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EXHIBIT 10.29
PATENT LICENSE AGREEMENT
THIS PATENT LICENSE AGREEMENT ("Agreement") is entered into effective as
of November 15, 1995 ("Effective Date") by and between SCM Microsystems, having
offices at 000 Xxxxxxxx Xxx, Xxx Xxxxx, Xxxxxxxxxx 00000 ("SCM") and MIPS
Dataline America, Inc.("MIPS"), having offices at 00000 Xxxxxxx Xxxxx Xxxxx,
Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000.
WHEREAS, MIPS owns United States patents number 5,036,429, 5,136,467 and
5,396,617, and any and all extensions, continuations, continuations-in-part,
divisionals, reissues-in-part, reissues and reissues-in-part of each and any of
such patent and any and all foreign counterparts of any of the foregoing (the
foregoing collectively referred to herein as the "Licensed Patents", and United
States patent number 5,396,617, specifically, being referred to herein
specifically as the "617 Patent"); and
WHEREAS, SCM desires to license and MIPS desires to grant licenses under
the Licensed Patents on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises above and the parties'
mutual promises below, and other good and valuable consideration, the
sufficiency of which is hereby acknowledged by the parties, SCM and MIPS hereby
agree as follows:
1. Grant of Rights.
1.1 License Grant. Subject to the terms and conditions of this
Agreement, MIPS hereby grants to SCM, and SCM accepts a perpetual, irrevocable,
fee-bearing, worldwide, and transferable right and license under the Licensed
Patents and any and all of MIP's right, title and interest therein and thereto,
with right to grant sublicenses of the foregoing rights, to manufacture, use and
sell, have manufactured, lease and import "Exclusive Products" and "Nonexclusive
Products" (as such terms are defined below) and provide related services of any
kind or nature.
1.2 Exclusivity. The rights and licenses granted to SCM in
Section 1.1 above are and will be exclusive with respect to the "Exclusive
Products". For purposes of this Agreement, "Exclusive Products" means the
following: PC cards and related products, including but not limited to smart
cards, ethernet cards, adapters, connectors and extensions; but specifically
excluding (i) products marketed by MIPS as of the Effective Date ("Current MIPS
Products") and (ii) products not competitive (directly or indirectly) with
products that may be offered by SCM from time to time ("Future MIPS Products"),
which Future Products are functionally similar to Current MIPS Products.
1.3 Nonexclusivity. The rights and licenses granted to SCM in
Section 1.1 are and will be nonexclusive with respect to the "Nonexclusive
Products". For purposes of this Agreement, "Nonexclusive Products" means the
following: Products of any kind for data storage, communication and/or transfer,
including but not limited to the Exclusive Products, and related applications
and interfaces, but specifically excluding Current MIPS Products.
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2. Compensation.
2.1 License Fees. For and in consideration of the rights and
licenses granted to SCM under this Agreement, subject to Sections 2.2, 2.3 and
2.4 below. SCM agrees to pay, on the terms set forth in Section 2.5, below, the
following MIPS license fees:
(a) An up-front fee of [ * ] and
(b) A per unit fee of [ * ] on the sale by SCM of the
"Floppy IC Card Combination Product" unit (as defined in SCM marketing
literature published as of the Effective Date) covered by the 617 Patent; and
(c) A sublicensing fee of [ * ] of "Hardware Sublicense
Royalties" received by SCM. As used in this Section, "Hardware Sublicense
Royalties" means Licensed Patent sublicense royalties received by SCM and
allocated to hardware content (as opposed to software or firmware content)
according to the terms of the Licensed Patent sublicense agreement between SCM
and the third party sublicensee. However, if no such allocation is made in such
sublicense agreement, then all royalties payable under the sublicense agreement
will be deemed to be allocated to hardware content; and
(d) A supplemental annual fee of [ * ]
2.2 Accrual of Fees. Fees payable in accordance with Section 2.1
above will accrue only upon actual receipt of revenues by SCM in respect of the
commercial disposition of products covered by one or more of the Licensed
Patents. However, no fees will accrue on revenues received by SCM from any of
its affiliates, by any SCM affiliates from SCM or by any SCM affiliates from one
another. However, SCM will not license through its affiliates in order to avoid
fees hereunder; and revenues received by such affiliates from third parties will
be deemed to accrue for purposes of calculating royalties of this Agreement.
2.3 Maximum Annual Fees. Fees payable to SCM in accordance with
Section 2.1 above will not exceed [ * ] per year (commencing with the Effective
Date and each anniversary thereof), and no fees in excess of such amount will
accrue to MIPS for any such year.
2.4 Patent Coverage. No fees will be payable under this agreement
unless there is a transaction for the commercial disposition of a product
covered by one or more unexpired, valid and enforceable Licensed Patents issued
in the jurisdiction in which the transaction occurs; provided that, except for
the U.S. patents specifically listed in the Recitals to this Agreement, SCM must
receive, in advance of the accrual of fees hereunder, unequivocal and
unambiguous written notice from MIPS of the issuance of such Licensed Patents.
For purposes of the preceding sentence, a transaction will be deemed to occur in
the jurisdiction in which physical possession of such product is received by the
recipient in such transaction (e.g., a purchaser or lessee).
* CERTAIN CONFIDENTIAL INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
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2.5 Payment Terms. SCM shall pay MIPS fees as provided in
Section 2.1 above, by valid bank check to be drawn on a U.S. bank, as follows:
(a) Up-front fees are payable within fifteen (15) days
after the Effective Date; and
(b) Per unit fees are payable within forty-five (45)
days after the fiscal quarter of SCM during which revenue is received by SCM on
the sale of the Floppy IC Card Combination Product unit; and
(c) Sublicensing fees are payable within forty-five
(45) days after the fiscal quarter of SCM during which sublicense royalty
revenue is received by SCM; and
(d) Supplemental annual fees are payable in advance at
least fifteen (15) days after each anniversary of the effective date during the
term of this Agreement, although the first such annual fee will be paid within
fifteen (15) days after the Effective Date.
2.6 Most Favored Licensee. MIPS represents and warrants to SCM
that MIPS has not granted any third party rights within the scope of the rights
and licenses granted to SCM under this Agreement on terms and conditions any of
which are more favorable than the terms and conditions provided to SCM in this
Section 2 above. MIPS agrees that, if at any time, MIPS offers or grants any
such more favorable terms and conditions to a third party, MIPS will notify SCM
in writing as soon as practicable. SCM will be entitled to substitute any such
more favorable terms and conditions for corresponding terms and conditions, if
any, provided in this Agreement.
2.7 Currency Conversion. SCM shall pay all fees under this
Agreement in U.S. dollars. If SCM receives sublicense royalties (upon which
sublicensing fees are based, as above) in currencies other than U.S. dollars,
then SCM shall convert such other currencies, for purposes of calculating
sublicensing fees, at currency conversion rates published by the Wall Street
Journal, U.S. West Coast Edition, on the last day of publication in the quarter
during which revenues accrue.
2.8 Taxes. MIPS shall bear all taxes, other than taxes on the
income of SCM, resulting from the grant or exercise of the rights and licenses
provided to SCM herein. Without limiting the foregoing, SCM may deduct from fees
payable to MIPS, and pay to taxing authorities in each jurisdiction, taxes
levied on fees payable to MIPS in connection with such grant or exercise. SCM
agrees to provide MIPS with certificates or other documents received by SCM in
connection with the payment of such withholding taxes to such authorities (which
may be usable by MIPS in obtaining foreign tax credits under U.S. federal law in
respect of such foreign taxes withheld).
2.9 Reports and Audits.
(a) SCM agrees to include with each quarterly payment of
fees a reasonably detailed report setting forth the information used to
calculate such fees.
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(b) SCM agrees to keep reasonably detailed books and
records containing such information.
(c) MIPS shall have the right to have its auditors
reasonably acceptable to SCM inspect such books and records to determine whether
quarterly payments made to MIPS under this Agreement are accurate; provided
that, SCM may condition any such inspection upon (i) reasonable notice to SCM;
(ii) conduct of the inspection during SCM's normal business hours, (iii)
initiation of any such inspection not more often than once a year and (iv) the
written agreement of the auditors to keep information SCM reasonably deems
confidential from unauthorized disclosure and to disclose to MIPS only the
amount of any overpayments or underpayments under this Agreement. MIPS shall
bear the cost of any such inspection; provided that SCM shall reimburse MIPS for
the reasonable cost of any such inspection which discloses an aggregate
underpayment to MIPS for the period for which books and records are inspected of
five percent (5%) or more (provided that SCM shall be obligated for such
reimbursement for any period only once).
3. Marketing Participation by MIPS.
SCM will consider including MIPS as a participant in SCM's
marketing activities related to products manufactured by SCM and covered by the
Licensed Patents, including sharing certain sales and marketing data and
reports, as well as potential technical collaboration and possible cooperative
selling activities. Such participation will be subject to written agreement of
both parties.
4. Expiration and Termination.
4.1 Expiration of Specific Licenses. The licenses granted to SCM
under each Licensed Patent as provided in this Agreement will expire, as to each
jurisdiction, upon the expiration, or a ruling of invalidity or unenforceability
of each Licensed Patent in any such jurisdiction; and SCM's payment obligations
under this Agreement in respect of such Licensed Patent will cease upon such
expiration; provided that SCM may continue to practice the inventions covered by
such Licensed Patent.
4.2 Termination. SCM may terminate this Agreement at any time for
any reason or for no reason upon thirty (30) days' written notice to MIPS. Upon
any such termination of this Agreement (or any other termination agreed by both
parties in writing), all rights and licenses granted to SCM under Section 2 of
this Agreement will cease; except that SCM will continue to have a perpetual
right to continue to manufacture and distribute replacement products and
components and provide product services in accordance with SCM's warranties
given to its customers and reasonable service policies.
4.3 Survival of Obligations. All payment obligations that have
accrued as of the effective date of expiration of any license or termination of
this Agreement shall survive termination for any reason. In addition, the
provisions of Sections 4 et seq. will survive termination of this Agreement for
any reason.
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5. Warranty and Authority. MIPS hereby represents and warrants to SCM
that MIPS owns all right, title and interest in and to the Licensed Patents
necessary in order for SCM to practice the inventions covered by the Licensed
Patents free from interference or claim by any third party. MIPS further
represents and warrants to SCM that MIPS has not granted or entered into (and
MIPS covenants to SCM that MIPS will not grant or enter into) any license or
agreement inconsistent with this Agreement. MIPS agrees to indemnify and hold
SCM harmless from and against any and all expenses, costs (including the
reasonable fees of attorneys and other professionals), damages, judgments,
awards and other liabilities of any nature incurred by SCM as a result of a
breach of the foregoing representations and warranties by MIPS, and MIPS shall
reimburse SCM or pay any of the foregoing promptly upon written request by SCM.
6. Limitation of Liability. IN NO EVENT WILL SCM BE LIABLE UNDER THIS
AGREEMENT FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL OR INDIRECT DAMAGES OR FOR ANY
AMOUNT IN EXCESS OF AMOUNTS EXPRESSLY PROVIDED HEREIN, UNDER ANY LEGAL OR
EQUITABLE THEORY, WHETHER OR NOT ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
7. General Provisions.
7.1 Governing Law; Venue. This Agreement will be governed and
interpreted in accordance with the laws of the State of California, excluding
its conflicts of law principles. The parties agree that any proceeding to
resolve any dispute under or in connection with this Agreement shall be brought
in the state or federal courts in Santa Xxxxx County, California.
7.2 Notices. Any notices permitted or required under this
Agreement shall be sent in writing via certified U.S. Mail or internationally
recognized courier to the recipient party's address first set forth in this
Agreement. Notices will be deemed to be effective three (3) days after sending.
7.3 Severability. The invalidity or unenforceability of any term
or provision of this Agreement shall in no way affect the validity or
enforceability of any other term of provision.
7.4 Complete Agreement. This Agreement is the final, complete and
exclusive understanding between SCM and MIPS with respect to its subject matter.
This Agreement supersedes all prior agreements and promises relating to its
subject matter. No promises or agreements made at or after the Effective Date
are binding unless in writing and signed by both parties.
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IN WITNESS WHEREOF, THE PARTY SIGNATORIES BELOW AGREE TO THIS AGREEMENT
AS SET FORTH ABOVE.
SCM MICROSYSTEMS, INC. MIPS DATALINE AMERICA, INC.
By:_________________________ By:_________________________
Xxxxxx Xxxxxxxxx, Dipl. Phys. Xxxxxx Xxxxxxxx,
President President
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