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5. Patent License If Option Exercised or If Option Not Granted: If the “Option Granted” box above is checked and LICENSEE has investigated LICENSOR’s invention and such investigation is favorable and LICENSEE has exercised its option, or if said box is not checked, then LICENSOR hereby grants to LICENSEE, subject to the terms and conditions herein, a patent license of the type (Exclusive or Nonexclusive) checked above. Such patent license shall include the right to grant sublicenses, to make, have made, use, and sell the Licensed Product throughout the United States, its territories, and possessions. Such patent license shall be under LICENSOR’s patent application, any continuations, divisions, continuations-in-part, substitutes, reissues of any patent from any of such applications (hereinafter and hereinbefore LICENSOR’s patent application), any patent(s) issuing thereon, and if the “Know-How Licensed” box is checked above, any know-how transferred to LICENSEE. 6. If Know-How Licensed: If the “Know-How” box above is checked, LICENSOR shall communicate to LICENSEE all of LICENSOR’s know-how in respect of LICENSOR’s invention within one month after the date of this Agreement and shall be available to consult with LICENSEE, for up to 80 hours, with respect to the licensed invention and know-how. All travel and other expenses of LICENSOR for such consultation shall be reimbursed by LICENSEE within one month after LICENSOR submits its voucher therefor. LICENSOR makes no warranty regarding the value, suitability, or workability of such know-how. The royalty applicable for such know-how shall be paid, at the rate indicated above, for a minimum of three years from the date of this Agreement if no option is granted, or for three years from the date of exercise if an option is granted and exercised by LICENSOR, and thereafter for so long as LICENSEE makes, uses, or sells Licensed Products and has a share in the United States of at least 15% of the competitive market for Licensed Products. 7. Royalties: A. Licensing Fee: Unless the “Option Granted” box above is checked, LICENSEE shall pay to LICENSOR, upon execution of this Agreement, a nonrefundable Licensing Fee. This Licensing Fee shall also serve as an advance against future royalties. Such Licensing Fee shall be computed as follows: (A) Take the Total Royalty Rate in percent, as stated above. (B) Multiply by LICENSEE’s Estimate of Its First Year’s Sales, in units of Licensed Product, as stated above. (C) Multiply by LICENSEE’s Estimated Unit Price of Licensed Product, in dollars, as stated above. (D) The combined product shall be the Licensing Fee, in dollars, as stated above. When LICENSEE begins actual sales of the Licensed Product, it shall certify its Actual Net Factory Sales Price of Licensed Product to LICENSOR in writing and shall either (1) simultaneously pay LICENSOR any difference due if the Actual Net Factory Sales Price of Licensed Product is more than the Estimated Unit Price, stated above, or (2) advise LICENSOR of any credit to which LICENSEE is entitled if the Actual Net Factory Sales Price of Licensed Product is less than the above Estimated Unit Price. In the latter case, LICENSEE may deduct such credit from its first royalty remittance to LICENSOR, under subpart B below. If an option is granted and exercised under Part 4 above, then LICENSEE shall pay this Licensing Fee to LICENSOR if and when LICENSEE exercises its option. B. Royalty: If the “Option Granted” box above is not checked, or if said box is checked and LICENSEE has exercised its option under Part 4, LICENSEE shall also pay to LICENSOR a Total Royalty, at the rate stated above. Such royalty shall be at the Patent Royalty Rate stated in Part 1 above, plus, if the “Know-How Licensed” box above is checked, a Know-How Royalty at the Know-How Royalty Rate stated above. Said Total Royalty shall be computed on LICENSEE’s Net Factory Sales Price of Licensed Product. Such Total Royalty shall accrue when the Licensed Products are first sold or disposed of by LICENSEE, or by any sublicensee of LICENSEE. LICENSEE shall pay the Total Royalty due to LICENSOR within one month after the end of each calendar quarter, together with a written report to LICENSOR of the number of units, respective sales prices, and total sales made in such quarter, together with a full itemization of any adjustments made pursuant to subpart F below. LICENSEE’s first report and payment shall be made within one month after the end of the first calendar quarter following the execution of this Agreement. No royalties shall be paid by LICENSEE to LICENSOR until after the Licensing Fee under subpart A above has been earned, but LICENSEE shall make a quarterly report hereunder for every calendar quarter after the execution hereof, www.nolo.com Form 16-5: Universal License Agreement Page 2 of 6
whether or not any royalty payment is due for such quarter, except that if an option is granted, LICENSEE shall not make any royalty reports until and if LICENSEE exercises its option. C. Minimum Annual Royalties: If the “Exclusive” box above is checked, so that this is an exclusive license, then this subpart C and subpart D shall be applicable. But if the “Nonexclusive” box is checked above, then these subparts C and D shall be inapplicable. There shall be no minimum annual royalties due under this Agreement until the “Year Commencing,” as identified in Part 1 above. For the exclusivity privilege of the patent license grant under Part 5 above, a Minimum Annual Royalty shall be due beginning with such royalty year and for each royalty year ending on the anniversary of such royalty year thereafter. Such Minimum Annual Royalty shall be equal to the Patent Royalty which would have been due if the “Minimum Number of Units [of Licensed Product] to Be Sold to Compute Minimum Annual Royalty” identified in Part 1 above were sold during such royalty year. If less than such number of units of Licensed Product are sold in any royalty year, then the Patent Royalty payable for the fourth quarter of such year shall be increased so as to cause the Patent Royalties paid for such year to equal said Minimum Annual Royalty. If an option is granted under Parts 1 and 4, then no Minimum Annual Royalties shall be due in any case until and if LICENSEE exercises its option. D. If Minimum Not Paid: If this part is applicable and if sales of Licensed Product in any royalty year do not equal or exceed the minimum number of units identified in Part 1 above, LICENSEE may choose not to pay the Minimum Annual Royalty under subpart C above. In this case, LICENSEE shall so notify LICENSOR by the date on which the last royalty for such year is due, i.e., within one month after any anniversary of the date identified in Part 1 above. Thereupon the license grant under Part 4 above shall be converted to a nonexclusive grant, and LICENSOR may immediately license others under the above patent. E. Most Favored Licensee: If this license is nonexclusive, or if it becomes nonexclusive under subpart D above, then (a) LICENSOR shall not grant any other license under the above patent to any other party under any terms which are more favorable than those which LICENSEE pays or enjoys under this Agreement, and (b) LICENSOR shall promptly advise LICENSEE of any such other grant and the terms thereof. F. When No Royalties Due: No Patent Royalties shall be due under this Agreement after the above patent expires or if it is declared invalid by a court of competent jurisdiction from which no appeal can be taken. Also, if LICENSOR’s patent application becomes finally abandoned without any patent issuing, then the Patent Royalty under this Agreement shall be terminated as of the date of abandonment. Any Know-How Royalties under Part 6 above shall continue after any Patent Royalties terminate, provided such Know- How Royalties are otherwise due under such Part 6. G. Late Payments: If any payment due under this Agreement is not timely paid, then the unpaid balance shall bear interest until paid at an annual rate of 10% until the delinquent balance is paid. Such interest shall be compounded monthly. H. Net Factory Sales Price: “Net Factory Sales Price” is defined as the gross factory selling price of Licensed Product, or the U.S. importer’s gross selling price if Licensed Product is made abroad, less usual trade discounts actually allowed, but not including advertising allowances or fees or commissions paid to employees or agents of LICENSEE. The Net Factory Sales Price shall not include (1) packing costs, if itemized separately, (2) import and export taxes, excise and other sales taxes, and customs duties, and (3) costs of insurance and transportation, if separately billed, from the place of manufacture if in the U.S., or from the place of importation if manufactured abroad, to the customer’s premises or next point of distribution or sale. Bona fide returns may be deducted from units shipped in computing the royalty payable after such returns are made. 8. Records: LICENSEE and any of its sublicensees shall keep full, clear, and accurate records with respect to sales subject to royalty under this Agreement. The records shall be made in a manner such that the royalty reports made pursuant to Part 7B can be verified. LICENSOR, or its authorized agent, shall have the right to examine and audit such records upon reasonable notice during normal business hours, but not more than twice per year. In case of any dispute as to the sufficiency or accuracy of such records, LICENSOR may have www.nolo.com Form 16-5: Universal License Agreement Page 3 of 6
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N O LO ® “The best roll-up-your-
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Products & Services Books & Softwar
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15th edition Patent It Yourself You
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Acknowledgments My deep thanks go t
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2 3 4 The Science and Magic of Inve
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8 9 E. Make and Sell Your Invention
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13 14 J. The Patent Laws of Other C
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Appendixes 1 2 Abbreviations Used i
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Your Legal Companion A. You Don’t
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Your Legal COMPANION | 3 D. Should
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Your Legal COMPANION | 5 E. New Mat
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8 | Patent it YOURSELF 3. Advantage
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10 | Patent it YOURSELF • Utility
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C H A P T E R 4 Will Your Invention
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ChaPter 4 | Will Your INVENTION SEL
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C H A P T E R 7 What Should I Do Ne
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Fig. 7A—Invention Decision Chart
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ChaPter 7 | What SHOULD I do Next?
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How to Draft the Specification and
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Appendix 4 | Fee SCHEDULE | 475 37
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482 | Patent it YOURSELF A. Patent
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A p p e n d i x 6 Quick-Reference T
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A P P E N D I X 7 Tear-Out Forms No
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Nondisclosure Agreement 1. Parties.
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Invention Disclosure Sheet of Inven
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Form 3-4: Application Data Sheet—
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Positive and Negative Factors Evalu
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Consultant’s Work Agreement 1. Pa
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Searcher’s Worksheet Sheet of Inv
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Form 10-1A: Declaration for Utility
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Form 10-1A: Declaration for Utility
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Form 10-2: Utility Patent Applicati
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Page 585: Universal License Agreement 1. Part
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Page 603 and 604: INDex | 585 in specification, 198,
Page 605 and 606: INDex | 587 exploitation of flowcha
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Page 613 and 614: INDex | 595 digital, for use in CAD
Page 615 and 616: INDex | 597 press release, 413 See
Page 617 and 618: INDex | 599 slash-sandwiched, 72, 4
Page 619 and 620: INDex | 601 in notebook, 50, 51, 53
Page 621 and 622: Bestsellers The Small Business Star
Page 623 and 624: Online Legal Forms Nolo offers a la
Page 625 and 626: Keep Up to Date 1 Go to Nolo.com/ne
Page 627: About the Author David Pressman is
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