Know-How License Agreement (Long form - Comprehensive)
THIS AGREEMENT, made, entered into, and effective this [date], by and between [name] (Licensor) and [name] (Licensee):
W I T N E S S E T H:
WHEREAS, Licensor is the owner of certain know-how incorporated in Proprietary Data (as hereinafter defined) useful in the development, production, and use of certain Products;
WHEREAS, Licensee wishes to obtain from Licensor the right to use the Proprietary Data in connection with the development, production, and use of Products; and
WHEREAS, Licensee further desires to obtain design and engineering assistance from Licensor from time to time in connection with the development, production, and use of Products and to engage Licensor as a consultant for that purpose;
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows:
Section 1
DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.01. Licensed Territory. [Designate territory].
1.02. Products. [Designate products, such as particular named software programs.]
1.03. Proprietary Data. Unpublished "know-how," which shall include (without limitation) computer program designs, algorithms, subroutines, system specifications, test data, charts, graphs, operation sheets, and all other technical information, owned by Licensor or under Licensor's control, relating to the development and production or use of Products and the design, configuration, programming, and protocol of the Products.
1.04. Royalty Revenues. (1) Licensee's gross revenue received by Licensee with respect to the use, distribution, licensing, or other transfer by Licensee for value of Products, less trade discounts, commissions, and transportation costs actually and reasonably allowed or incurred (but Royalty Revenues shall not include fees or proceeds resulting from the preparation, licensing, distribution, or support of any modification, correction, update, or enhancement of the Products) and (2) gross royalties and other payments received by Licensee with respect to sublicenses granted by Licensee pursuant to this Agreement. To the extent Licensee may prepare, license, distribute, or support any Product in a modified, corrected, updated, or enhanced form, the fees or proceeds attributable to the Product, as distinguished from fees or proceeds attributable to the modification, correction, update, or enhancement, shall be prorated in good faith by Licensee based on the fair market of each component, and such portion of fees and proceeds shall be deemed revenues received with respect to the distribution and licensing of the Products.
1.05. Annual Period. Each period of twelve months from [date] until [date], inclusive.
Section 2
LICENSE GRANTED
2.01. Grant of License of Proprietary Data. Licensor hereby grants to Licensee, and Licensee hereby accepts, a perpetual, nonexclusive, and irrevocable right to use and employ the Proprietary Data in the development, production, modification, use, and distribution of the Products in the Licensed Territory and the right to sublicense others to do so on the same terms as set forth in this Agreement. Subject to the provisions of this Agreement, Licensee is authorised to modify, correct, and enhance the Proprietary Data as it may deem appropriate, and Licensee shall be entitled to exclusive ownership and control of the resulting modification, correction, or enhancement, including any patent rights available with respect thereto, any trade secrets pertaining thereto, and any copyrights subsisting therein as derivative works, but only to the extent that they shall be separate and clearly distinguishable from the underlying work.
2.02. Grant of License to Product Rights. In connection with the rights granted to Licensee, Licensee shall receive a perpetual, nonexclusive, and paid-up license to all proprietary technology that Licensor may own or control relating to Products, including patents, patent applications, trade secrets, know-how, license rights, and copyrights therein.
2.03. Right to Sublease. The foregoing rights include the right to sublicense the proprietary data to third parties for reasonable compensation and under terms that maintain the confidentiality of all Proprietary Data.
Section 3
PROPRIETARY DATA
3.01. Disclosure and Transfer of Proprietary Data. Licensor shall furnish to Licensee the Proprietary Data in a form sufficient to enable Licensee to use and practice the Proprietary Data and to modify, use, and transfer Products.
3.02. Confidentiality Obligations. Licensee shall use Licensee's best efforts, consistent with the efforts Licensee uses to protect Licensee's own most valuable and sensitive trade secret data, to maintain the confidentiality of all Proprietary Data. Such confidentiality obligations shall not apply, however, to Proprietary Data (1) in the public domain at the time of its use or disclosure; (2) already known by Licensee at the time is as made available by Licensor; (3) independently developed by Licensee; (4) required to be disclosed pursuant to official process, order, or demand so long as Licensor shall be given prior notice of such official process, order, or demand adequate to enable Licensor to oppose the same; or (5) necessarily disclosed in the marketing and sale of Products.
3.03. Copying of Master Copy. Within [number] days after the execution of this Agreement. Licensor shall make available to Licensee a master copy of each software program included within the Proprietary Data, including both source and object code thereto and all available system documentation, in the form then existing, for reproduction by Licensee at Licensee's cost. To the extent reasonably possible, each master copy will be in a form reasonably suitable for copying. Since it may not be practical or desirable to duplicate all of the Proprietary Data, Licensor, during the term of this Agreement, shall cooperate with Licensee in providing all further Proprietary Data and documentation that Licensee from time to time specifically requests.
3.04. Consultation by Licensor. Licensor, at Licensee's request, will evaluate information supplied by Licensee with respect to a specific use, design, or modification of a Product and provide consultation and advice based on Licensor's evaluation. If Licensee wishes to engage Licensor to perform design, development, testing, or other work relating to Products, Licensee will specify the work that is desired to be performed and request a quote for such work from Licensor. In response to such request for evaluation or development, Licensor will prepare an estimate of the time and cost required by Licensor to perform such work, and, if Licensee accepts such estimate, Licensor shall proceed accordingly. The results of such work shall become Proprietary Data for all purposes under this Agreement.
Section 4
TECHNICAL AND DEVELOPMENT ASSISTANCE
4.01. Licensor, on such terms as may be mutually agreeable to the parties, shall assist Licensee in the development and use of the Products by providing to Licensee's personnel such instruction and advice as Licensee shall reasonably request. Licensor, upon Licensee's request, shall arrange for Licensee to obtain the services of a consultant in the Licensed Territory who, in Licensor's opinion, is qualified to provide technical advice and instruction relating to Products. Licensee shall engage and shall pay all fees and expenses associated with such consultant.
Section 5
PAYMENTS TO LICENSOR FOR LICENSEES
5.01. With respect to the Licenses granted herein, Licensee shall pay to Licensor:
a. An initial disclosure fee of .......... dollars ($..........).
b. Additional payments of .......... percent (.....%) of Royalty Revenues from the distribution by Licensee of
Products within the Licensed Territory;
c. Additional payments of .......... percent (.....%) of all Royalty Revenues with respect to sublicenses to the
Proprietary Data granted by Licensee.
5.02. Upon expiration of [number] years from the effective date of this Agreement, all royalty obligations shall expire and all rights and licenses granted hereunder shall become fully paid up.
Section 6
TERM OF AGREEMENT
6.01. The term of this Agreement shall be for [number] years, commencing on the effective date hereof. Notwithstanding termination of this Agreement, the licenses granted in Section 2 shall remain in effect in accordance with their terms.
Section 7
REPORTS; PAYMENTS; RECORDS
7.01. Initial License Fees. Upon the effective date of this Agreement, Licensee shall pay Licensor the initial disclosure fee owing under Section 5.1(a) by certified check.
7.02. Continuing Royalties. From and after the time that Licensee has Royalty Revenues, Licensee shall furnish Licensor with a report, on or before the first day of each calendar [month; quarter] of each Annual Period, setting forth in reasonable detail the applicable Royalty Revenues during the preceding calendar [month; quarter]. Concurrently with each report, Licensee shall pay to Licensor the amount of royalty payments indicated as due in such report.
7.03. Books and Records. Licensee shall keep accurate records and books of account indicating in detail the Products distributed, licenses to the Proprietary Data granted, and the Royalty Revenues. Such records and books of account shall be open to examination at all reasonable times by representatives of Licensor. Licensee shall permit Licensor's representatives to take excerpts from, and make...
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