914,701
United States of America 5,109,417
United States of America 5,142,656
United States of America 5,230,038
PATENT APPLICATIONS
-------------------
Country Application Number
------- ------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇/▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇/▇▇
▇▇▇▇▇▇ PI9007063
Canada 2,059,141
Canada 2,077,662
Canada 2,077,668
Canada 519,978-6
Canada (Docket 90-3-827)
China 91,102,167.1
Europe 91,102,167.1
Europe 86,900,480.4*
Europe 91,117,397.9*
Europe 90,903,518.0*
Europe 91,102,167.1*
Europe 92,903,819.8*
France 90,903,518.0
Germany 90,903,518.0
Italy 90,903,518.0
Japan 2-503,825
Japan 3-508,357
Japan 4-504,474
Japan 4-503,836
Korea 90-702,194
Luxembourg 90,903,518.0
Netherlands 90,903,518.0
PCT 91/02512
PCT 92/00133
PCT 92/00134
PCT 92/04767
Spain 90,903,518.0
PATENT APPLICATIONS (continued)
-------------------------------
Country Application Number
------- ------------------
Sweden 90,903,518.0
Switzerland 90,903,518.0
Taiwan 80,101,567
United Kingdom 90,903,518.0
United States of America 07/597,438
United States of America 07/638,896
United States of America 07/710,805
United States of America 07/718,356
United States of America 07/781,262
United States of America 07/927,429
United States of America 07/959,730
United States of America 08/092,269
United States of America 08/102,072
United States of America 08/115,513
United States of America 08/145,975
APPENDIX B - "DOLBY AC-3 DIGITAL AUDIO SYSTEM"
Compliance with the algorithm description and operating parameters as specified
in ATSC document A/52, the "Dolby AC-3 Licensing Manual", the "Software
Interface Protocol" issued by LICENSOR and any further reasonable specifications
and requirements as LICENSOR may issue from time to time.
APPENDIX C - PRELIMINARY SPECIFICATIONS FOR DOLBY AC-3 SYSTEM
Dolby AC-3 digital audio system encoding equipment shall comply with the
following specifications in production (when measured through a standard
decoder):
Audio data rate for two channels: 192 kb/sec
Frequency Response: 20 Hz - 20 kHz = 0.2 dB
Dynamic Range: Greater than 85 dB
Distortion: Less than 0.1% at 1 kHz
Less than 0.5%, 20 Hz - ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇: Less than -80 dB
Level Stability: Better than 0.2 dB
APPENDIX D - APPENDIX DELETED
APPENDIX E - ROYALTY SCHEDULE
[*] [*]
* Certain information in this Exhibit has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
