EXHIBIT 10.3
DEFINITIVE AGREEMENT
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This Agreement is made as of January 9, 1998 ("Effective Date"), by and
between Gemstar International Group Limited ("Gemstar International"), a
corporation organized and existing under the laws of the British Virgin Islands,
StarSight Telecast, Inc. ("StarSight"), a corporation organized and existing
under the laws of the State of California, USA, having its main place of
business at 00000 Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000, and
Microsoft Corporation ("Microsoft"), a corporation organized and existing under
the laws of the State of Washington, USA, having its main office and place of
business at Xxx Xxxxxxxxx Xxx, Xxxxxxx, Xxxxxxxxxx 00000-0000, XXX, who agree as
follows:
Section 1
Recitals
Gemstar (defined below) is engaged in the manufacture, research and
development of data processing products and methods including the provision of
schedule and programming information to end users and television broadcast
facilities having systems compatible for receiving such information.
Microsoft develops, manufactures, licenses, sells and supports a wide range of
software and hardware products, including data processing products, for personal
computers ("PCs"), sub-PCs, computerized appliances, workstations and servers.
Gemstar International and its subsidiaries, including StarSight, Gemstar
Development Corporation, a California corporation, and VCR Index Systems B.V., a
Netherlands corporation, and Microsoft have intellectual property rights
including certain patents and patent applications, and have the right to grant
licenses to the other under such intellectual property rights. The parties
expect to continue research and development which will be protected by future
intellectual property rights. Each of the parties wishes to be granted licenses
under such intellectual property rights of the other party.
StarSight and Microsoft entered into a definitive agreement effective October
1, 1996 ("StarSight Agreement"). The StarSight Agreement, inter alia, related
to EPGs and certain intellectual property rights of StarSight and Microsoft
related to EPGs. StarSight subsequent to October 1, 1996 became a wholly owned
subsidiary of Gemstar.
The parties wish to cooperate with respect to their respective development of
data processing products and provision of schedule and programming information
to end users and television broadcast facilities. Further, the parties wish to
share certain revenues and conduct various marketing activities in connection
with such products and services.
Section 2
Definitions
When the following terms are used in capitalized form herein, they shall have
the following meanings:
"Additional Patents" means the following U.S. Patents and their counterparts:
[*]; and 5,293,357 (Xxxxxxxxxx), in which Gemstar is a licensee having a [*]
right to sublicense. With respect tothe Additional Patents, Gemstar acknowledges
that it has the [*] to sublicense Microsoft and its Subsidiaries for at least
Microsoft Licensed Products in which data is delivered directly to the Microsoft
Licensed Product through a [*] delivery mechanism under certain terms and
conditions.
"Advertising Links" means a hypertext link or other mechanism through which
advertising is made available to or accessible by user selection. One example
of an "Advertising Link" would be an icon which could be selected by a user
which activates or causes the display or storage of an advertising message.
"Advertising Revenue(s)" means [*] Microsoft revenues generated from
advertising sold for display in [*] EPG display of any Microsoft EPG Product or
Other Microsoft Licensed Product, as well as any [*] paid by an advertiser,
data provider or any other party to Microsoft for [*] of an Advertising Link
or Data Link or for user selection of an Advertising Link or Data Link in any
EPG display of any Microsoft EPG Product or Other Microsoft Licensed Product, as
applicable. In the event, all, or a portion of any such advertising and/or
Advertising Links are used by Microsoft or provided by Microsoft to one or more
third parties (including Microsoft Subsidiaries) for no consideration or for
consideration other than cash ("Non-Revenue Producing Advertising Inventory"),
then Microsoft shall make available for Gemstar's utilization an amount of
inventory of advertising and/or Advertising Links of equal quality in an amount
equal to [*] of such Non-Revenue Producing Advertising Inventory. Accordingly,
the split of total non-cash inventory represented by the sum of Non-Revenue
Producing Advertising Inventory (i.e., the amount used or provided by Microsoft)
and the portion provided for Gemstar's use is [*] to Microsoft and [*] to
Gemstar. Any revenues Gemstar derives from its use of such inventory shall be
Gemstar's and shall not be included in
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Subscription Revenues. For its [*], Gemstar shall be entitled to run scheduled
ads and zero priority ads of the same [*] and at the same ratio as run by
Microsoft as part of Microsoft's [*]. To the extent Microsoft runs zero priority
ads, Gemstar shall provide Microsoft with a sufficient quantity of advertising
content to be run as zero priority ads by Microsoft. To the extent Microsoft
runs scheduled ads it shall notify Gemstar in a timely manner such that Gemstar
will be able to provide Microsoft with its percentage share as scheduled ads to
be run by Microsoft in the following calendar quarter.
"Data Carriage Rights" mean collectively "Data Carriage Rights (non-Service
Provider originated)" and "Data Carriage Rights (Service Provider originated)."
"Data Carriage Rights (non-Service Provider originated)" means a covenant in
favor of Gemstar to [*] any EPG Related Data carried in the VBI lines or via any
other applicable equivalent data transmission bandwidth (digital or otherwise).
If the Server Provider elects to convert between analog and digital signals such
conversion shall not adversely affect the data included in the original signal.
For the purpose of this definition, digital equivalence shall be determined by
reference to [*] bit rates.
"Data Carriage Rights (Service Provider originated)" means a covenant by the
Service Provider to provide Microsoft and/or Gemstar with exclusive access,
control and use rights to at least the number of VBI lines specified in Section
5.4.1 or an equivalent bandwidth (digital or otherwise) as of the date each
respective Service Provider begins authorized use of a Microsoft EPG Product.
The Data Carriage Rights shall be allocated among the parties and operated as
provided in Section 5.4.1.
"Data Link" means a hypertext link or other mechanism contained in the TV
listing data which populates any Microsoft EPG Product through which additional
services, which may generate Subscription Revenues or Advertising Revenues, can
be made available or accessible by user selection. One example of a "Data Link"
could be a link to a web site of the channel or program provider or studio
supplying a particular show in the listing.
"Data Loader" means a mechanism for receiving and storing data in a manner
which allows it to be displayed in an EPG.
"Deliverables" shall mean either the Microsoft Deliverables or the Gemstar
Deliverables as the context may require.
"Delivering Party" shall mean Microsoft in the case of the Microsoft
Deliverables and Gemstar in the case of the Gemstar Deliverables.
"Digital Set Top Box" means any limited purpose digital device which is not a
Traditional Product or a Personal Computer, a principal design and function of
which is the reception of broadcast television programming (whether in digital
or analog form), irrespective of the broadcast method (e.g., cable, satellite)
on which Microsoft has installed or licensed an Microsoft EPG Product.
"Direct Broadcast Satellite Product" or "DBS Product" means an integrated
receiver/decoder product compatible with a direct broadcast satellite system
such as, for example, the DirecTV 101 West direct broadcast satellite network.
A DBS Product may be, for example, without limitation a television, a VCR or
personal computer having an integrated direct broadcast satellite network
receiving function.
"DirecTV" means DirecTV, Inc. or its successor in interest to its television
satellite business.
"Electronic Program Guide" or "EPG" means any electronic guide which displays
or gives selective access to any information.
"EPG Related Data" means program listing information, advertising information
and associated data pertaining to or directly accessed through any EPG related
application or capability. The phrase "directly accessed" shall not preclude
the first accessed data source or site from having multiple internal data pages
or levels which shall be considered EPG Related Data.
"Gemstar" means Gemstar International Group Limited and all of its
Subsidiaries, excluding Norpak. In the event of a grant of intellectual
property, a grant by Gemstar means a grant by Gemstar International and a
covenant by Gemstar International to cause a grant by its Subsidiaries, and a
grant to Gemstar means a grant to Gemstar unless Gemstar directs that such grant
be to an identified Subsidiary or Subsidiaries.
"Gemstar Authorization Codes" means codes which Gemstar uses to electronically
send activation, deactivation or other commands or data to individually
addressable Gemstar products.
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"Gemstar Data Loader" means a Data Loader that receives and stores Gemstar
data, pursuant to a Gemstar authorization.
"Gemstar Deliverables" shall mean deliverables identified on Appendix B,
attached hereto and incorporated by reference.
"Gemstar Licensed Product(s)" means any and all EPG products and services of
Gemstar or any of its Subsidiaries the primary function of which is to receive
with the intent to display and/or display information from a Gemstar data
service and a substantial portion of which functionality is to receive with the
intent to display and/or display television programming information which
products and services, but for this Agreement would directly or indirectly
infringe one or more of the valid and enforceable claims of the Microsoft
Licensed Patents. For example, personal computer operating systems,
Internet/intranet browser programs, general purpose word-processing programs,
and spreadsheet programs would not be included in the term "Gemstar Licensed
Products."
"Gemstar Protocol(s)" means data structures, protocols, and similar
information established by Gemstar to enable Gemstar products to receive, decode
and utilize information broadcast through the Gemstar system.
"Gemstar Trademarks" means the "Gemstar" and the "Gemstar and Design"
trademarks, whether alone or in combination, as illustrated inthe trademark list
delivered to Microsoft concurrent with the execution hereof; provided however,
that the appearance and/or style of the trademarks may vary from time to time as
specified by Gemstar in its sole discretion.
"Licensed Patents" means, as to each party to this Agreement, the claims
covering EPG-related inventions in any and all patents and applications
throughout the world including utility, models, design patents, divisionals,
reissues, continuations, re-examinations and extensions thereof, issued or
issuing on applications entitled to an effective filing date before [*],
under which patents or applications therefor such party or any of its
Subsidiaries now has or [*] of or within the scope granted herein. The term
"Licensed Patents" shall not apply with respect to any claim ("Conditional
Claims") of any patent in which either party first obtains rights before, on, or
after the Effective Date if a grant of a license or the exercise of rights
thereunder would result, [*] or result in the loss of any rights in such patent,
by the granting party, except for [*] to Subsidiaries of such granting party,
and [*] to third parties for inventions made by said third parties while
employed by such granting party to this Agreement. Except for the Additional
Patents, Microsoft, Gemstar and StarSight represent that none of the patents or
applications in which they currently have rights include Conditional Claims.
Notwithstanding the exception provided for Conditional Claims, Gemstar Licensed
Patents shall further mean all claims of the Additional Patents, provided,
however, that Gemstar's obligation to convey rights in the Additional Patents to
Microsoft and its Subsidiaries under this Agreement shall be no greater than the
rights Gemstar has in such Additional Patents and shall not apply if any such
conveyance would require Gemstar to incur a royalty payment to an unaffiliated
party. Licensed Patents shall not include [*] patents.
"Microsoft Deliverables" shall mean deliverables identified on Appendix A,
attached hereto and incorporated by reference and as may be amended from time to
time in writing by the mutual agreement of the parties to this Agreement.
"Microsoft EPG Product" means a Microsoft Licensed Product that includes or
incorporates an EPG designed to receive and display TV listings.
"Microsoft Licensed Product(s)" means any and all products, services and
infrastructure of Microsoft or any of its Subsidiaries which products, services
and infrastructure, but for this Agreement would directly or indirectly infringe
one or more of the valid and enforceable claims of the Gemstar Licensed Patents.
The term "Microsoft Licensed Products," however, shall not include Traditional
Products.
"Net Advertising Revenues" means Advertising Revenues less only allowances for
uncollectable amounts and bad debts, determined in accordance with generally
accepted accounting principles as consistently applied by Microsoft.
"Net Data Carriage Right Revenues" means Advertising Revenues and other
revenues, such as subscription revenues derived by Gemstar from Microsoft
products, which are attributable to Gemstar's use of the Data Carriage Rights
(Service Provider originated) less only allowances for uncollectable amounts and
bad debts, determined in accordance with generally accepted accounting
principles as consistently applied by Gemstar.
"Net Subscription Revenues" means Subscription Revenues less only allowances
for uncollectable amounts and bad debts, determined in accordance with generally
accepted accounting principles as consistently applied by Gemstar.
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"Other Microsoft Licensed Products" means Microsoft Licensed Products which
are not for a: (w) digital television, as described in Section 11.2, (x) Service
Provider Provisioned Digital Set Top Box; (y) Digital Set Top Box; or (z)
Personal Computer.
"Personal Computer" shall mean any multi-purpose computing device which has
the capability of supporting word processing, spreadsheet processing and data
base processing, and components designed therefor.
"Potentially Active Units" means units of Microsoft EPG Products that are
designed for use with, and distributed as part of systems including television
tuners and that have or are estimated to have been placed in the market by
Microsoft, which estimate shall be based upon data published or provided by Data
Quest.
"Receiving Party" shall mean Gemstar in the case of the Microsoft Deliverables
and Microsoft in the case of the Gemstar Deliverables.
"Service Provider" means any company or entity which operates a public
broadcast system (i.e., system is not similar to an intranet where access is
restricted within an organization such as a company or government agency),
irrespective of the broadcast method (e.g., cable, satellite), for providing
programming services such as television.
[*] means, with respect to any Digital Set Top Box, one that is directly or
indirectly provided by a [*] to an end user via lease, subscription or otherwise
whereby title to the Digital Set Top Box does not pass to the end user (i.e.,
the Digital Set Top Box remains an asset listed on the financial books of the
[*] or other entity which provides the Digital Set Top Box to the end user). In
the case where title to a Digital Set Top Box is intended to pass to an end user
over time, for example as a result of a lease/purchase arrangement with
installment payments for an applicable Digital Set Top Box, such Digital Set Top
Box shall be deemed to be [*].
"Subscription Free Data" means local or otherwise geographically appropriate
broadcast TV listings data provided by Gemstar to an end user via a Gemstar Data
Loader free of any charges to such end user, and additional broadcast TV
listings data to the extent that Gemstar offers such additional data to
unaffiliated third parties or to Gemstar products for free.
"Subscription Revenues" means Gemstar revenues generated from (or as a result
of) Subscription Free Data services (e.g., advertisements), Data Links,
Advertising Links or paid subscribers to the Gemstar EPG subscription service
for local or otherwise geographically appropriate broadcast TV listings derived
directly from users' use of Microsoft EPG Products. The term "Subscription
Revenues" does not include subscription revenues received by Gemstar derived
from any non-Microsoft EPG product irrespective of whether such non-Microsoft
EPG Product runs on a third party platform or on a Microsoft operating system
platform (such as "Windows 95" or its successor products and platforms).
"Subsidiary" means a corporation, company, or other entity: (i) more than [*]
of whose outstanding shares or securities (representing the right to vote for
the election of directors or other such managing authority) are, now or
hereafter, owned or controlled, directly or indirectly by a party hereto, but
such corporation, company, or other entity shall be considered to be a
Subsidiary only so long as such ownership or control exists; or (ii) which does
not have outstanding shares or securities, as may be the case with a
partnership, joint venture, or unincorporated association, but more than [*] of
whose ownership interest representing the right to make decisions for such
corporation, company, or other entity is, now or hereafter, owned or controlled,
directly or indirectly by a party hereto, but such corporation, company, or
other entity shall be considered to be a Subsidiary only so long as such
ownership or control exists.
"Trade Secret(s)" means information shared by one party with the other
relating to past, present and future research, development and business
activities, which information is treated as secret and confidential, and which
information derives independent, actual or potential value from not being
generally known to other persons by proper means.
"Traditional Product(s)" means devices of the type and capability generally
available in the consumer market as of [*], in the following product categories:
television sets, VCRs, TVCRs, and television set top decoder boxes irrespective
of whether such products are connected via cable, satellite, telephony, MMDS,
etc. and irrespective of whether such products are [*] or distributed by some
other means.
"Transfer(s)" or "Transferred" means (i) deliver(ed) to others (including for
export) other than by sale, regardless of the basis of compensation, if any,
(e.g., by consignment or by gift) and/or (ii) sell (sold) in combination with
other products.
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"Version" means a particular model or version of a Microsoft Licensed Product.
"Version Number" means any combination of numbers, letters, and/or words used
to identify a particular Version of a Microsoft Licensed Product.
"Web Server" means a mechanism for distributing, via the Internet, EPG Related
Data to Microsoft EPG Product(s) using a Gemstar Data Loader.
Section 3
Patent and Trade secret Cross-License
3.1 Subject to the obligations herein, including without limitation the
consideration and payments pursuant to Sections 5 and 6, Gemstar and StarSight
hereby grant to Microsoft a worldwide, non-exclusive, non-assignable license
under Gemstar's and StarSight's Licensed Patents and, subject without limitation
to Section 10.1 and 10.2, Trade Secrets to make, have made, use, lease, sell,
offer to sell, otherwise market and import Microsoft Licensed Products.
3.2 Subject to the obligations herein, including without limitation the
consideration and payment pursuant to Sections 5 and 6, Microsoft hereby grants
to Gemstar a worldwide, non-exclusive, non-assignable license under Microsoft's
Licensed Patents and, subject without limitation to Sections 10.1 and 10.2,
Trade Secrets to make, have made, use, lease, sell, offer to sell, otherwise
market and import Gemstar Licensed Products.
3.3 Subject to Section 11, the patent licenses granted under this Section 3
shall not include the right to grant sub-licenses. The right to "have made"
shall not be considered a prohibited sub-license.
Section 4
Development and Schedules
4.1 Microsoft shall deliver the Microsoft Deliverables to Gemstar in
accordance with schedules referenced in Section 4.5. If the schedule is not
specified for a particular Microsoft Deliverable, then such Microsoft
Deliverable will be distributed throughout the term of this Agreement as jointly
determined by the parties.
4.2 Microsoft grants to Gemstar the license rights described in Appendix A
with respect to the Microsoft Deliverables. The relevant license grants will
apply to all Versions (pre-release and final) and components thereof distributed
by Microsoft. To the extent any of the license rights set forth in Appendix A
are inconsistent with the license rights set forth in this Agreement, then the
license rights set forth in this Agreement shall apply.
4.3 Gemstar shall deliver the Gemstar Deliverables to Microsoft in accordance
with schedules referenced in Section 4.5. If the schedule is not specified for a
particular Gemstar Deliverable, then such Gemstar Deliverable will be
distributed throughout the term of this Agreement as jointly determined by the
parties.
4.4 Gemstar grants to Microsoft the license rights described in Appendix B
with respect to the Gemstar Deliverables. The relevant license grants will
apply to all Versions (pre-release and final) and components thereof distributed
by Gemstar. To the extent any of the license rights set forth in Appendix B are
inconsistent with the license rights set forth in this Agreement, then the
license rights set forth in this Agreement shall apply.
4.5 The current schedule for the delivery of the Deliverables is set forth on
Appendices A and B and may, from time to time be updated upon agreement of the
parties. The schedule and all updates thereto will take into account the
availability of the Deliverables and timing of development activities and test
deployments. The parties agree to use reasonable efforts to implement the
development activities and test deployments in accordance with the agreed upon
schedule.
4.6 In the event hardware is included in the Deliverables, then the following
additional terms and conditions shall apply to such hardware. The Delivering
Party shall retain title to hardware it delivers at all times. The Receiving
Party shall insure and take normal precautions to care for the hardware it
receives. The Delivering Party agrees that for the duration of this Agreement
it will maintain the hardware it delivers in good working order at its expense.
The Delivering Party shall determine in its sole discretion the methods (e.g.,
repair, replacement) by which it will maintain the hardware it delivers in good
working order. The Receiving Party agrees to provide reasonable assistance and
access to the hardware it receives to the Delivering Party for this purpose.
4.7 The Receiving Party may not reverse engineer, and in the case of the
software, de-compile, or disassemble the Deliverables it receives.
4.8 The parties acknowledge the importance of compatibility between
Gemstar's data/service and Microsoft EPG Products. Microsoft agrees that it
shall not intentionally design its software and/or hardware to
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block out or prevent the reception of Gemstar's data/service. Gemstar shall use
reasonable efforts to make its data and security mechanisms compatible with such
software and/or hardware. Microsoft agrees that it shall take prompt steps to
correct any inadvertent blocking designs upon written notice from Gemstar or
upon Microsoft's own discovery of such a problem.
4.9 The parties acknowledge that changes to the Deliverables will probably
need to be made as development on their respective products progresses toward
commercial release or as new types of products are developed. Accordingly, the
parties agree to review Appendices A and B from time to time and make amendments
to this Agreement to reflect such changes.
4.10 It shall be Microsoft's responsibility to develop a Gemstar Data Loader
as necessary for each country at Microsoft's sole cost and expense. Gemstar
agrees to provide to Microsoft at no cost up to five hours of telephone support
per month during development and all relevant information pertaining to the
Gemstar data structure and broadcast protocol. However, should Microsoft
request any engineering support from Gemstar, then Microsoft agrees it shall
reimburse Gemstar for all non-recurring engineering ("NRE") charges, at a rate
of not less than one-hundred and fifty (US $150) per hour, which are related to
the development of Gemstar Data Loaders for use in and or in conjunction with a
Microsoft EPG Product. Microsoft shall also reimburse Gemstar for any material
costs and other related costs associated with such engineering.
4.11 Gemstar shall invoice Microsoft for costs and/or expenses set forth in
Section 4.10 as soon as reasonably practical after such costs and/or expenses
are incurred. Microsoft agrees to remit payment within thirty (30) days of
receipt of invoice. All such payments shall be in accordance with Section 6.
Section 5
Marketing And Data Loaders
5.1 Inclusion of Gemstar Data Loader
5.1.1 Microsoft, as partial consideration for the licenses and rights granted
to it herein, agrees that all Microsoft EPG Products shall conform to each of
the following:
(a) Subject to Gemstar meeting the requirements of Section 4,
Microsoft shall deliver the applicable Gemstar Data Loader with all Microsoft
EPG Products irrespective of whether the Gemstar data service is available.
(b) Microsoft shall not deliver as part of the Microsoft EPG Product
any other Data Loader for a service that provides broadcast TV listings
except in the case of a Service Provider Provisioned Digital Set Top Box that
contains either a Data Loader with no Data Links or one with Data Links that
has been authorized by Microsoft pursuant to the requirements of Section
5.1.1(c).
(c) Microsoft shall not permit (via licensing restrictions and
potentially through technical restrictions) any Data Loader other than the
Gemstar Data Loader to contain Data Links which have not been approved in
writing by Microsoft. Approval of a Data Loader containing Data Links shall
be based on Microsoft's rate card. Revenue obtained by such approval shall
be included in Microsoft Advertising Revenues.
5.1.2 Notwithstanding the provisions of Section 5.1.1(b), in the event the
Gemstar TV listings data service is [*] available in a [*] at the time a Version
of a Microsoft EPG Product is introduced in such [*], then [*] shall not
apply to such Version. The Microsoft EPG Product, however, shall still [*] a
Gemstar Data Loader, except as provided below, so that if and when the Gemstar
data service becomes available in such [*] it may be used with the Microsoft EPG
Product. Microsoft, prior to the introduction of a new Version [*] required to
include the Gemstar Data Loader in circumstances where it is [*] the Gemstar
data service will be available or technology to develop a Gemstar data loader is
not made available to Microsoft at [*], based upon written confirmation to that
effect by Gemstar, in a particular geographic area prior to the release of the
particular Version of a Microsoft EPG Product or when, by the nature of the
hardware on which the Microsoft EPG Product is loaded, [*]. Microsoft shall
provide Gemstar with a schedule of introduction and new releases into the
various [*] no later than [*] prior to the first such introduction, and provide
relevant information relating to the new version. Gemstar shall respond within
[*] days of such notice whether or not Gemstar has decided to support the
introduction or the particular release. Microsoft may proceed absent written
confirmation from Gemstar. Microsoft will also promptly introduce a new Version
of the Microsoft EPG Product which complies with the requirements of Sections
5.1.1(a) and (b), by [*] the other Data Loader in such new Version unless such
omission is [*] when the Gemstar data service becomes available in such [*].
Notwithstanding the foregoing, Microsoft may not enter into an agreement with a
Data Loader supplier which provides for [*]
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[*]
5.2 Marketing Requirements
5.2.1 Microsoft, as partial consideration for the licenses and rights
granted to it herein, agrees that all Microsoft EPG Products shall conform to
each of the following:
(a) If [*], Microsoft shall prominently display the Gemstar logo in all
Microsoft EPG Products (including, to the extent applicable,
Windows 95 and/or successor products):
(i) on the main EPG display and customized variations of such
screen such as personalized variations for different household
members and on the first screen of each TV listing display, if
different; and
(ii) with reference to the offer of the trial period described in
Section 5.6.2.
(b) The Gemstar logo will be the only logo for a TV listings service
shown on the EPG display of any Microsoft EPG Product which
actively uses the Gemstar Data Loader; provided however, this
restriction shall not prohibit Microsoft from including logos of
companies which are [*] of Gemstar (e.g., a Service Provider logo).
(c) Microsoft shall give credit to Gemstar in an "about box" or
equivalent screen, in all Microsoft EPG Products including those
products identified in Sections 5.1.2. An example of such language
is:
"Gemstar Logo" Features of this product are licensed from Gemstar
International Group Limited.
(d) If [*], Microsoft shall prominently display the Gemstar logo on the
front of any Digital Set Top Box hardware product made by or for
Microsoft that includes a Microsoft EPG Product and on the face of
any accompanying Microsoft remote control device. Microsoft shall
require the Gemstar logo to be similarly displayed on any Digital
Set Top Box hardware product and accompanying remote control device
made by an original equipment manufacturer which has been licensed
to ship with a Microsoft EPG Product.
(e) If [*], Microsoft shall make commercially reasonable use of the
Gemstar Trademarks (both the word and design marks) in connection
with the marketing or advertising of the EPG functionality of a
Microsoft EPG Product, provided the Gemstar EPG service is
available for use in connection with such Microsoft EPG Product in
the applicable geographic area. Microsoft shall not incorporate
into any Microsoft EPG Product the logo or trademark of any
competing (i.e., non-Gemstar) EPG service for TV listings subject
to the provisions of Sections 5.1.1(b), 5.1.2 and 7.2. Microsoft's
use of the Gemstar Trademarks (both the word and design marks)
shall cover the following materials and advertising:
(i) manuals and user documentation (whether printed or in
electronic form);
(ii) product specification sheets;
(iii) point-of-purchase materials;
(iv) sales training materials;
(v) TV/radio advertising;
(vi) in-box materials;
(vii) consumer magazine advertising;
(viii) trade journals and related advertising; and
(ix) packaging.
However, the foregoing shall not require Microsoft to mention
Gemstar or display the Gemstar logo on every occasion listed in
this Section 5.2.1(e) where EPG functionality is described or
discussed, so long as this Section 5.2.1(e) is substantially met.
(f) Subject to Section 5.2.2, Microsoft shall provide the
functionality in Microsoft EPG Product software to display an
offering message to the consumer in the EPG set up routine or other
appropriate place to encourage the consumer to subscribe to a
Gemstar service if such service exists prior to the initial release
of a particular version of a Microsoft EPG Product and to
display a message to alert the customer to renew the Gemstar
service when renewal is
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due; provided that such functionality shall not be a generalized
messaging function to enable communication with users.
5.2.2 Notwithstanding the provisions of Section 5.2.1(a), 5.2.1(b) and
5.2.1(f), in the event the initial execution of the EPG set-up routine of a
Microsoft EPG Product is not able to connect to a data transmission/delivery
mechanism for Gemstar's TV listings data in any given geographic region because
such mechanism is not available, or if the user declines to sign up for the
Gemstar service (whether that service is free or otherwise), then the set-up
routine may [*] on the EPG display; but only on the condition that the Microsoft
EPG Product shall allow the user, at [*] to sign up for the Gemstar service at a
later date, whether that occurs as a result of the availability of the service
in that geographic area or otherwise, in which case the [*] shall appear in the
EPG display if and as required pursuant to Sections 5.2.1(a) and (b). In all
cases, however, the provisions of Section 5.2.1(c) shall apply. For the purposes
of this Section 5.2.2, a "data transmission/delivery mechanism" shall generally
mean without limitation any broadcast data transport provided to the consumer as
part of a normal cable, telephony, airwave or satellite service. In the event
the Gemstar data service is not available on a "data transmission/delivery
mechanism" which mechanism is generally competitive in terms of cost,
availability and service to the "data transmission/delivery mechanism" for other
EPG-related services available to consumers in the particular geographic region,
then the Gemstar mechanism shall not be considered a "data transmission/delivery
mechanism" for the purposes of this Section, but only so long as the Gemstar
"data transmission/delivery mechanism" is [*].
5.3 License for Gemstar Trademarks
5.3.1 Gemstar grants to Microsoft and Microsoft accepts a worldwide, non-
exclusive, royalty-free license to use the Gemstar Trademarks solely in
connection with the marketing and promotion of Gemstar as set forth in Section
5. Microsoft shall use the Gemstar Trademarks (word and design marks) only in
the form set forth on the trademark list delivered to Microsoft concurrent with
the execution hereof unless otherwise approved in writing by Gemstar and shall
include the designation or (R), as instructed by Gemstar. Microsoft agrees to
use its best efforts to comply with all applicable laws and regulations
pertaining to the proper use and designation of Gemstar Trademarks in each
country in which Microsoft uses the Gemstar Trademarks. Microsoft shall not have
the right to use the Gemstar Trademarks as a business name, or fictitious
business name.
5.3.2 Quality Control
(a) The nature and quality of a Microsoft Licensed Product marketed
in connection with the Gemstar Trademarks and the Gemstar logo,
and all marketing and promotional material using the Gemstar
Trademarks and the Gemstar logo, shall be a high quality
consistent with the high quality of Gemstar's goods and shall
conform to the requirements of this Agreement and otherwise be
consistent with the reputation and goodwill symbolized by the
Gemstar Trademarks and the Gemstar logo.
(b) Gemstar shall have the right to monitor the quality of the
Microsoft Licensed Products and advertising and promotional
materials using the Gemstar Trademarks and the Gemstar logo to
ensure that the Microsoft Licensed Products and advertising and
promotional materials conform to the requirements of this
Agreement. In the event Gemstar believes any Microsoft Licensed
Products, advertising or promotional materials do not conform to
such standards, upon Gemstar's request Microsoft shall provide
exemplars of the relevant Microsoft Licensed Products,
advertising and promotional materials for review by Gemstar.
5.3.3 Microsoft acknowledges that it is often difficult, particularly in
foreign countries, to obtain clear, registered title to Gemstar Trademarks.
Accordingly, Microsoft agrees that the rights granted herein exist only to the
extent that Gemstar owns such rights, and no warranty, express or implied, is
made with respect thereto or with respect to the trademark rights of any third
parties that may conflict with the rights granted herein.
5.3.4 Microsoft agrees that any use of the Gemstar Trademarks or the
Gemstar logo, including but not limited to use as a trade name, service xxxx or
trade style shall inure to the benefit of Gemstar, and that such use by
Microsoft shall not give to Microsoft any right, title or interest in the
Gemstar Trademarks or the Gemstar logo.
5.3.5 Microsoft agrees that it will not, during the term of this Agreement
or at any time thereafter, make application for, or aid or abet others to seek
trademark registrations or recordings of, trade names or company names in any
state of the United States, in the United States Patent and Trademark Office, or
in other United States governmental agencies, or in any foreign country of any
xxxx or design which includes Gemstar Trademarks, or variations thereof, or
imitations thereof, alone or in combination, except with the prior written
permission of Gemstar.
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[*] Confidential Treatment Requested.
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5.3.6 Microsoft agrees not to take any action challenging or opposing, or
to raise or cause to be raised, either during the term of this Agreement or
after its termination, on any grounds whatsoever, any questions concerning, or
objections to, the validity of the Gemstar Trademarks or Gemstar's rights
therein.
5.3.7 Microsoft agrees to provide reasonable assistance to Gemstar, at
Gemstar's cost, in obtaining registrations for the Gemstar Trademarks by
providing, without limitation, information and samples of trademark usage
regarding the Gemstar Trademarks; provided, however, the failure to obtain such
registrations shall not affect the validity of this Agreement.
5.3.8 Microsoft acknowledges that this Agreement does not convey any
ownership interest in the Gemstar Trademarks to Microsoft.
5.4 VBI, Bandwidth and Data Carriage
5.4.1 If discounted pursuant to Section 6.1.2, in the event that Microsoft
provides a Service Provider or the Service Provider's original equipment
manufacturer with a license to install a Microsoft EPG Product on a [*]
for deployment on a public broadcast network system (i.e., system is not similar
to an intranet where access is restricted within an organization such as a
company or government agency), irrespective of the broadcast method (e.g.,
cable, satellite), and such Service Provider has ownership, control or access to
previously uncommitted and available VBI lines or to equivalent data
transmission bandwidth, then Microsoft shall secure Data Carriage Rights in the
amounts set forth below:
--------------------------------------------------------------------
Region Number of VBI to be acquired
------------------------------------- ----------------------------
North America [*]
--------------------------------------------------------------------
Other regions [*]
--------------------------------------------------------------------
It is assumed among the parties that a Service Provider has [*] to previously
[*] bandwidth unless the Service Provider makes [*] for the benefit of Gemstar
that it does not [*] to the required amount of VBI lines or equivalent data
bandwidth, in which case [*], [*] in this provision shall mean that the Service
Provider has first made reasonable effort to accommodate Gemstar data by [*], if
possible, without [*] to the Service Provider, existing use or commitment. The
methods of acquiring and operating the Data Carriage Rights for various Service
Providers will be determined [*] in its reasonable discretion by Microsoft. The
arrangement may take the form of [*] agreement or as [*] and independent
relationships between the Service Provider, and Gemstar and Microsoft,
respectively. In any [*], the Service Provider will provide Gemstar with
exclusive access to [*] of the Data Carriage Rights Microsoft secures pursuant
to this Section 5.4.1. Gemstar agrees to assume the risk that the aforementioned
data transmission bandwidth and/or VBI rights may not be [*] for Gemstar's
purposes.
5.4.2 Gemstar agrees to use a portion of its bandwidth in accordance with
the following priority. If the bandwith is obtained by Microsoft, then the
first priority of all available bandwidth is for Gemstar data which supports
Microsoft EPG Products; the next priority is for data used to generate
Advertising Revenues and Subscription Revenues; the next priority prioity is for
Microsoft's use of up to [*] of the total bandwidth; and the next priority is
for Gemstar's use. If the bandwidth is first obtained by Gemstar, then the first
priority of all available bandwidth shall be for existing use by or for Gemstar;
the second priority is for Gemstar data which supports Microsoft EPG Products;
the next priority is for data used to generate Advertising Revenues and
Subscription Revenues, the next priority is for Microsoft's use of up to [*]
of the total bandwidth (less existing Gemstar use); and the next priority is for
Gemstar's use. The foregoing priority schedule shall not alter Gemstar's
obligation to provide the Subscription Free Service or Trial Period as required
in Section 5.6.
5.4.3 Microsoft, in its efforts to secure Data Carriage Rights, may commit to
the [*] on behalf of Gemstar up to [*] of the [*]. In the [*], at such time that
Gemstar reaches an agreement with a [*] for less than or equal to [*] sharing
instead of the foregoing [*] and provided [*] prior written notice to Microsoft,
then the percentage sharing going forward shall be [*] of the [*]. This
provision shall not apply to any Microsoft transactions where Microsoft has
already entered into an agreement or has made a pricing proposal on such subject
matter prior to receipt of such written notice.
5.4.4 Each party shall manage its respective bandwidth allocation and the
relevant data transmission networks. Both parties shall use reasonable efforts
to coordinate with each other regarding bandwidth allocation and management.
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[*] Confidential Treatment Requested.
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5.4.5 The parties agree that their use of the Data Carriage Rights shall
be subject to prevailing FCC regulations and, [*] limited to EPG-Related Data.
5.4.6 Subject to the parties reaching agreement on the terms of Microsoft's
acquisition of VBI bandwidth through Gemstar (as provided in Section 5.4.7),
Microsoft agrees to provide Gemstar, at no charge, access to and use of a
minimum of [*] of Microsoft's allocated bandwidth or equivalent bandwidth on the
[*] satellite within the continental US. The approval by [*] of such allocation
of bandwidth to Gemstar shall be subject to the terms and conditions of the
agreement between Microsoft and [*]. Microsoft agrees to use its commercially
reasonable, good faith efforts to obtain such approval from [*] and to assist
Gemstar in its efforts to work with [*] to resolve any hardware-related issues
and/or other technical issues relating to the use of the [*] bandwidth (For
example, distribution and/or retrofitting of set-top boxes to handle the [*]
data channel decryption function).
5.4.7 Gemstar agrees to work with Microsoft if requested, on a commercially
reasonable basis to provide Microsoft access to [*] new VBI line within
Gemstar's existing data delivery systems or network to facilitate the delivery
of Microsoft advertising or other information. Gemstar would maintain the
network in conjunction with its existing service, and invoice Microsoft in [*]
which is intended to cover Gemstar's costs and expenses to maintain the network
and obtain the VBI bandwidth. The use of such VBI bandwidth shall be subject to
the terms and conditions of Gemstar's agreement(s) with the applicable third
party data delivery systems or network provider(s).
5.4.8 The parties also agree to work with each other on a commercially
reasonable basis to assist in obtaining any additional rights or access to data
delivery systems worldwide which are necessary or desirable to support the
parties' respective subscription and/or advertising businesses related to
products licensed hereunder. The parties acknowledge, however, that despite
such efforts they may not be able to obtain access to the necessary or desirable
amount of bandwidth on any given data delivery system.
5.5 Advertising
5.5.1 If discounted pursuant to Section 6.1.2 and except where prohibited
by applicable law or regulations, Microsoft shall design [*] Microsoft EPG
Products which will be used for a public broadcast system (i.e, system is not
similar to an intranet where access is restricted within an organization such as
a company or governmental agency) to include advertising functionality. Gemstar
agrees that all advertising data/inventory for Microsoft EPG Products shall be
exclusively obtained and sold by Microsoft and/or its designates.
5.5.2 Microsoft agrees to make available to Gemstar a limited amount of
advertising inventory in any EPG display of Microsoft EPG Products, equivalent
to [*] of the total advertising inventory, free of charge, solely for
advertising Gemstar's own products and services. The advertising inventory made
available to Gemstar pursuant to this Section 5.5.2 shall be evenly distributed
between prime and non-prime times. Further, when viewed by a viewer, such
advertising inventory shall be of no less prominence, on average, than the
advertising inventory of other Microsoft customers who pay for such inventory in
cash.
5.6 Data Services
5.6.1 Gemstar agrees to provide Microsoft with access to Gemstar's
Subscription Free Data and related delivery mechanism for use in connection with
Microsoft EPG Products in all geographical regions where such Subscription Free
Data and delivery is made available by Gemstar to any third party or Gemstar EPG
product. In the United States such Subscription Free Data shall be provided for
a [*]. The number of days of Subscription Free Data provided in all other
geographical regions shall be at Gemstar's sole discretion and in no event shall
the amount of such data supplied be shorter than that supplied to any third
party or Gemstar EPG product in the applicable geographic region.
5.6.2 In the event Gemstar decides not to offer the Subscription Free Data
service outside the United States, Gemstar agrees to provide a minimum of [*] to
each new end user customer of a Microsoft EPG Product only in those instances
when the Gemstar Data Loader is used by the customer. Upon the expiration of the
[*], the consumer will be offered the opportunity to subscribe to the Gemstar
service at a rate no higher than the then current published standard Gemstar
consumer rate card. In the event the consumer does not subscribe, then the
Gemstar data subscription service to such subscriber may be terminated, in
Gemstar's discretion. Gemstar may from time to time, at its sole option, offer
end user customers of Microsoft EPG Products additional periods of free and/or
discounted service.
5.6.3 Gemstar will administer, at its sole expense, the end user
subscription process, including xxxx collections, credit checks, subscription
authorizations and de-authorizations, with customers who subscribe to Gemstar's
service through a Microsoft EPG Product. Microsoft will administer, at its sole
expense, technical support insofar as it relates to Microsoft Licensed Products.
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[*] Confidential Treatment Requested.
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5.6.4 Microsoft agrees to communicate and/or meet with Gemstar on a
regular and timely basis to discuss Microsoft's intent and/or plans to introduce
Microsoft EPG Products into any geographic region where the Gemstar service is
not then available. Microsoft further agrees to use commercially reasonable
efforts to assist Gemstar so that it may meet Microsoft's launch plans in any
given geographic region. This assistance includes but is not necessarily
limited to Microsoft assisting Gemstar to make the necessary local contacts for
the purposes of initiating Gemstar service in such geographic region. Microsoft
shall work with Gemstar, in conjunction with original equipment manufacturers
and the owners of data transmission capacity, to increase and facilitate
Gemstar's ability to have a viable data transmission/delivery mechanism for TV
listings data in any given geographic region where Gemstar does not then have
its service available. Gemstar shall, however, be solely responsible for
negotiating and acquiring the necessary bandwidth and establishing the required
infrastructure to support its data service.
5.7 Legacy Products
5.7.1 Other than Microsoft's obligation to pay the fully-discounted per
unit fees identified in Section 6.1.2, Microsoft shall have no obligations under
Sections 5.1, 5.2, 5.4 and 5.5 with respect to versions of Microsoft EPG
Products first released commercially or in beta form prior to [*] (e.g., WebTV
Plus and Windows 98). Microsoft's obligations shall, however, be effective under
this Agreement with respect to any units of Microsoft EPG Products shipped after
[*], in the case of products which are not dependent on a WebTV service, and
after [*], in the case of products which are dependent on a WebTV service. to
the extent such Microsoft EPG Products are to be considered licensed under this
Agreement.
5.8 Web Server
5.8.1 The parties agree to discuss establishing a relationship for
developing and maintaining a Web Server, the terms and conditions of any such
relationship to be separately agreed upon by the parties.
Section 6
Payments, Accruals, Records and Reports
6.1 Payments.
6.1.1 Microsoft shall pay StarSight on behalf of Gemstar the non-refundable
"lump sum" royalty payment of [*] for the license set forth in Section 3.1 and
Subscription Free Data. Of the lump sum royalty payment, [*] shall be paid
within two (2) business days of execution hereof. The remaining [*] shall be
either netted against the amount of [*] payable by StarSight to Microsoft under
the Recission Agreement of even date or paid within two (2) business days of
receipt of actual payment from StarSight, as determined by the parties. Gemstar
guarantees StarSight's payment obligation under the Recission Agreement.
6.1.2
(a) Microsoft agrees to pay Gemstar a Per Box Special Fee of [*] for
each [*] and, per annum or fraction thereof, a Continuing Special Fee of [*] per
box due and payable on December 31 of each year, commencing December 31, 1998,
less the discounts set forth below, as applicable.
(b) Microsoft shall be entitled to the following discounts against the
Special Fees for [*]: (i) a discount of [*] against the Per Box Special Fee if
the Service Provider agrees to affix the Gemstar logo on the Digital Set Top Box
in accordance with Section 5.2.1; (ii) a discount of [*] if the Service Provider
agrees that Microsoft can display the Gemstar logo on each Microsoft EPG Product
in accordance with Section 5.2.1; (iii) a discount of [*] if the Service
Provider in North America agrees to provide Gemstar with access to [*] Service
Provider originated VBI lines or equivalent digital bandwidth for use by Gemstar
EPG-related services; (iv) in the event the discount under (iii) above applies,
an additional [*] per VBI line or equivalent digital bandwidth for use by
Gemstar EPG-related service, for a maximum discount under this section (iv) of
[*]; and (v) a discount of [*] if the Service Provider outside North America
agrees to provide Gemstar with access to [*] Service Provider originated VBI
line or equivalent digital bandwidth for use by Gemstar EPG-related services and
an additional discount of [*] if the Service Provider outside North America
agrees to provide Gemstar with access to an [*] Service Provider originated VBI
line or equivalent digital bandwidth for use by Gemstar EPG-related services.
Microsoft shall receive an annual discount of [*] per box in the event Microsoft
secures control over more than [*] of the Advertising Revenues on the Service
Provider Provisioned Digital Set Top Box for which Gemstar will receive a share
under Section 6.1.3. If Microsoft does not secure such control, the annual per
box discount is not
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[*] Confidential Treatment Requested.
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available and Microsoft's obligations under Sections 5.5 and 6.1.3 shall not
apply. All such discounts are applicable only if earned at the time of execution
of the [*] agreement between Microsoft and the Service Provider for the supply
of a particular version of [*], unless this requirement is waived by Gemstar in
writing in Gemstar's sole discretion. The discount structure provided in
subsections (iii), (iv) & (v) shall be adjusted proportionately in the event the
Service Provider does not have [*] to previously uncommitted and available VBI
lines or equivalent data transmission bandwidth in an amount greater than or
equal to the number specified in Section 5.4.1.
(c) Microsoft agrees to pay Gemstar a Retail Per Box Special Fee of [*]
for each Digital Set Top Box sold [*], such Special Fee shall be due and
payable upon shipment of the Digital Set Top Box, less the discounts set forth
below, as applicable. Microsoft agrees that in the case of a retail-sold Digital
Set Top Box, Gemstar's share of Advertising Revenues shall be [*].
(d) Microsoft shall be entitled to the following additive discounts against
the Special Fees for retail-sold Digital Set Top Boxes: (a) a discount of [*]
against the Per Box Special Fee if the Gemstar logo is affixed on such Digital
Set Top Box in accordance with Section 5.2.1; (b) a discount of [*] if the
Gemstar logo is displayed on each Microsoft EPG Product and is displayed in
accordance with Section 5.2.1.
(e) Microsoft shall further receive a Limited Functionality Discount of [*]
for each Digital Set Top Box, whether Service Provider Provisioned or retail-
sold, if the EPG functionality for the Digital Set Top Box is equal to or less
than the WebTV Plus product as is available in the market on [*]. Whether an EPG
contains functionality greater than the WebTV Plus EPG shall be determined
solely by reference to Gemstar Licensed Patents.
(f) Microsoft agrees to pay Gemstar an Other Product Per Unit Fee on each
unit of Other Microsoft Licensed Product at such time that the unit is shipped
ex factory in accordance with the following terms and conditions:
(i) If the Other Microsoft Licensed Product is provided to an entity
having an existing license with Gemstar covering the same functionality, the
Other Product Per Unit Fee shall equal the lesser of (x) the then current per
unit license fee paid by such entity and (y) [*], as adjusted pursuant to the
terms hereof, for a period equal to the shorter of the (p) the remaining natural
term of the existing license agreement and (q) five (5) years.
[*]
(iii) If the Other Microsoft Licensed Product is provided to an entity
which does not have an existing license with Gemstar covering the same
functionality, but Gemstar has an existing license or licenses, or thereafter
licenses, another entity for the same or similar product, the Other Product Per
Unit Fee shall be equal to the [*] rates applicable to such same or similar
product [*].
[*]
(v) If the Other Microsoft Licensed Product is provided to an entity
and Gemstar has not yet entered into a license agreement with that entity or any
other entity covering the same functionality, there shall be no Other Product
Per Unit Fee until such time as Gemstar does in fact enter into an arm-length
license agreement. Once Gemstar enters into such a license agreement, the Other
Product Per Unit Fee for subsequent Microsoft Licensed Products having the same
functionality shall be equal to the average rates applicable to such other
agreements [*].
(vi) In the alternative to the payment terms set forth in subsection
(v), Microsoft may request a good faith negotiation with Gemstar to determine a
different Other Product Per Unit Fee. In the event, elects this alternative and
the parties are not able to agree upon different rate, then the parties agree to
submit the issue to a panel for binding resolution in accordance with the
applicable rules of the American Arbitration Association.
(vii) Except as otherwise provided herein, no Other Product Per Unit
Fee shall be due with respect to Other Microsoft Licensed Product.
(viii) Microsoft and Gemstar shall negotiate in good faith the
marketing terms, if any, applicable to a particular Other Microsoft Licensed
Product.
6.1.3
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[*] Confidential Treatment Requested.
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(a) Microsoft agrees to pay Gemstar [*] of the total Net Advertising
Revenues; provided however, Microsoft shall not be obligated to begin payments
under this Section 6.1.3 until a cumulative number of [*] have been shipped by
Microsoft [*].
(b) Microsoft agrees to pay Gemstar Gemstar's share of Net Advertising
Revenue as set forth in Section 6.1.3(a); as follows however, Microsoft
guarantees that Gemstar's share of Net Advertising Revenue shall be at least the
amounts set forth in and paid in accordance with the following schedule:
(i) To the extent Gemstar has not been paid a cumulative amount of
[*] by the time that Microsoft has shipped a cumulative number of four [*], then
Microsoft agrees to and shall remit the difference between the cumulative Net
Advertising Revenue payments already made to Gemstar at such time and [*]
("Difference Payment 1") to Gemstar no later than the end of the then current
quarter.
(ii) To the extent Gemstar has not been paid a cumulative amount of
[*] by the time that Microsoft has shipped a cumulative number of [*], then
Microsoft agrees to and shall remit the difference between the cumulative Net
Advertising Revenue payments already made to Gemstar at such time (including
Difference Payment 1) and [*] ("Difference Payment 2") to Gemstar no later than
the end of the then current quarter.
(iii) Microsoft agrees Difference Payments 1 and 2 are non-
refundable, however, Gemstar agrees such Difference Payments 1 and 2 shall be
applied as a credit against future Net Advertising Revenues due Gemstar under
this Agreement.
6.1.4 For the purpose of this Section 6, upgrades, updates and new
versions to or for a Digital Set Top Box with Microsoft EPG Product for which a
Special Fee has already been paid shall not constitute a new unit of Microsoft
EPG Product so long as the original Digital Set Top Box has not been taken out
of service, replaced with new hardware or a new Digital Set Top Box, except in
the case where a WebTV Plus equivalent Digital Set Top Box has been upgraded to
a greater functionality device, in which case the Limited Functionality Discount
of [*] shall be refunded by Microsoft to Gemstar upon such upgrade, provided,
however, that Microsoft's obligations to make such a refund shall not be
triggered until Microsoft has upgraded at least [*] units for which the discount
in Section 6.1.2(e) has been paid.
6.1.5 Gemstar agrees to pay Microsoft [*] of the total Net Subscription
Revenues and Net Data Carriage Revenues.
6.1.6 All payments due under Sections 6.1.2 through 6.1.3 shall be
accounted for on a calendar year quarterly basis and paid within forty-five (45)
days after each quarter. Notwithstanding the foregoing, at Microsoft's option,
it may elect to pay amounts due under Sections 6.1.2 through 6.1.3 in quarterly
installment payments over a period of [*] years from the date the original
payment is due. A [*] per annum rate of interest, accrued quarterly shall accrue
on such installment payments.
6.1.7 All payments due under Section 6.1.2 shall be subject to adjustment
on an annual basis commencing on the first anniversary of the Effective Date.
Such adjustment shall be equal to the percentage change between the Effective
Date and the date of such adjustment in the Consumer Price Index for All Urban
Consumers, U.S. City Average, for all items (1995 = 458.0) (For a 1967 base call
000-000-0000), as published by the Bureau of Labor Statistics of the Department
of Labor ("CPI").
6.1.8 Microsoft agrees to pay Gemstar [*] for, and Gemstar hereby grants, a
fully-paid, perpetual and irrevocable option to sublicense Gemstar's rights
under the [*], to the fullest extent possible, on terms and conditions at least
as favorable to Microsoft as the terms of Gemstar's license are to Gemstar. Any
sublicense granted under this Section 6.1.8 shall not involve any additional
payment or obligations by Microsoft with respect to Microsoft Licensed Products
which would be covered by Gemstar's direct license under the [*].
6.2 Accruals, Records and Reports
6.2.1 Royalties and payments due under Sections 6.1.2 through 6.1.3 shall
accrue as follows:
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[*] Confidential Treatment Requested.
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(a) Royalties shall accrue when any unit of Microsoft EPG Product with
respect to which royalty payments are required by Section 6.1.2 is
sold or licensed (as evidenced by xxxx or invoice) and payment
therefor is received by Microsoft. Royalties shall not accrue at
the time of sale or Transfer for sales or Transfers between
Microsoft and its Subsidiary for resale or for further Transfer.
Royalties shall not accrue for "not for resale" or "NFR" units
distributed by Microsoft.
(b) Payments required by Section 6.1.3 shall accrue when Advertising
Revenues as to which such payment is due have been billed by
Microsoft and payment therefor is received by Microsoft. Payments
required by Section 6.1.3 shall accrue for "not for resale" or
"NFR" units distributed by Microsoft.
(c) Payments required by Section 6.1.5 shall accrue on Net
Subscription Revenues when the underlying subscription fee has been
billed and payment therefor is received by Gemstar. Payments
required by Section 6.1.5 shall accrue for "not for resale" or
"NFR" units distributed by Microsoft.
6.2.3 All royalties and other sums of money due hereunder shall be paid in
United States dollars. All royalties and other sums of money for an accounting
period computed on invoiced amounts in currencies other than United States
dollars shall be converted directly into United States dollars without
intermediate conversions to another currency at the intercompany exchange rates
established from time to time and consistently applied by the paying party for
internal transactions and accounting purposes which in each case shall be
commercially reasonable.
6.2.4 Each Microsoft royalty report shall include the following
information:
(a) as to royalties due under Section 6.1.2:
(i) identification by Version Number, Service Provider (as
applicable), quantity and description of each product upon
which a royalty has accrued pursuant to Section 6.2.1(a);
(ii) identification of the amount of royalties due for each such
product, including all information required to show how such
amount has been calculated and the aggregate of all royalties
due; and
(iii) identification of the amount of royalties as to which credit
is taken under Section 7.4.1, if any.
(b) as to Net Advertising Revenue payments due under Section 6.1.3:
(i) the total amount of Advertising Revenues;
(ii) the amount of each cost permitted to be deducted from such
total in order to determine Net Advertising Revenue;
(iii) identification of the amount of Net Advertising Revenues
payment due including all other information, in addition to
that of Section 6.2.4(b)(ii), to show how such amount has been
calculated; and
(iv) identification of the amount of royalties as to which credit
is taken under Section 7.4.1, if any.
6.2.5 Each Gemstar royalty report shall include the following information:
(a) as to payments due on Net Subscription Revenues under Section
6.1.5:
(i) the total amount of Subscription Revenues;
(ii) the amount of each cost permitted to be deducted from such
total in order to determine Net Subscription Revenues; and
(iii) identification of the amount of Net Subscription Revenues
payment due including all other information, in addition to
that of Section 6.2.5(a)(ii), to show how such amount has been
calculated.
6.2.6 In the event that any of the subsections of Sections 6.2.4 or 6.2.5
(as applicable) do not apply, the reporting party shall so state as to each
Section. In the event no royalties are due, the reporting party's royalty report
shall so state as to each such subsection.
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6.2.7 Each royalty report shall be certified by an officer of the
reporting party or by a designee of such officer to be correct to the best of
such party's knowledge and information.
6.2.8 Each royalty report shall be in a format sufficient to account for
the information which forms the basis for the royalty payments, discount and
other financial terms set forth herein. The parties shall agree upon
appropriate formats consistent with commercially reasonable business standards.
6.2.9 An accounting period shall end on the last day of each March, June,
September, and December during the term of this Agreement. Within forty-five
(45) calendar days after the end of each such period, the paying party shall
furnish to the other party a written royalty report containing the information
specified in Section 6.2.4 or Section 6.2.5 (as applicable) and shall pay to
such party all unpaid amounts, whether royalty or other payments, accrued
hereunder in favor of such other party to the end of each such period. The
paying party shall bear and pay all taxes which are required by its national
government, including any political subdivision thereof, as the result of the
existence or operation of this Agreement, except any necessary, appropriate, and
required income tax imposed upon royalties or other payments, by the national
government of such party. The paying party may deduct or withhold such income
tax from said royalties or other payments provided it furnishes the other party
with a tax certificate, or other document evidencing payment of such income tax.
Gemstar represents and warrants to Microsoft that all rights to exploit Gemstar
Licensed Patents in the United States are owned by an entity within the Gemstar
group having a tax situs in the United States. Further, Gemstar represents and
warrants to Microsoft that all rights to exploit Gemstar Licensed Patents
outside of the United States are owned by an entity within the Gemstar group
having a tax situs outside of the United States. Gemstar agrees to hold
Microsoft harmless against any taxes, interest, penalties or related costs
resulting from any inaccuracies in the foregoing representations and warranties.
Gemstar agrees to notify Microsoft promptly in writing of any change of any fact
upon which the foregoing representations and warranties are based.
Notwithstanding any other provision in this Agreement, the parties agree to
cooperate consistent with good business practices with respect to identifying
the source of any revenue which is subject to this Agreement and structuring of
resulting payments to the appropriate entity. StarSight shall file with
Microsoft a U.S. I.R.S. Form W-9 with respect to the payment set forth in
Section 6.1.1.
6.2.10 Each party shall keep separate records in sufficient detail to
permit the determination of royalties and other payments payable hereunder.
Such records shall be maintained for at least eighteen (18) months. At the
request of one party, the other party will permit an independent auditor and
technical consultant selected by the requesting party or any other person or
persons acceptable to both parties, to examine during ordinary business hours
once each calendar year such records and other documents as may be necessary to
verify or determine royalties and other payments paid or payable under this
Agreement. Such auditor, technical consultant or other person(s) shall be
instructed to report to the requesting party only the amount of royalties and
other payments due and payable. If no request for examination of such records
for any particular accounting period has been made by one party within [*]
years after the end of said period, the right to examine such records for said
period shall terminate.
6.2.11 The fees and expenses of the requesting party's representative
performing any examination of records under Section 6.2.10 shall be borne by the
requesting party. However, if an error resulting in the underpayment of either
royalties or other payments of more than [*] of the total thereof respectively
due is discovered for any year examined, then the total fees and expenses of
these representatives shall be borne by the other party. Such other party in any
case shall pay the requesting party the amount of any under payment of royalties
or other payments uncovered as a result of any such examination of records.
Section 6.2.12 specifically applies to any such underpayment.
6.2.12 The paying party shall be liable for interest at a rate of one and
[*] per month compounded monthly plus [*] on any overdue royalty or other
payment set forth in Section 6.1, commencing on the date such royalty or other
payment becomes due; provided however, such amount will not accrue until the
party to receive payment has provided a prior written [*] day notice to the
paying party and a fifteen (15) day opportunity to cure. If such interest rate
exceeds the maximum legal rate in the jurisdiction where a claim therefor is
being asserted, the interest rate shall be reduced to such maximum legal rate.
6.2.13 The advance payment set forth in Section 6.1.1 reflects a lump sum
payment for Microsoft Licensed Product during the initial [*] year period from
the Effective Date, earned ratably on a quarterly basis and is being paid in a
lump sums as a matter of convenience.
6.3 Adjustments for Similar Transactions
6.3.1 If during the term of this Agreement Gemstar enters into a [*]
that Gemstar in its reasonable judgment determines to contain terms,
conditions and associated obligations relating to [*] which when taken as a
whole are more favorable for the non-Gemstar party than
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[*] Confidential Treatment Requested.
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the terms, conditions and associated obligations contained in this Agreement are
for Microsoft, then Gemstar shall immediately notify Microsoft of such Other
Terms. The notification shall be in writing and in sufficient detail for
Microsoft to understand and evaluate the Other Terms. Upon written demand given
to Microsoft within thirty (30) days of the day on which Microsoft receives
Gemstar's notice, Microsoft shall have the right to demand that this Agreement
be amended to adopt [*] of the Other Terms in lieu of corresponding terms
contained in this Agreement (as may be previously amended), provided that
Microsoft shall not be entitled to receive or review the agreement documenting
the Similar Transaction absent the written consent of the non-Gemstar party to
the agreement (which consent Gemstar shall use its commercially reasonable
efforts to obtain).
6.3.2 If during the term of this Agreement Microsoft in its reasonable
judgment has reason to believe that Gemstar has entered into a [*] and has
failed to so notify Microsoft, then Microsoft shall have the right to name an
independent third party reasonably acceptable to Gemstar (the "Independent
Auditor") to review Gemstar's records for the purpose of determining whether a
[*] shall have taken place; provided that such Independent Auditor shall agree,
in form and substance satisfactory to Gemstar in its reasonable discretion, to
maintain all information contained in records confidential and to not reveal
such information to any other party (including, without limitation, Microsoft).
If such Independent Auditor shall determine that a [*] has taken place, then
Gemstar shall reimburse all reasonable out-of-pocket fees, costs and expenses
incurred by Microsoft in connection with such review within thirty (30) days of
receipt of an invoice therefor from Microsoft. If such Independent Auditor shall
determine that a [*] has not taken place, then Microsoft shall reimburse all
reasonable out-of-pocket fees, costs and expenses incurred by Gemstar in
connection with such review within thirty (30) days of receipt of an invoice
therefor from Gemstar.
6.3.3 For purposes of this Agreement, the term [*] shall mean any
agreement, arrangement or other transaction that [*] any third party (other than
Gemstar Subsidiaries) with an aggregate installed base of not less than [*]
units, subscribers or end users under the Gemstar Licensed Patents. In the event
Gemstar enters into separate transactions with affiliated companies, the units,
subscribers or end users of the affiliated companies shall be aggregated for the
purposes of determining whether the [*] level has been reached. For the purposes
of this Section, "affiliate" shall mean any person which controls, is controlled
by or under the common control of a particular company.
6.3.4 In order to prevent an abuse of Section 6.3.2, Microsoft agrees to
pay a liquidated damage equal to the non-negative multiplicative product of (x)
[*], and (y) [*].
6.3.5 If Gemstar publishes a policy for licensing substantially the same
scope of intellectual property as defined in Gemstar Licensed Patents and
Microsoft Licensed Product(s) herein to Service Providers, and such policy
contains terms, [*] which are more favorable to Service Providers than to
Microsoft under this Agreement, and such policy has effect on more than [*]
subscribers or units, Microsoft shall have the right to elect, within thirty
(30) days of Microsoft receiving written notice of Gemstar reaching of the [*],
to adopt all of the terms under the policy in lieu of its corresponding terms in
this Agreement. Gemstar shall provide prompt written notice to Microsoft upon
reaching the [*] threshold.
Section 7
Limited Indemnity
7.1 Gemstar Trademark Indemnification
7.1.1 Gemstar shall, at its expense and Microsoft's request, defend any
claim or action brought against Microsoft, and Microsoft's Subsidiaries,
affiliates, directors, officers, employees, agents and independent contractors,
to the extent it is based upon a claim that the Gemstar Trademarks infringe or
violate any trademark or other proprietary or unfair competition right of a
third party, and Gemstar will indemnify and hold Microsoft harmless from and
against any costs, damages and fees reasonably incurred by Microsoft, including
but not limited to fees of attorneys and other professionals, that are
attributable to such claim. Microsoft shall: (i) provide Gemstar prompt notice
in writing of any such claim or action and permit Gemstar to answer and defend
such claim or action; and (ii) provide Gemstar information, assistance and
authority to help Gemstar to defend such claim or action. Gemstar will not be
responsible for any costs, damages or fees, if a settlement is made by Microsoft
without Gemstar's written permission, which permission will not be unreasonably
withheld. Microsoft shall have the right, at its expense, to employ separate
counsel and participate in the defense of any claim or action. Gemstar shall
reimburse Microsoft upon demand for any payments made or loss suffered by it at
any time after the Effective Date, based upon the judgment of any court of
competent jurisdiction or pursuant to a bona fide compromise or settlement of
claims, demands, or actions, in respect to any damages related to any claim or
action under this Section 7.1.
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[*] Confidential Treatment Requested.
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Gemstar may not settle any claim or action under this Section 7.1 on Microsoft's
behalf without first obtaining Microsoft's written permission, which permission
will not be unreasonably withheld. In the event Microsoft and Gemstar agree to
settle a claim or action, each party agrees not to publicize the settlement
without first obtaining the other party's written permission, which permission
will not be unreasonably withheld.
7.1.2 Notwithstanding Section 7.1.1, should the use of any Gemstar
Trademark as contemplated by this Agreement be enjoined or be threatened to be
enjoined, Gemstar shall notify Microsoft and immediately, at Gemstar's expense:
(i) procure for Microsoft the right to continue use the Gemstar Trademark, as
applicable, as licensed in this Agreement; or (ii) replace or modify the Gemstar
Trademark with a xxxx that is non-infringing. In the alternative, and at
Gemstar's election, Gemstar may notify Microsoft that Sections 5.2 and 5.3 shall
not apply to the infringing or potentially infringing Gemstar Trademark until
such time as Gemstar notifies Microsoft that such xxxx is neither infringing nor
potentially infringing. In the event, after a reasonable period of time,
Gemstar is unsuccessful in its attempts to procure the necessary rights or
replace or modify the Gemstar Trademark as indicated above, Microsoft may take
reasonable steps to remove or modify the Gemstar Trademark, with Gemstar's
approval not to be unreasonably withheld, to prevent the injunction from being
entered. In such event, Microsoft shall be entitled to the branding discounts
set forth in Section 6.1.2.
7.1.3 The indemnification in Sections 7.1.1 and 7.1.2 shall not apply to
any trademark which is a concatenation of a Gemstar Trademark and a Microsoft
trademark to the extent the claim or action is based upon the combination of the
two marks.
7.2 Related Obligations
7.2.1 In the unlikely event that Gemstar or any of its subsidiaries should
enter into an agreement to merge with, acquire, or be acquired by [*], Gemstar
agrees that a condition of any such merger or acquisition shall be Microsoft's
receipt of a license under all patent rights available to Gemstar and/or any
merged company, their subsidiaries and affiliates. This license shall be granted
to Microsoft at the same time as the signing of the agreement to merge or
acquire, at a one time fee not to exceed [*] each, and a Other Product Per Unit
Fee and Per Box Special Fee adjustment not to exceed [*].
7.2.2 Microsoft, on behalf of itself or its Subsidiaries, may notify
Gemstar that it intends to make, use, sell, offer for sale, or import a product
or service that it believes does not infringe Gemstar's Licensed Patents. Such
notification shall be in writing and shall further include a working copy of the
intended product and/or offer Gemstar access to the intended service. Gemstar
shall then have [*] days to provide Microsoft with written notice if Gemstar
concludes that the product or service infringes any of Gemstar's Licensed
Patents, which notice (the "Patent Notice") shall specifically identify such
Licensed Patents by patent number and claim. If the Patent Notice is not
provided by Gemstar, the intended product or service will be not be considered a
Microsoft Licensed Product. Subsequent products and services of Microsoft will
not be considered Licensed Products to the extent that they implement the same
functionality as the intended product or service. If Gemstar provides Microsoft
with the Patent Notice, then the parties agree to submit the issue of
infringement of the specified patent claims to a panel for binding resolution in
accordance with the applicable rules of the American Arbitration Association. In
the event that the panel concludes that the intended product or service does not
infringe, then subsequent products and services of Microsoft will not be
considered Licensed Products to the extent that they implement the same
functionality in the same way to achieve the same result as the intended
product. If the panel concludes that the intended product or service does
infringe, then Microsoft shall be obligated to pay the Patent Owner [*] times
the Per Box Special Fee for the intended product during a period extending from
the Requesting Party's receipt of the Patent Notice through the entry of the
panel's decision, but in no event shall such period be less than [*] years. In
the event the parties disagree whether a publicly released product or service of
Microsoft or its Subsidiaries is a Microsoft Licensed Product under this
Agreement, then Gemstar shall similarly provide Microsoft with a Patent Notice
and the issue shall be submitted to a panel for binding resolution and with the
same remedies as outlined above. The treble damages provided under this Section
shall be Gemstar's exclusive remedy for disputes regarding a particular
product's or service's inclusion within the definition of Microsoft Licensed
Products.
7.2.3 Microsoft may initiate a challenge to the validity or enforceability
of any claim in any Gemstar Licensed Patents regarding the Gemstar Licensed
Patents. In recognition of the cost and inconvenience that may be incurred by
Gemstar, Microsoft agrees to prepay certain amounts to Gemstar. Upon initiation
of the challenge process, Microsoft shall make accelerated estimated payments of
(a) Per Box Special Fees, if any, (b) Continuing Special Fees, if any, (c)
Advertising Revenue(s) sharing, if any, (d) Subscription Revenue(s) sharing, if
any, (e) Other Product Per Unit Fees, if any, due the other party for a [*]
period following the date of initiation of the challenge. The estimate payments
shall be based on the amount paid in the applicable category in the preceding
[*] month period, increased each quarter by a rate equal to the greater of (x)
[*], and (y) [*] of the percentage increase of the last quarter payment divided
by the first quarter. The estimated payments shall be adjusted to conform to the
actual payments through refunds or additional payments, as the case may be, on a
quarterly basis. All discounts from Gemstar to Microsoft shall be suspended
until the challenge has been terminated. The terms and conditions of this
section shall survive termination or expiration of this Agreement. Microsoft
further agrees that in the event the challenge results in the affirmation of any
such product as a licensed product, Microsoft shall pay Gemstar an additional
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[*] Confidential Treatment Requested.
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[*] damage equal to three times any amount which may be due Gemstar for such
product under Section 7.7.3(a), (b), (c) and/or (d). Microsoft agrees that the
outcome of any such determination on the validity and scope of the patents shall
not affect its obligation to pay the Per Box Special Fee, Other Product Per Unit
Fee and Continuing Special Fee as provided in Section 6 above.
7.2.4 Microsoft's obligations under Sections 7.2.2 and 7.3.3 shall apply
to the [*] and to [*] only to the extent Microsoft is licensed under the [*]
with no further financial obligation other than as provided in this Agreement.
Microsoft's obligations under Sections 7.2.2 and 7.2.3 shall not apply to [*]
patents.
Section 8
Warranties
8.1 NEITHER PARTY MAKES ANY REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE
PRODUCTS LICENSED HEREUNDER, THIS AGREEMENT OR OTHERWISE, AND HEREBY DISCLAIMS
ANY FURTHER WARRANTY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, INTELLECTUAL PROPERTY VALIDITY, INTELLECTUAL PROPERTY NON-
INFRINGEMENT OR OTHER STATUTORY WARRANTY, EXCEPT AS EXPRESSLY SET FORTH HEREIN.
8.2 NEITHER PARTY HERETO SHALL BE LIABLE TO THE OTHER PARTY, ITS
CUSTOMERS, OR ANY OTHER ENTITY CLAIMING THROUGH OR UNDER SUCH OTHER PARTY FOR
ANY LOSS OF PROFITS OR INCOME, LOSS OF DATA OR OTHER TANGIBLE BUSINESS LOSS OR
OTHER CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES, EVEN IF SUCH PARTY HERETO
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT.
8.3 Gemstar warrants title to the patents listed on Appendix C.
Section 9
Term and Termination
9.1 This Agreement shall come into effect as of the Effective Date and,
unless terminated sooner in accordance with this Section 9, shall remain in
effect [*].
9.2 Either party may terminate this Agreement or any license granted by it
hereunder upon written notice to the other party in the event that the other
party breaches a material obligation or warranty hereunder, and fails to cure
such breach within sixty (60) days after written notice by the non-breaching
party. A breach of Section 5.1, 5.2, 5.3, 5.5 and 7.4, failure to make a
payment under Section 6 and breach of any confidentiality obligation under
Section 10 including the NDA set forth in Section 10.1 shall be among the acts
considered to be a breach of a material obligation.
9.3 The provision of Sections 6.1.2 through 6.1.5, 6.2, 7.4, 8 and 10 and
any other provision which by its nature is intended to survive termination,
shall survive any termination or expiration of this Agreement. Termination of
this Agreement or any license granted herein shall not affect Microsoft Licensed
Products or Gemstar Licensed Products distributed prior to the date of such
termination.
9.4 During the term of this Agreement, and provided the parties are in
material compliance with the terms hereof, the parties shall in good faith
negotiate any other additional licenses under Microsoft intellectual property
rights and Gemstar intellectual property rights as may be required and/or
requested by either party to continue the business contemplated by this
Agreement.
Section 10
Confidentiality
10.1 The terms and conditions of this Agreement and information provided
and or exchanged pursuant to this Agreement shall be deemed "Confidential
Information" and subject to the terms and conditions of the Non-Disclosure
Agreement dated April 1, 1996 (the "NDA"), as amended, between Microsoft and
StarSight, except that (1) the five (5) year period of Section 2(a) thereof
shall be amended to be coextensive with the term of this Agreement, and (2) the
second sentence of Section 4(g) thereof shall be deleted and Section 12.8 hereof
shall be substituted therefor. Any conflict between the terms of the NDA and
the terms of this Agreement shall be resolved in favor of the terms of this
Agreement.
10.2 Microsoft acknowledges that the Gemstar Authorization Codes and
Gemstar Protocols are highly confidential and that unauthorized use or
disclosure of such information could significantly damage the business of
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[*] Confidential Treatment Requested.
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Gemstar. In the event Microsoft obtains rightful possession or knowledge of
Gemstar Authorization Codes pursuant to this Agreement then, in addition to its
other obligations under this Section 10, Microsoft agrees that no more than one
(1) master copy and one (1) backup copy of Gemstar Authorization Codes and
Gemstar Protocols shall be made or maintained ("Authorized Copies"). Such
Authorized Copies will be maintained in a locked room or container when not in
use and will be accessible only by a limited number of employees who require
access to the Gemstar Authorization Codes or Gemstar Protocols for incorporation
into the Microsoft Licensed Products. Microsoft agrees to maintain a written
record of individual employees that actually accessed the Gemstar Product
Authorization Codes or Gemstar Protocols, and shall provide such information to
Gemstar upon request.
10.3 The parties agree to jointly announce the signing of this Agreement
once it is fully executed. Neither party shall make any public announcement
about or otherwise disclose to any third party the terms or content of this
Agreement or the parties' discussions regarding the subject matter of this
Agreement without the written consent of the other party, which consent shall
not be unreasonably withheld or delayed. Either party may make at any time
announcements which are advised to be made by the Parties' respective outside
counsel or that are required by applicable law, regulatory bodies, stock
exchange or stock association rules, so long as the party so required to make
the announcement, promptly after learning of such requirement, notifies the
other party of such requirement and discusses with the other party in good faith
the exact wording of any such announcement. Each party, as applicable, agrees
to request "confidential treatment" from the appropriate regulatory authority if
this Agreement must be included as part of any public filing.
Section 11
Sub-Licenses; Other Licenses
11.1 All licenses granted herein include the right of the licensee to
grant sub-licenses of or within the scope of such licenses to a party's
Subsidiaries. Each Subsidiary so sub-licensed shall be bound by the terms and
conditions of this Agreement (other than the payment of royalties as provided in
Section 6, which shall remain the obligation of Microsoft and Gemstar,
respectively) as if it were named herein in the place of such licensee. The
licensee represents to the licensor that it has the power to bind each such
Subsidiary to the terms and conditions of this Agreement and agrees to, and
shall take whatever action is necessary to, so legally bind its Subsidiaries, or
in the alternative, the licensee hereby guarantees the performance of the
obligations of its Subsidiaries hereunder. The licensee shall pay and account to
the licensor for all payments due hereunder in respect of the exercise by any
Subsidiary of the licensee of the sub-license granted to it hereunder. Any sub-
license granted to a Subsidiary shall terminate on the date such Subsidiary
ceases to be a Subsidiary.
11.2 In the event that the Microsoft EPG Product is integrated into a
digital television, which is understood by definition not to be a Digital Set
Top Box or Personal Computer and in which a video display is the principal
function, and such digital television is manufactured or marketed by an entity
which has an existing effective license from Gemstar covering such digital
televisions under which Gemstar controls, or receives a share of the revenues
derived from, the advertising and subscription functionalities therein, then
with respect to such digital televisions, Microsoft shall adjust Gemstar's share
of Net Advertising Revenue(s) under Section 6.1.3(a) to [*] for Microsoft EPG
Products licensed to that entity until the earlier of (x) its expiration by its
natural terms, and (y) [*] years from the date of adjustment. Further, Microsoft
agrees to pay a [*] for each such digital television on which Microsoft has
installed or licensed a Microsoft EPG Product as specified under Section
6.1.2(c) subject to any discount applicable under Section 6.1.2(e). In all cases
where there is [*] an existing effective license agreement, the provisions
governing Digital [*] shall apply to digital televisions.
11.3 In the event Microsoft or its Subsidiaries provide Microsoft Licensed
Products as a vendor to a third party which has an existing license agreement
with Gemstar, which agreement has not been breached by such third party, [*].
Section 12
Miscellaneous
12.1 Waiver. A party's failure at any time to require the other party's
------
performance of any obligation under this Agreement shall not affect such party's
right to require subsequent performance of that obligation. Any waiver of any
breach of any provision of this Agreement shall not be construed as a waiver of
any continuing or succeeding breach of such provision, waiver or modification of
the provision itself, or any modification of any right under this Agreement.
__________
[*] Confidential Treatment Requested.
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12.2 Assignment. Neither party may assign or otherwise transfer this
----------
Agreement, or any of its rights, licenses or obligations hereunder, to any third
party without the prior written consent of the other and any such attempted
assignment or transfer shall be void, except in the case of the sale of all or
substantially all of the assigning party's assets relating to the licensed
products (in which case this Agreement shall be fully binding on the licensee's
successor in interest).
12.3 Express Licenses Only. The rights and licenses granted in this
---------------------
Agreement are limited to those expressly recited. No rights, licenses or other
grants are made by implication, estoppel, exhaustion, operation of law or
otherwise.
12.4 Patent Marking. Microsoft shall, except as may otherwise be agreed
--------------
to in writing (such as to account for additional Gemstar Licensed Patents which
issue), provide the following notice or a reasonable variation to be agreed to
in advance by the parties in writing on all Microsoft EPG Product and with any
accompanying instruction material package:
"Gemstar Licensed: The manufacture and sale of EPG features of
this product was licensed from Gemstar International Group
Limited, which license includes rights under U.S. Patent No.s:
4,706,121; 5,151,789; 5,353,121; 5,479,266; and 5,479,268."
For each unit of Microsoft EPG Product which is or includes hardware, the above
notice or the reasonable variation of such notice as mutually agreed to in
writing must be affixed to the hardware and be visible. For each unit of
Microsoft EPG Product which is embodied in software this notice may appear in an
"about-box" or may be embedded as a character (Ascii) string which appears in
the executable software code when it is viewed or printed. Microsoft's failure
to comply with the foregoing requirements shall not constitute a breach of this
Agreement; provided, upon learning of such failure, Microsoft promptly corrects
it.
12.5 Resolution of Disputes
12.5.1 Except with respect to obligations imposed by this Agreement,
Microsoft forever releases, acquits and discharges Gemstar and StarSight
(collectively, the "Gemstar/StarSight Released Parties") from any and all
claims, causes of action, demands and liabilities (including damages of any
kind), known or unknown, that have been or could have been asserted against the
Gemstar/StarSight Released Parties as of the Effective Date arising out of or
related to claims asserted against Gemstar/StarSight Released Parties relating
to the StarSight Agreement.
12.5.2 Except with respect to obligations imposed by this Agreement,
Gemstar and StarSight forever release, acquit and discharge Microsoft, including
its Subsidiaries, (collectively, the "Microsoft Released Parties")from any and
all claims, causes of action, demands and liabilities (including damages of any
kind), known or unknown, that have been or could have been asserted against the
Microsoft Released Parties as of the Effective Date arising out of or related to
claims asserted against the Microsoft Released Parties relating to the StarSight
Agreement.
12.5.3 The parties hereto acknowledge the existence of Section 1542 of the
Civil Code of the State of California which reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED SETTLEMENT WITH THE DEBTOR."
The parties to this Agreement hereby respectively waive and relinquish all
rights and benefits under Civil Code Section 1542 and any law or legal principal
of similar effect in any jurisdiction with respect to the release granted
herein.
12.5.4 The parties to this Agreement mutually acknowledge and agree that
the terms of this Section 12.5 are intended as a settlement and compromise of
disputed claims and nothing in this Agreement shall be deemed as an admission of
wrongdoing or liability by either party for any purpose.
12.6 Each party as "Granting Party" grants to the other party the right to
obtain upon request and to the extent and subject to the terms and conditions
under which the Granting Party has the right to do so at the time of such
request, a license of or within the scope granted herein with respect to any
patent which would otherwise qualify as a Licensed Patent of the Granting Party,
but for payment to third parties as set forth in the definition of Licensed
Patents. Such license shall be granted under a separate agreement at a royalty
rate or other payment payable by the Granting Party to a third party for
granting of such license or the exercise of rights thereunder.
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12.7 Payments, Notices and Other Communications
12.7.1 All notices and other communications required or permitted under
this Agreement shall be in writing and shall be given in one of the following
ways:
(i) by overnight courier;
(ii) by registered or certified mail; or
(iii) by facsimile followed by registered or certified mail.
Such notices shall be delivered to the parties at the following addresses
(or at such other address as a party may specify by written notice to the
other);
If to Gemstar:
Gemstar International Group Limited
c/o StarSight Telecast, Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Fax Number (000) 000-0000
Attn: Xxxxx Xxxxxxxxxx
If to Microsoft:
Microsoft Corporation
Xxx Xxxxxxxxx Xxx
Xxxxxxx, XX 00000-0000
Xxxxxx Xxxxxx of America
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
Group Product Manager
Consumer Platforms Division
With a copy to:
Law and Corporate Affairs (same address)
Either party may change its address by a notice given to the other party in
the manner set forth above. Notices and communications shall be deemed to have
been given upon receipt when delivered personally or by overnight courier, or
ten (10) days after posting if sent by registered or certified mail; or upon
receipt by facsimile, provided the original copy is received by registered or
certified mail within ten (10) days after facsimile transmission.
12.7.2 Royalty reports, as described in Section 6.2, shall be sent by
overnight delivery, or faxed and then mailed within five (5) days as set forth
below.
If to Gemstar:
Gemstar International Group Limited
c/o StarSight Telecast, Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Fax Number (000) 000-0000
Attn: Xxxxx Xxxxxxxxxx
If to Microsoft
Microsoft Corporation
Xxx Xxxxxxxxx Xxx
Xxxxxxx, XX 00000-0000
Attn: Special Agreements/ Dept. 551
Fax number (000) 000-0000
12.7.3 All payments by Microsoft as set forth in Section 6.1 shall be paid
via automated clearing house payment, check sent by overnight delivery or bank
wire transfer to:
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[*]
12.7.4 All payments by Gemstar as set forth in Section 6.1 shall be paid
via automated clearing house payment, check sent by overnight delivery or bank
wire transfer to:
[*]
12.8 Partial Invalidity. If any provision of this Agreement shall be
------------------
found or held to be invalid or unenforceable in any jurisdiction in which this
Agreement is being performed or enforced, the remainder of this Agreement shall
be valid and enforceable, and the parties shall use their best efforts to
negotiate a substitute valid and enforceable provision that most nearly effect
the parties' intent in entering into this Agreement.
12.9 Governing Law. The validity, construction, and performance of this
-------------
Agreement shall be governed by and interpreted in accordance with the laws of
the State of California, USA, without regard to conflicts of laws provision.
12.10 Section Headings. The heading to sections and this Agreement are to
----------------
facilitate reference only and do not form a part of this Agreement, and shall
not in any way affect the interpretation thereof.
12.11 Entire Agreement. The terms and conditions herein contained
----------------
constitute the entire agreement between the parties regarding the subject matter
hereof, and supersede all previous agreements and understandings, whether oral
or written, between the parties hereto with respect to the subject matter
hereof. No modification, alteration, addition or change in the terms hereof
shall be binding on either party hereto unless reduced to writing and duly
executed by the parties in the same manner as the execution of this Agreement.
In Witness Whereof, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives on the dates set forth below.
Microsoft: Gemstar:
Microsoft Corporation Gemstar International Group Limited
By:________________________________ By:____________________________________
Xxxxx X. Xxxxxx
Senior Vice President
Consumer Platforms Division
Date:______________________________ Date:__________________________________
StarSight:
StarSight Telecast, Inc.
___________________________________ By:____________________________________
___________________________________ Date:__________________________________
__________
[*] Confidential Treatment Requested.
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Appendix A
Microsoft Deliverables and Schedule
1. Deliverables Defined
Microsoft shall deliver to Gemstar at least one copy of each Microsoft EPG
Product and associated development tool (e.g., software developer kit ("SDK")
and driver developer kit ("DDK"))("EPG Development Tools") as such products and
tools become available, as determined by Microsoft. Microsoft shall deliver the
Microsoft EPG Products and EPG Development Tools in pre-release and final
Versions.
2. Schedule for Delivery
To be agreed upon by the parties.
3. License Grant
The license grants for each Microsoft EPG Product and EPG Development Tool
shall be the standard Microsoft license grants for such products and tools. At
a minimum, however, the Gemstar shall be entitled to and is hereby granted at
least the following license rights with respect to each Microsoft EPG Product
and EPG Development Tool:
3.1 Microsoft EPG Products. Microsoft grants Gemstar the following
----------------------
limited, non-exclusive rights:
Gemstar may use the Microsoft EPG Products to design, develop, and test
Gemstar products and services and associated development tools and
infrastructure products for use with Microsoft EPG Products, EPG Development
Tools and infrastructure products.
3.2 EPG Development Tools. Microsoft grants Gemstar the following
---------------------
limited, non-exclusive rights:
a. Software Product. Gemstar may install and use the EPG Development
----------------
Tools to design, develop, and test software application products for use with
Microsoft EPG Products ("Application").
b. Sample Code. Gemstar may modify the sample source code located in the
-----------
EPG Development Tools "samples" directories ("Sample Code") to design, develop,
and test Gemstar's Application. Gemstar may also reproduce and distribute the
Sample Code in object code form along with any modifications it makes to the
Sample Code, provided that Gemstar complies with the Distribution Requirements
described below. For purposes of this section, "modifications" shall mean
enhancements to the functionality of the Sample Code.
c. Redistributable Code. Portions of the EPG Development Tools are
--------------------
designated as "Redistributable Code."
d. Distribution Requirements. Gemstar may copy and redistribute the
-------------------------
Sample Code and/or Redistributable Code (collectively "Redistributable
Components") as described above, provided that (i) Gemstar distributes the
Redistributable Components only in conjunction with, and as a part of, its
Application; (ii) Gemstar's Application adds significant and primary
functionality to the Redistributable Components; (iii) the Redistributable
Components only operate in conjunction with Microsoft EPG Products; (iv) Gemstar
does not permit further redistribution of the Redistributable Components by its
end-user customers; (v) Gemstar does not use Microsoft's name, logo, or
trademarks to market its Application; (vi) Gemstar includes a valid copyright
notice on its Application; and (vii) Gemstar agrees to indemnify, hold harmless,
and defend Microsoft from and against any claims or lawsuits, including
attorneys' fees, that arise or result from the use or distribution of its
Application, except to the extent such claims or lawsuits arise as a consequence
of the Microsoft Deliverables.
e. Pre-Release Code. In the event, the EPG Development Tools contain
----------------
pre-release code, then Gemstar is hereby advised that is not at the level of
performance and compatibility of the final, generally available, product
offering. These portions of the EPG Development Tools may not operate correctly
and may be substantially modified prior to first commercial shipment. Microsoft
is not obligated to make this or any later version of the EPG Development Tools
commercially available. Microsoft grants Gemstar the right to distribute test
versions of its Application created using the pre-release code provided Gemstar
complies with the Distribution Requirements described in Section 3.2(d) of this
Appendix A and the following additional provisions: (i) Gemstar must xxxx the
test version of its Application "BETA" and (ii) Gemstar is solely responsible
for updating its customers with versions of its Application that operate
satisfactorily with the final commercial release of the pre-release code.
4. Support
A-1
In addition to such direct support from Microsoft technical personnel as
Microsoft deems necessary, support for StartSight's use of the Microsoft
Deliverables shall be in accordance with Microsoft's standard support offerings.
X-0
Xxxxxxxx X
Gemstar Deliverables and Schedule
1. Deliverables Defined
Gemstar shall deliver to Microsoft technical information, trade
secrets and specifications regarding extraction of Gemstar's data stream from
VBI, decryption of the Gemstar data stream, Gemstar data formats and other
technologies, all as Gemstar deems necessary, to facilitate the compatibility of
Microsoft EPG Products with Gemstar's data and transmission network and to
assist Microsoft in the development of the Gemstar Data Loader and a data
security mechanism (collectively "Gemstar Deliverables"). Microsoft shall own
the Gemstar Data Loader developed pursuant to Section 4.10.
2. Schedule for Delivery
To be agreed upon by the parties.
3. License Grant
Gemstar grants Microsoft the following limited, non-exclusive rights:
Microsoft may use the Gemstar Deliverables to design, develop, and test
Microsoft EPG Products and associated development tools and infrastructure
products for use with Gemstar products and services.
4. Support
In addition to such direct support from Gemstar technical personnel as
Gemstar deems necessary, support for Microsoft's use of the Gemstar Deliverables
shall be in accordance with Gemstar's standard support offerings.
X-0
Xxxxxxxx X
Xxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxx Xxxxxx Utility and Design Patents
Patents Owned or Licensed by Gemstar
---------------
5,307,173
---------------
5,335,079
---------------
5,382,983
---------------
5,475,382
---------------
5,515,173
---------------
5,532,732
---------------
5,539,391
---------------
5,552,837
---------------
5,553,123
---------------
5,559,550
---------------
5,600,711
---------------
5,673,089
---------------
5,488,409
---------------
5,523,794
---------------
5,543,852
---------------
5,581,614
---------------
5,621,579
---------------
5,659,367
---------------
5,499,103
---------------
5,512,963
---------------
5,541,738
---------------
5,543,929
---------------
5,640,484
---------------
5,502,694
---------------
5,566,528
---------------
5,619,383
---------------
5,677,895
---------------
5,706,145
---------------
4,908,713 (Claims 1-18)
---------------
5,505,815
---------------
5,568,272
---------------
5,414,756
---------------
4,706,121
---------------
4,977,455
---------------
5,151,789
---------------
5,353,121
---------------
5,479,266
---------------
5,479,268
---------------
5,532,754
---------------
5,550,576
---------------
5,619,274
---------------
5,684,525
---------------
338,202
---------------
338,203
---------------
E-1
336,417
---------------
349,118
---------------
346,169
---------------
346,268
---------------
364,166
---------------
377,797
---------------
E-2
