U.S. Court of Appeals for the Federal Circuit, University of Massachusetts v. L’Oréal S.A., Docket No. 2021-1969

Jurisdictional Discovery

 

Personal Jurisdiction (Foreign Corporation)

 

Technology Licensed by Foreign Corporation to the U.S. Corp. Could Suffice to Allow Jurisdictional Discovery. R & D Abroad Could Suffice as Well

 

Patent-Infringement Claims

 

L’Oréal

 

 

 

 

Appeal from the United States District Court for the District of Delaware in No. 1:17-cv-00868-CFC-SRF.

 

 

(…) UMass also challenges the district court’s personal-jurisdiction determinations. See Personal Jurisdiction Report and Recommendation at 17–26; Personal Jurisdiction Order at 1–4. Because we find that at the very least jurisdictional discovery was appropriate, we vacate and remand to the district court, without reaching the question of whether UMass made a sufficient prima facie showing that L’Oréal S.A. was subject to personal jurisdiction based on the complaint and evidence submitted at the time of the Rule 12(b)(2) motion. See Autogenomics, Inc. v. Oxford Gene Technology Ltd., 566 F.3d 1012, 1016–17 (Fed. Cir. 2009). Personal-jurisdiction analysis for patent-infringement claims is governed by Federal Circuit law. See Synthes (U.S.A.) v. G.M. Do Reis Jr. Ind. Com. de Equip. Medico, 563 F.3d 1285, 1293 (Fed. Cir. 2009); Electronics for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1348 (Fed. Cir. 2003). A denial of jurisdictional discovery, however, is reviewed for abuse of discretion, applying the law of the regional circuit. Autogenomics, 566 F.3d at 1021–22. In the Third Circuit,“ if the plaintiff presents factual allegations that suggest with reasonable particularity the possible existence of the requisite contacts . . . , the plaintiff’s right to conduct jurisdictional discovery should be sustained.”  Eurofins Pharma US Holdings v. BioAlliance Pharma SA, 623 F.3d 147, 157 (3d Cir. 2010) (cleaned up and emphasis added); see also Compagnie Des Bauxites de Guinee v. L’Union Atlantique S.A. d’Assurances, 723 F.2d 357, 362 (3d Cir. 1983) (“A plaintiff who is a total stranger to a corporation should not be required, unless he has been undiligent, to try such an issue on affidavits without the benefit of full discovery.” (citation omitted)). In other words, jurisdictional discovery should be allowed unless plaintiff is attempting to “undertake a fishing expedition based only upon bare allegations” or a claim is “clearly frivolous.” Eurofins, 623 F.3d at 157; Toys “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446, 456 (3d Cir. 2003) (citation omitted). Here, the district court abused its discretion in not allowing jurisdictional discovery on the record before it. In front of the magistrate judge, UMass made more than clearly frivolous, bare allegations that L’Oréal S.A. was subject to personal jurisdiction, either because L’Oréal S.A. introduced the accused products into the stream of commerce or because L’Oréal USA operated as L’Oréal S.A.’s agent in certain potentially relevant respects. See Plaintiffs’ Memorandum of Law in Opposition to Defendant L’Oréal S.A.’s Motion to Dismiss at 1–17, University of Massachusetts v. L’Oreal S.A., No. 1:17-cv-00868 (D. Del. Dec. 8, 2017), ECF No. 27. For example, as potentially relevant to both theories, UMass put forward evidence buttressing the possibility that L’Oréal S.A. researched and developed the addition of adenosine to skin-care products, J.A. 263–69; J.A. 1070; J.A. 1073–77, and L’Oréal S.A.’s own submitted declaration indicated that L’Oréal S.A. may have licensed that technology to L’Oréal USA, J.A. 553–54 (Rabinowitz Decl. ¶ 6) (“From time to time, L’Oréal S.A. and L’Oréal USA engage in the sale of goods or services between the two companies.”). For its part, L’Oréal S.A. did not specifically deny allegations that it developed and licensed the relevant technology to L’Oréal USA, stating only that “L’Oréal S.A. does not directly develop, sell, market, or advertise to consumers in Delaware any of the products at issue in this action,” without making it clear what it meant by “directly develop.” J.A. 553–54 (Rabinowitz Decl. ¶ 6).

 

 

Because this evidence raises the possibility that discovery might have uncovered the requisite contacts under our precedent, see, e.g., Nuance Communications, Inc. v. Abbyy Software House, 626 F.3d 1222, 1233–34 (Fed. Cir. 2010); Celgard, LLC v. SK Innovation Co., 792 F.3d 1373, 1379–82 (Fed. Cir. 2015), we vacate the jurisdictional determinations. UMass is entitled to jurisdictional discovery before any jurisdictional determination, if one remains necessary, is made.

 

 

 

 

 

(U.S. Court of Appeals for the Federal Circuit, June 13, 2022, University of Massachusetts v. L’Oréal S.A., Docket No. 2021-1969)

 

U.S. Court of Appeals for the Eleventh Circuit, MidlevelU, Inc. v. ACI Information Group, Docket No. 20-10856

 

Blogs

 

Search Engine

 

Web Crawlers

 

RSS Feed

 

Copyright Infringement

 

Implied License

 

Statutory Damages 17 U.S.C. § 504

 

Eleventh Circuit Pattern Jury Instructions (Civil Cases)

 

 

Appeal from the United States District Court for the Southern District of Florida.

 

This appeal involves a blog operator that sued a content aggregator for copyright infringement after the aggregator copied and published the blog’s content. A jury sided with the blog operator. The main issue for us is whether the district court should have allowed the jury to decide whether the aggregator had an implied license to copy and publish the blog’s content. Although the district court employed a too narrow understanding of an implied license, we conclude that a jury could not have reasonably inferred that the blog impliedly granted the aggregator a license to copy and publish its content.

 

MidlevelU makes the full text of its blog articles available in an RSS—or “really simple syndication”—feed. It has used the RSS feed since the blog’s inception to allow readers to easily read its articles. MidlevelU designed its blogging platform so that its RSS feed would distribute the full text of the blog instead of only headlines and summaries of recent articles. It also coded its website to instruct search engines that they may copy and archive every page on the site. MidlevelU included a copyright notice on its website and RSS feed, with a date range from 2012 to the present year, but it did not include a copyright notice for each article.

 

Through the RSS feeds, Newstex received new articles posted to the blogs. It ran the articles through software that generated summaries of the articles. The entries in the Index for these blog articles included bibliographic information about the author and the blog, the computer-generated summary of the article, and a link to the original post. Newstex also added a tab labeled “original” to each entry, available only to subscribers. It embedded an “iFrame” in that tab so that clicking on the tab opened a window showing the original, fully browsable web page, including the full-text content of each article—a “live snapshot”— within the Index website.

 

(…) In June 2018, MidlevelU sued Newstex for copyright infringement. In response, Newstex asserted copyright-registration invalidity, implied license, and fair use as affirmative defenses.

 

(…) A nonexclusive license to use copyrighted material “may be granted orally, or may even be implied from conduct.” Jacob Maxwell, Inc. v. Veeck, 110 F.3d 749, 752 (11th Cir. 1997) (internal quotation marks omitted); see 17 U.S.C. §§ 101, 204(a).

 

Latimer v. Roaring Toyz, Inc., 601 F.3d 1224, 1235 (11th Cir. 2010). In Latimer, we described one way to create an implied license. Id. We held that “an implied license is created when one party (1) creates a work at another person’s request; (2) delivers the work to that person; and (3) intends that the person copy and distribute the work.” Id.

 

Newstex argues, and we agree, that Latimer did not create an exclusive test. Latimer described the creation of an implied license in a work-for-hire relationship without addressing whether or how an implied license might be created in other contexts. We have never held that the Latimer test provides the only avenue for proving that a copyright holder granted an implied license to an alleged infringer. And leading copyright authorities condemn “transmuting the three Latimer factors into the only applicable test.” 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 10.03[A][7] & n.69.6a (rev. ed. 2018); accord 2 William F. Patry, Patry on Copyright § 5:131 (2007).

 

(…) Creating material at another’s request is not the essence of a license; an owner’s grant of permission to use the material is.

 

A license is “a permission . . . to commit some act that would otherwise be unlawful.” License, Black’s Law Dictionary (11th ed. 2019); see Robert W. Gomulkiewicz et al., Licensing Intellectual Property: Law and Application 4 (2d ed. 2011) (“A ‘license’ is a grant of permission.”).

 

When an owner’s conduct “clearly” manifests “a consent to . . . use” of copyrighted material, the owner impliedly grants a nonexclusive license. De Forest Radio Tel. Co. v. United States, 273 U.S. 236, 241 (1927); see also License, 2 Bouvier’s Law Dictionary (14th ed. 1874) (“An implied license is one which is presumed to have been given from the acts of the party authorized to give it.”). A nonexclusive license is a “mere waiver of the right to sue” for infringement. De Forest, 273 U.S. at 242 (internal quotation marks omitted); see also Jacob Maxwell, 110 F.3d at 753.

 

Courts have recognized permission to use copyrighted material in web-based contexts vastly different from the facts in Latimer. Field v. Google Inc., 412 F. Supp. 2d 1106, 1116 (D. Nev. 2006); accord Parker v. Yahoo!, Inc., No. 07-2757, 2008 WL 4410095, at *3–4 (E.D. Pa. Sept. 25, 2008). In Field, a website owner sued Google for posting archived copies of the site’s pages, which included copyrighted content. Field, 412 F. Supp. 2d at 1109–10. Google presented evidence that it is well known within the Internet industry that websites can be coded to tell search-engine web crawlers—automated programs that “crawl” the web to locate, copy, and archive webpages for a search-engine index—not to copy their webpages or display archived copies of the webpages on the search-engine index. Id. at 1110, 1112–13. Absent this affirmative instruction, a search engine like Google infers permission to copy and archive the webpages. Id. at 1116. Yet the plaintiff had coded his website to allow web crawlers to copy and archive all its pages, and even admitted that he knew about Google’s practices. Id. at 1113–14. Because Google could reasonably interpret the plaintiff’s conduct as the grant of a license for this use, Google succeeded on its implied-license defense. Id. at 1116.

 

Field recognized an industry practice where search engines using web crawlers construe permission to use material in a limited way and for a particular purpose.

 

(…) Monika Isia Jasiewicz, Comment, Copyright Protection in an Opt-Out World: Implied License Doctrine and News Aggregators, 122 Yale L.J. 837, 846 (2012) (explaining that because “an opt-out scheme for gaining copyright holders’ permission online represents a significant departure from the traditional framework of American copyright law, . . . . some courts have been hesitant to extend Field’s reach beyond the narrow search engine context”).

 

(…) Implied permission to enter through a front door (web crawler) does not also imply permission to enter through a back window (RSS feed).

 

(…) Newstex failed to present evidence that would have allowed the jury to infer that MidlevelU granted an implied license to copy and publish the content of its blog.

 

(…) MidlevelU elected to pursue statutory damages. 17 U.S.C. § 504.

 

The district court gave the jury our pattern instruction, which lists several factors for a jury to consider in determining the appropriate amount of statutory damages to award: “the profits the defendant earned because of the infringement; the revenues that the plaintiff lost because of the infringement; the difficulty of proving the plaintiff’s actual damages; the circumstances of the infringement; whether the defendant intentionally infringed the plaintiff’s copyright; and deterrence of future infringement.” Eleventh Circuit Pattern Jury Instructions (Civil Cases) § 9.32 (2013).

 

The completed verdict form also confirms that the jury understood it could award damages for only the registered works. The jury awarded damages for 27 infringed articles. It awarded $7,500 per article—well within the available range of $750 to $150,000 per willfully infringed work. See 17 U.S.C. § 504(c)(1)–(2).

 

Newstex makes no argument that multiplying the bottom of the range by a factor of 10 is unreasonable for the added factor of willfulness.

 

(…) A “certificate of a registration made before or within five years after first publication of the work” constitutes “prima facie evidence of the validity of the copyright and of the facts stated in the certificate.” Id. § 410(c) (emphasis added). The date of publication is a “fact stated in the certificate.” Id.; see Gaste v. Kaiserman, 863 F.2d 1061, 1064 (2d Cir. 1988). And the dates listed in the certificates are presumed to be true. United Fabrics Int’l, Inc. v. C&J Wear, Inc., 630 F.3d 1255, 1258 (9th Cir. 2011).

 

 

Secondary authorities: Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 10.03[A][7] & n.69.6a (rev. ed. 2018); William F. Patry, Patry on Copyright § 5:131 (2007); Robert W. Gomulkiewicz et al., Licensing Intellectual Property: Law and Application 4 (2d ed. 2011).

 

 

 

(U.S. Court of Appeals for the Eleventh Circuit, March 3, 2021, MidlevelU, Inc. v. ACI Information Group, Docket No. 20-10856)

 

 

 

 

 

U.S. Court of Appeals for the Federal Circuit, Cheetah Omni LLC v. AT&T Services, Inc., Docket No. 19-1264

Patent Infringement

License Agreements

Patent’s Continuations

Implied License Presumption

Legal Estoppel

Legal estoppel prevents licensors from derogating or detracting from definable license rights granted to licensees for valuable consideration

Contract Drafting

Cheetah owns U.S. Patent 7,522,836 (“the ’836 patent”) directed to optical communication networks. AT&T uses a system of hardware and software components in its AT&T fiber optic communication networks.

In the district court, Cheetah asserted that AT&T infringes the ’836 patent by making, using, offering for sale, selling, or importing its fiber equipment and services. In response to the allegations, Ciena moved to intervene in the suit because it manufactures and supplies certain com- ponents for AT&T’s fiber optic systems and because those components formed the basis of some of Cheetah’s infringement allegations. The court granted Ciena’s motion to intervene.

(…) In their motion, Ciena and AT&T argued that the two prior licenses included implicit licenses to the ’836 patent covering all of the accused products. The district court agreed, granting summary judgment and dismissing the suit with prejudice.

(…) Cheetah granted to Ciena “a perpetual, irrevocable, worldwide, non- exclusive, fully paid-up license under the Licensed Patents to make, have made (directly or indirectly and solely for Ciena or its Affiliates), use, offer to sell, sell, and import and export the Licensed Products.” J.A. 411. The agreement defined “Licensed Patents” to mean

(i) the Patents-in-Suit, and (ii) all parents, provisionals, substitutes, renewals, continuations, continuations-in-part, divisionals, foreign counterparts, reissues, oppositions, continued examinations, reexaminations, and extensions of the Patents-in-Suit owned by, filed by, assigned to or otherwise controlled by or enforceable by Cheetah or any of its Affiliates or its or their respective successors in interest at any time as of, prior to, on or after the Effective Date, whether filed before, on or after the Effective Date.

J.A. 410. The “Effective Date” was defined as “the earliest date upon which all Parties had signed the Agreement or identical counterparts thereof.” J.A. 411. The “Licensed Products” were defined as

(i) all past, present or future Ciena or Ciena Affiliate products, services or combinations, components, or systems of products or services, and any modifications or enhancements thereof, that could by themselves or in combination with other products, services, components or systems, be alleged to infringe at least one claim of at least one Licensed Patent in the absence of a license under this Agreement and (ii) all Ciena products identified or accused by Cheetah of infringing any claim of any of the Patents-in-Suit in its complaint, amended complaint, infringement contentions, or otherwise.

Key to the parties’ dispute is the relationship between the ’836 and ’714 patents. The ’714 patent is a continuation-in-part of U.S. Patent 6,943,925 (“the ’925 patent”). The ’836 patent is a continuation of U.S. Patent 7,145,704 (“the ’704 patent”), which is also a continuation of the ’925 patent. These relationships are depicted below: (...)

Because the ’714 patent was asserted in the ROADM litigation, it is necessarily included in the Ciena license. By its terms, the Ciena license also includes “all parents” to the patents in the ROADM litigation, and, as the parent to the ’714 patent, the ’925 patent is likewise an expressly li- censed patent under the agreement, even if not enumerated. The question we are presented with here, however, is whether the ’836 patent, a continuation of a continuation of the ’925 patent, i.e., its grandchild, is impliedly licensed under the Ciena license. In personal terms, because the uncle and grandparent of the ’836 patent, are licensed, is the ’836 patent also licensed?

Relying on our holding in General Protecht Group Inc. v. Leviton Manufacturing Co., 651 F.3d 1355, 1361 (Fed. Cir. 2011), the district court determined that the ’836 patent was impliedly licensed as the grandchild of the expressly licensed ’925 patent. Decision, slip op. at 10. The district court reasoned that an express license of the ’925 patent included an implied license for its continuations “because those continuations disclose the same inventions as the licensed patent.” Id. We agree.

We agree with the district court, and with AT&T and Ciena, that the licenses include an implied license to the ’836 patent that extends to the accused AT&T systems. Legal estoppel prevents licensors from derogating or detracting from definable license rights granted to licensees for valuable consideration. AMP Inc. v. United States, 389 F.2d 448, 452 (Ct. Cl. 1968). In TransCore, we interpreted legal estoppel to provide an implied license to a related, later-issued patent that was broader than and necessary to practice an expressly licensed patent. TransCore, LP v. Elec. Transaction Consultants Corp., 563 F.3d 1271, 1279 (Fed. Cir. 2009).

Two years later, we considered whether an express license to a patent includes an implied license to its continuations, even when the continuation claims are narrower than previously asserted claims. General Protecht, 651 F.3d at 1361. Relying on TransCore, we answered that question in the affirmative: “Where . . . continuations issue from parent patents that previously have been licensed as to certain products, it may be presumed that, absent a clear indication of mutual intent to the contrary, those products are impliedly licensed under the continuations as well.” Id. We further explained that parties could contract around the presumption of an implied license if it did not “reflect their intentions” but that it was the parties’ burden to “make such intent clear in the license.” Id.

In General Protecht, the continuation patent at issue had not yet issued at the time of the parties’ express license of the parent patent. Cheetah attempts to cabin General Protecht’s holding to express licenses executed before the issuance of a continuation patent. We decline to read General Protecht so narrowly. The timing of patent issuance is not material to the policy rationale underpinning our implied license presumption. See TransCore, 563 F.3d at 1279. Moreover, if anything, it is easier for the parties to clearly identify an already-issued continuation and expressly exclude it from a license agreement.

(…) If Cheetah had a contrary intent, it could have made its intent clear in the agreement as a matter of contract drafting.

(U.S. Court of Appeals for the Federal Circuit, February 6, 2020, Cheetah Omni LLC v. AT&T Services, Inc., Docket No. 19-1264)

U.S. Court of Appeals for the Federal Circuit, Molon Motor and Coil Corp., v. Nidec Motor Corp., Docket No. 2019-1071

Patent Infringement

Licenses

Contract Law

Contract Drafting

Covenant Not to Sue

Settlement, License and Release Agreement

Merger Clause

Integration Clause

Merger of the Two Agreements?

Illinois State Law

Contract Interpretation

Four Corners Rule

Parol Evidence Rule

Comparing the Subject Matter of Contracts

Appeal from the United States District Court for the Northern District of Illinois in No. 1:16-cv-03545

Molon Motor and Coil Corporation (“Molon”) appeals from the judgment of the U.S. District Court for the Northern District of Illinois in favor of Nidec Motor Corporation (“Nidec”) on Molon’s claim for infringement of U.S. Patent 6,465,915 (“the ’915 patent”). The district court granted summary judgment that Molon is barred from enforcing the ’915 patent against Nidec pursuant to a covenant not to sue that Molon granted in 2006 (“the 2006 Covenant”). Molon argues that the 2006 Covenant was extinguished by a clause in a Settlement, License and Release Agreement that the parties entered into in 2007 (“the 2007 Settlement”). The clause at issue in the 2007 Settlement states that all prior covenants “concerning the subject matter hereof” are “merged” and “of no further force or effect.” Because we agree with the district court that the two agreements concern different subject matter and therefore do not merge, we affirm.

The 2006 Covenant states: Molon hereby forever covenants not to sue Merkle- Korff for patent infringement (whether direct, contributory, or by inducement thereof) under either the ’915 patent or the ’726 patent with respect to any and all products previously or presently made, used or sold by Merkle-Korff in the United States. This covenant extends directly to Merkle-Korff as well as any individual or entity to which Merkle- Korff previously or presently supplies products by way of the manufacture and/or sale thereof in the United States.

In early 2007, Molon and Merkle-Korff entered into the 2007 Settlement, after which the parties jointly filed a stipulation of dismissal in the ’5134 litigation. J.A. 30–37. In the 2007 Settlement, Merkle-Korff agreed to pay Molon a lump sum payment in exchange for an exclusive license to more than a dozen of Molon’s United States and foreign patents and patent applications—including the ’785, ’915, and ’726 patents—within a narrowly defined exclusive market:

The 2007 Settlement states: Grant. Molon hereby grants each of the Merkle- Korff Affiliates an exclusive, fully paid-up, royalty free, worldwide, perpetual, irrevocable, retroactive, current and future right and license of all Patent Rights to make, have made, use, sell, offer to sell, lease, import, export, or otherwise commercialize products and/or systems for resale or other transfer: (i) to any of the other Merkle-Korff Affiliates; and/or (ii) to [a third-party company and its affiliates] (such persons and entities in (i) and (ii) above, collectively the “Kinetek Exclusive Market”). Under said license, the sale, offer to sell, lease, importation, exportation, commercialization and/or other transfer of products and/or systems between two Merkle-Korff Affiliates (as expressly set forth in (i) above), shall in no way permit the transferee Merkle-Korff Affiliate (i.e., the receiving Merkle-Korff Affiliate) to make, have made, use, sell, offer to sell, lease, import, export, or otherwise commercialize such products and/or systems for resale or other transfer to any person or entity outside of the Kinetek Exclusive Market.

In addition to the exclusive license rights within the Kinetek Exclusive Market, the 2007 Settlement granted Merkle-Korff in certain instances “the right, but not the duty, to pursue an infringement claim”—i.e., the right to exclude others from using the patents within the Kinetek Exclusive Market.

The 2007 Settlement contains a “merger” or “integration” clause:

The integration clause states: Entire Agreement. This Agreement is an integrated Agreement and constitutes the entire agreement and understanding between and among the Parties with regard to the matters set forth herein and shall be binding upon and inure to the benefit of the administrators, agents, personal representatives, successors, and assigns of each. There are no representations, promises, or agreements pertaining to the terms or subject matter of this Agreement, whether express or implied, that are not set forth in this Agreement. All prior and contemporaneous conversations, negotiations, possible and alleged agreements, representations and covenants concerning the subject matter hereof, are merged herein and shall be of no further force or effect.

The 2007 Settlement also expresses the parties’ agreement that they cooperated in drafting the agreement, it is not to be interpreted for or against either of them, and it is to be governed by the laws of the State of Illinois. J.A. 34–35.

(The terms “merger clause” and “integration clause” may be used interchangeably to describe a clause in a written contract that states that there are no representations, promises, or agreements between the parties except those found in the written contract. See Restatement (Second) of Contracts § 216 cmt. e (1981).)

Merkle-Korff later merged with Nidec. Whether that merger immunizes Nidec from liability that it might have otherwise had prior to the merger raises the issue that is at the heart of this appeal. In the present suit Molon alleges that Nidec is practicing and/or inducing others to practice the ’915 patent outside the licensed Kinetek Exclusive Market. See J.A. 58–64.

Nidec moved for partial summary judgment on Molon’s infringement claim, arguing that Molon is barred from enforcing the ’915 patent against Nidec under the 2006 Covenant. Molon responded that the 2006 Covenant was extinguished by the merger clause in the 2007 Settlement. Applying Illinois contract law, the district court granted partial summary judgment in favor of Nidec on Molon’s claim for infringement of the ’915 patent. J.A. 1–12. Because the merger clause in the 2007 Settlement pertains only to covenants “concerning the subject matter hereof,” the court compared the subject matter of the 2006 Covenant to the subject matter of the 2007 Settlement. The court found that the 2006 Covenant gives Nidec a right to avoid suit for patent infringement on two patents, one of which is the ’915 patent. J.A 9. In contrast, the 2007 Settlement is in some ways broader—it is an exclusive license, it includes more than a dozen patents and applications, and it provides Nidec with some enforcement rights—and in other ways narrower—it is limited to a defined market of customers—than the 2006 Covenant. J.A. 9. Thus, the court concluded, the 2006 Covenant remains in effect because it does not concern the same subject matter as the 2007 Settlement.

In this case, the question before us is whether the 2007 Settlement should be interpreted to have revoked or extinguished the 2006 Covenant. Contract interpretation is a question of state law. See Volt Info. Sci., Inc. v. Bd. Of Tr. Of Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989). The 2007 Settlement contains a choice-of-law provision requiring that it “be governed and construed in accordance with the laws of the State of Illinois as to all matters of interpretation and remedy.” J.A. 35. Therefore, we apply Illinois state law to interpret the 2007 Settlement de novo.

Traditional contract interpretation principles in Illinois require application of the “four corners” rule. Air Safety, Inc. v. Teachers Realty Corp., 706 N.E.2d 882, 884 (Ill. 1999). In applying this rule, “a court must initially look to the language of a contract alone, as the language, given its plain and ordinary meaning, is the best indication of the parties’ intent.” Gallagher v. Lenart, 874 N.E.2d 43, 58 (Ill. 2007); Rakowski v. Lucente, 472 N.E.2d 791, 794 (Ill. 1984) (“Where a written agreement is clear and explicit, a court must enforce the agreement as written. Both the meaning of the instrument, and the intention of the parties must be gathered from the face of the document without the assistance of parol evidence or any other extrinsic aids.”).

We must therefore look to the language of the 2007 Settlement. The merger clause states in relevant part:

All prior and contemporaneous conversations, negotiations, possible and alleged agreements, representations and covenants concerning the subject matter hereof, are merged herein and shall be of no further force or effect.

The parties have not argued that the merger clause is ambiguous or that it requires extrinsic evidence to interpret what the parties intended. The clause, on its face, only pertains to covenants “concerning the subject matter” of the 2007 Settlement.

We first address the language of the merger clause in the 2007 Settlement, which limits its application to covenants “concerning the subject matter hereof.” We consider whether the subject matter of the 2006 Covenant and the 2007 Settlement is the same, such that the 2006 Covenant was expressly merged into the 2007 Settlement.

In comparing the subject matter of contracts, Illinois courts have cautioned against defining subject matter too broadly or too narrowly. For example, in Ill. Concrete- I.C.I., Inc. v. Storefitters, Inc., the court rejected the broad view that two contracts had the same subject matter simply because both involved “using trucks.” 922 N.E.2d 542, 546 (Ill. App. Ct. 2010). On the other hand, in Midwest Builder Distrib., Inc. v. Lord & Essex, Inc., the court rejected an “extremely narrow view” of two contracts as having subject matter limited to “the specifications of the products to be delivered.” 891 N.E.2d 1, 20 (Ill. App. Ct. 2007).

(…) To determine the subject matter of each agreement, we must examine the actual language of the agreements themselves. We must consider how the language of each agreement conveys the substantive rights and obligations exchanged between the parties.

First, we look at the subject matter of the 2006 Covenant, which is a one-paragraph unilateral covenant not to sue on two patents—the ’915 patent and the ’726 patent. J.A. 27. The 2006 Covenant covers “any and all products previously or presently made, used or sold by Merkle-Korff” and it extends geographically to “the United States.” It contains no restrictions on the market for sales of licensed products.

Next, we look at the subject matter of the 2007 Settlement, which is an eight-page bilateral contract, in which Merkle-Korff agreed to pay monetary consideration to Mo- lon in exchange for an exclusive license covering more than a dozen United States and foreign patents and patent applications. J.A. 30–37. The 2007 Settlement is not limited to any specific products or geographical area, but it is limited to the Kinetek Exclusive Market. J.A. 31. Additionally, the 2007 Settlement gives Merkle-Korff a right to sue third parties for infringement of the licensed patents within the Kinetek exclusive Market in the event that Molon declines to do so.

A covenant not to sue is equivalent to a nonexclusive or “bare” license, see Ortho Pharm. Corp. v. Genetics Inst., Inc., 52 F.3d 1026, 1032 (Fed. Cir. 1995), which is a promise by the patent owner not to sue the licensee for practicing the patented invention, and under which the patent owner impliedly reserves the right to grant similar nonexclusive licenses to other entities. See Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1345 (Fed. Cir. 2001). In contrast, an exclusive license is a license to practice the patented invention “accompanied by the patent owner’s promise that others shall be excluded from practicing it within the field of use wherein the licensee is given leave.” Textile Prods., Inc. v. Mead Corp., 134 F.3d 1481, 1484 (Fed. Cir. 1998) (quoting Western Elec. Co. v. Pacent Reproducer Corp., 42 F.2d 116, 118 (2d Cir. 1930)). We have characterized an exclusive licensee as “sharing the property rights represented by a patent.” Rite-Hite Corp. v. Kelly Co., 56 F.3d 1538, 1553 (Fed. Cir. 1995) (quoting Weiner v. Rollform, 744 F.2d 797, 807 (Fed. Cir. 1984)).

There are fundamental differences between an exclusive license and a nonexclusive license, particularly in the context of standing to assert a claim for patent infringement. See Rite-Hite, 56 F.3d at 1552 (citing Independent Wireless Tel. Co. v. Radio Corp. of Am., 269 U.S. 459, 468– 69 (1926)). In essence, an exclusive licensee has an interest in the patent sufficient to establish an injury when a third party infringes, akin to an ownership interest, while a non- exclusive licensee has no such interest in the patent and merely enjoys freedom from suit. See id. Under this framework, it cannot be said that an exclusive license and a non- exclusive license necessarily concern the same subject matter, even though both licenses include the same patent.

We thus find that there are important substantive differences between the subject matter of the 2006 Covenant and the 2007 Settlement. The 2006 Covenant is a unilateral promise by Molon not to sue Merkle-Korff (or its successor, Nidec) for infringement of two patents, one of which is the ’915 patent. The 2007 Settlement, in contrast, is a bilateral contract through which Molon transferred to Merkle-Korff a share in the existing and potential exclusionary rights under more than a dozen listed patents and applications, one of which is the ’915 patent. Moreover, the 2006 Covenant is limited to products existing at the time of its execution, while the 2007 Settlement includes both existing and future products. And the 2006 Covenant is not limited to any specific market, while the 2007 Settlement is limited to the Kinetek Exclusive Market.

We therefore conclude that the language of the merger clause in the 2007 Settlement did not expressly extinguish the 2006 Covenant.

(Merger doctrine in its traditional form as a doctrine of contract interpretation. See Schweickhardt v. Chessen, 161 N.E. 118, 122 (Ill. 1928) (“The rule is, that when parties reduce their agreement to writing, all prior negotiations leading up to the execution of the contract are merged therein, and parol evidence is not admissible to explain, contradict, enlarge, or modify the writing as it existed when executed.”). The effect of the merger doctrine is to “preclude evidence of understandings, not reflected in a writing, reached before or at the time of its execution which would vary or modify its terms.” J & B Steel Contractors, Inc. v. C. Iber & Sons, Inc., 642 N.E.2d 1215, 1217 (Ill. 1994); see also Fuchs & Lang Mfg. Co. v. R.J. Kittredge & Co., 146 Ill. App. 350, 364 (Ill. App. Ct. 1909) (“It follows legally that this written contract merged all prior negotiations, letters and telegrams in the written agreement thus formulated and signed; and all extrinsic evidence of oral or written negotiations became incompetent, immaterial and irrelevant for the purpose of contradicting or modifying the written agreement.”)).

Under Illinois law, the doctrine of merger only applies when a later contract “relates to the same subject matter and embraces the same terms” as an earlier contract. Kraft v. No. 2 Galesburg Crown Fin. Corp., 420 N.E.2d 865, 870 (Ill. App. Ct. 1981).

We agree with the district court that the absence of any reference to the 2006 Cove- nant in the 2007 Settlement, though not dispositive, is an indication that Nidec did not intend to assent to its revocation.

(We see nothing “strange” about a market-limited exclusive licensee being both empowered to sue for infringement within the licensed market and also subject to being sued by the licensor for infringement outside of that market.)

(…) For these reasons, we find that the merger clause in the 2007 Settlement does not indicate that the parties intended to revoke the 2006 Covenant. The 2006 Covenant remains operable, and it bars Molon’s suit against Nidec for infringement of the ’915 patent.

Accordingly, the judgment of the district court is affirmed.

(U.S. Court of Appeals for the Federal Circuit, January 10, 2020, Molon Motor and Coil Corp., v. Nidec Motor Corp., Docket No. 2019-1071)

License and Technology Transfer Agreement

 

 

From

https://contracts.onecle.com/evergreen-solar/everq-license-2006-09-28.shtml

Sample Business Contracts

License and Technology Transfer Agreement - Evergreen Solar Inc. and EverQ GmbH

 

 

 

AMENDED AND RESTATED

 

                                    LICENSE &

 

                               TECHNOLOGY TRANSFER

 

                                    AGREEMENT

 

                                 BY AND BETWEEN

 

                              EVERGREEN SOLAR, INC.

 

                                       AND

 

                                   EVERQ GMBH

 

<PAGE>

 

                                TABLE OF CONTENTS

 

 

                                                                         

ARTICLE 1 DEFINITIONS

   1.1  CONSTRUCTION

   1.2  DEFINITIONS

 

ARTICLE 2 RIGHTS AND LICENSES

   2.1  E LICENSE GRANT TO VENTURECO

   2.2  VENTURECO LICENSE GRANT TO E

   2.3  RESERVATION OF RIGHTS; NO IMPLIED LICENSES

 

ARTICLE 3 TECHNOLOGY TRANSFER

   3.1  QUARTERLY MEETINGS

   3.2  DELIVERY OF TECHNICAL DELIVERABLES

   3.3  COPIES

   3.4  [****]

 

ARTICLE 4 CONSIDERATION AND PAYMENT

   4.1  ROYALTY

   4.2  ROYALTY EVALUATION BY EXPERTS

   4.3  TAX AUTHORITY CHALLENGES

   4.4  ROYALTY CALCULATIONS

   4.5  PAYMENT

   4.6  CURRENCY

   4.7  TAXES

   4.8  AUDIT

   4.9  SEPARATE AGREEMENTS

   4.10 PROSPECTIVE BASIS

   4.11 WAIVER

 

ARTICLE 5 INTELLECTUAL PROPERTY RIGHTS

   5.1  OWNERSHIP

   5.2  ENFORCEMENT OF JOINTLY OWNED INTELLECTUAL PROPERTY RIGHTS

   5.3  THIRD PARTY LICENSES

   5.4  FURTHER COOPERATION

 

ARTICLE 6 WARRANTIES

   6.1  REPRESENTATIONS AND WARRANTIES

   6.2  REMEDY

   6.3  DISCLAIMER

 

 

September 28 06 FINAL

 

 

                                       -i-

 

<PAGE>

 

                                TABLE OF CONTENTS

 

 

                                                                         

ARTICLE 7 CONFIDENTIAL INFORMATION

   7.1  CONFIDENTIAL INFORMATION

 

ARTICLE 8 TERM

   8.1  TERM

   8.2  SPECIAL TERMINATION RIGHT

   8.3  EFFECT OF TERMINATION

 

ARTICLE 9 GENERAL PROVISIONS

   9.1  LIMITATION OF LIABILITY

   9.2  NOTICES

   9.3  LANGUAGE

   9.4  AMENDMENTS AND WAIVERS

   9.5  ASSIGNMENT

   9.6  ENTIRE AGREEMENT; SEVERABILITY

   9.7  OTHER REMEDIES; SPECIFIC PERFORMANCE

   9.8  GOVERNING LAW AND DISPUTE RESOLUTION

   9.9  COMPLIANCE WITH LAWS AND REGULATIONS

   9.10 EXPORT

   9.11 FORCE MAJEURE

   9.12 INDEPENDENT CONTRACTORS

   9.13 THIRD PARTY BENEFICIARIES

   9.14 COUNTERPARTS

   9.15 CONDITION

 

 

September 28 FINAL

 

 

                                      -ii-

 

<PAGE>

 

                              AMENDED AND RESTATED

                                    LICENSE &

                               TECHNOLOGY TRANSFER

                                    AGREEMENT

 

     This Amended and Restated License & Technology Transfer Agreement (this

"AGREEMENT") is made by and between Evergreen Solar, Inc., a Delaware

corporation ("E"), and EverQ GmbH, a limited liability company (GmbH),

incorporated under the laws of the Federal Republic of Germany ("VENTURECO" or

"EverQ"), as of the Effective Date. E and VentureCo are hereinafter referred to

individually by their respective names or as "PARTY" and collectively as

"PARTIES."

 

                                    RECITALS:

 

     WHEREAS, E, Q Cells AG ("Q") and Renewable Energy Corporation ("REC") have

entered into that certain Master Joint Venture Agreement (Notarial Deed nr.

287/2005 of the Berlin notary public Dr. Rudolf von Hanstein, the "MASTER

AGREEMENT") which is deemed to be incorporated into this Agreement where this

Agreement refers to the Master Agreement (and remains incorporated

notwithstanding termination of the Master Agreement), pursuant to which, among

other things, the Parties have agreed to enter this Agreement;

 

     WHEREAS, Q and VentureCo have entered into that certain License and

Technology Transfer Agreement By and Between Q-Cells AG and EverQ GmbH (the "Q

LICENSE AGREEMENT");

 

     WHEREAS, REC and VentureCo have entered into that certain License and

Technology Transfer Agreement By and Between Renewable Energy Corporation and

EverQ GmbH (the "REC LICENSE AGREEMENT");

 

     WHEREAS, E and VentureCo have entered that certain License & Technology

Transfer Agreement ("PRIOR AGREEMENT");

 

     WHEREAS, E and VentureCo wish to amend the Prior Agreement and agree that

this Agreement shall supersede and replace the Prior Agreement;

 

     NOW, THEREFORE, in consideration of the foregoing premises and the

representations, warranties, covenants and agreements herein contained, and

other good and valuable consideration, the receipt and sufficiency of which are

hereby acknowledged and accepted, and intending to be legally bound hereby, the

Parties hereto hereby agree as follows:

 

 

                                      -1-

 

<PAGE>

 

                                   ARTICLE 1

 

                                  DEFINITIONS

 

     1.1 Construction. Capitalized terms not defined herein shall have the

meanings set forth in the Master Agreement. The interpretation of this Agreement

shall be governed by those principles set forth in SECTION 1.2 (Headings and

Other Interpretation) of the Master Agreement.

 

     1.2 Definitions. As used herein:

 

     "ADDED VALUE" means increased value through sale of a Licensed Product

attributable to [****] incorporated into or used to manufacture that Licensed

Product, for example, [****]. The "Added Value" is determined by comparison of

[****].

 

     "DIRECT PRODUCTION COSTS" means all [****] required for the production of a

Licensed Product, and [****] associated with manufacturing a Licensed Product

incorporating MNIP.

 

     "COST SAVINGS" means the aggregate reduction of Total Production Costs of a

Licensed Product attributable to [****] incorporated into or used to manufacture

that Licensed Product. Any change in yields and conversion efficiencies shall be

taken into account in determining the "Cost Savings." The "Cost Savings" is

determined by comparison of [****] in manufacture of the Licensed Products, or

determined by comparison to another agreed [****]. If royalty payments are based

on a royalty determined under Section 4.1(f) (Alternative Royalty Rate

Calculation Based on MNIP), then each quarter the "Cost Savings" will be

calculated by comparing [****] to the agreed [****]. The mechanism for defining

such [****] will not change during the term of the royalty payments, but the

[****].

 

     "EFFECTIVE DATE" means [****].

 

     "E IP" means the E Technology and E Intellectual Property Rights.

 

     "E INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property Rights

owned or Licensable by E or its Affiliates during the Initial Period and (with

respect to certain MNIP and other Intellectual Property Rights as described in

this Agreement) [****] Post Termination Period, that relate to the manufacture,

production, assembly, use or sale of Licensed Products, or which would, without

the licenses herein, be infringed or violated by the operation of VentureCo's

business or its commercialization of products as contemplated in the Master

Agreement. "E INTELLECTUAL PROPERTY RIGHTS" includes those Intellectual Property

Rights listed in PART 1 OF EXHIBIT A and (once available for commercial use), in

PART 2 OF EXHIBIT A but excludes those Intellectual Property Rights listed in

PART 3 OF EXHIBIT A ("EXCLUDED E INTELLECTUAL PROPERTY RIGHTS"). For the

avoidance of doubt, "E INTELLECTUAL PROPERTY RIGHTS" excludes (i) MNIP offered

to VentureCo but which it has elected not

 

 

                                      -2-

 

<PAGE>

 

to license, (ii) other Intellectual Property Rights for improvements or other

inventions that are made after the [****] Post Termination Period (except to the

extent regulated in the context of support services to VentureCo pursuant to an

applicable agreement), and (iii) in the event of an acquisition of E,

Intellectual Property Rights of the acquirer of E.

 

     "E TECHNICAL DELIVERABLES" means any reasonably available documentation,

records and other tangible items constituting E Technology and E Intellectual

Property Rights, including any such items specified in Part 1 of Exhibit A.

 

     "E TECHNOLOGY" means all Technology owned or Licensable by E or its

Affiliates during the Initial Period and (with respect to certain MNIP and other

Technology as described in this Agreement) [****] Post Termination Period, that

relates to the manufacture, production, assembly, use or sale of Licensed

Products and the operation of VentureCo's business and commercialization of

products as contemplated in the Master Agreement. "E TECHNOLOGY" includes

Technology relating to items described in PART 1 OF EXHIBIT A ("INCLUDED E

TECHNOLOGY") and (once available for commercial use) relating to MNIP described

in PART 2 OF EXHIBIT A, but excludes Technology relating to items described in

PART 3 OF EXHIBIT A ("EXCLUDED E TECHNOLOGY"). For the avoidance of doubt, E

Technology excludes (i) MNIP offered to VentureCo but which it has elected not

to license, (ii) other Technology created after the [****] Post Termination

Period (except to the extent regulated in the context of support services to

VentureCo pursuant to an applicable agreement), and (iii) in the event of an

acquisition of E, Intellectual Property Rights of the acquirer of E.

 

     "EXCLUDED E TECHNOLOGY" has the meaning set forth in SECTION 1.2

(Definitions - E Technology).

 

     "INITIAL PERIOD" means the time period commencing on the License Effective

Date and ending on the Termination Date.

 

     "INTELLECTUAL PROPERTY RIGHTS" means all rights in, to, or arising out of:

(i) any Patents; (ii) inventions, discoveries (whether patentable or not in any

country), invention disclosures, improvements, trade secrets, proprietary

information, know-how, technology and technical data; (iii) copyrights,

copyright registrations, mask works, mask work registrations, and applications

therefor in any country, and all other rights corresponding thereto throughout

the world; and (iv) any other proprietary rights in or to Technology anywhere in

the world.

 

     "JOINTLY OWN" has the meaning set forth in SECTION 5.1(a)(i) (Definition).

 

     "LICENSABLE" means possession of the ability to grant a license or

sublicense of, or within, the scope provided for in this Agreement without

payment of any fee to, or violating the terms of any agreement or other

arrangements with a Third Party and without violating any applicable laws, rules

or regulations.

 

     "LICENSE EFFECTIVE DATE" means the Effective Date.

 

 

                                      -3-

 

<PAGE>

 

     "LICENSED PRODUCTS" means Wafers, Cells, and/or Modules, as the case may

be, in which the Wafers are made using String Ribbon Technology.

 

     "LICENSED PRODUCTS REVENUE" means the cumulative Net Sales Price for all

Licensed Products Sold in the respective period.

 

     "MARKET RATE" means [****].

 

     "MATERIAL NEW IP" or "MNIP" means Intellectual Property Rights and

Technology developed or Licensable by E only after the License Effective Date

[****]. Notwithstanding anything to the contrary, MNIP shall not include any

Excluded E Intellectual Property Rights or, in the event of an acquisition of E,

Intellectual Property Rights of the acquirer of E. In general Intellectual

Property Rights and Technology that are legally protectible and reduce Total

Production Costs of Licensed Products by, or provide an Added Value of, [****];

provided, however, that MNIP may include Property Rights and Technology not

meeting such criteria to the extent that it nevertheless provides a substantial

and material benefit.

 

     "NET SALES PRICE" means, (i) for arm's length Sales for fair value, the

average gross revenue received by VentureCo in the period for Sales of the

Licensed Products, accounted for in accordance with generally accepted

accounting principles, less any deduction for discounts, returns, freight,

insurance, taxes, and duties and (ii) for Sales other than arm's length Sales

for fair value, the greater of (a) the net average selling price of the same or

most nearly same Licensed Product and (b) the average gross revenue for such

Sales less any deduction for discounts, returns, freight, insurance, taxes, and

duties in accordance with generally accepted accounting principles.

 

     "PATENTS" means any German, international or foreign patent or any

application therefor and any and all reissues, divisions, continuations,

renewals, extensions and continuations-in-part thereof.

 

     "POST TERMINATION PERIOD" means the time period commencing immediately

after the Termination Date. "[****] POST TERMINATION PERIOD" means the [****]

period commencing immediately after the Termination Date.

 

     "REGISTERED E INTELLECTUAL PROPERTY RIGHTS" means all E Intellectual

Property Rights (including Patents) that have been registered, filed, issued or

otherwise perfected or recorded with or by any state, government or other public

or quasi-public legal authority, including any applications for filings for any

such rights.

 

     "SOLD" or "SELL" means any direct or indirect disposition, by sale, lease,

use or otherwise, of a Licensed Product.

 

     "STRING RIBBON" means [****].

 

     "TECHNOLOGY" means information and technology in tangible and/or intangible

form and materials, embodiments, implementations or improvements of any

technology, including, but not limited to: software, media, data collections,

databases, techniques, methods, processes, formulae,

 

 

                                      -4-

 

<PAGE>

 

systems, hardware, equipment, prototypes, proofs of concept, apparatuses,

hardware, software, algorithms, files, routines, documents, designs, drawings,

plans, specifications and the like.

 

     "TERMINATION DATE" means the earlier of the date on which the Master

Agreement or this Agreement is terminated in accordance with its terms.

 

     "TOTAL PRODUCTION COSTS" means the total of the [****] and [****] to the

extent such [****] is directly associated with the respective product.

 

     "VENTURECO INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property

Rights developed and owned (solely or jointly) by VentureCo that relate to or

which would, without the licenses set forth herein, be infringed or violated by

making, using, selling, importing or otherwise exploiting Wafers, Cells and

Modules.

 

     "VENTURECO IP" means VentureCo Technology and VentureCo Intellectual

Property Rights.

 

     "VENTURECO TECHNOLOGY" means all technology developed and owned (solely or

jointly) by VentureCo that relates to the making, using, selling, importing or

other exploiting Wafers, Cells and Modules.

 

                                   ARTICLE 2

 

                              RIGHTS AND LICENSES

 

     2.1 E License Grant to VentureCo. Subject to the terms and conditions of

this Agreement, E hereby grants and agrees to grant to VentureCo, effective upon

the License Effective Date, a world-wide, non-exclusive, non-transferable,

perpetual, irrevocable, fully paid up and royalty-free (except as provided in

ARTICLE 4 (Consideration and Payment)) license, without the right to sublicense,

under the E Intellectual Property Rights, to make (but not have made), use,

sell, offer for sale, import or otherwise commercialize or exploit Licensed

Products, to use the E Technology in connection with the foregoing, and to

otherwise operate VentureCo and commercialize its products as contemplated in

the Master Agreement. It is understood that the foregoing license to VentureCo

includes, without limitation, the right to change and make improvements and

extensions to the E Technology. Furthermore, it is understood that VentureCo

shall have the right to commercially exploit such changes and improvements in

accordance with such license.

 

     2.2 VentureCo License Grant to E. VentureCo hereby grants and agrees to

grant to E a world-wide, non-exclusive, non-transferable (except pursuant to

SECTION 9.5 (Assignment)), perpetual, irrevocable, fully paid up, royalty-free,

fully sublicensable, license, under the VentureCo Intellectual Property Rights

developed in the Initial Period and [****] Post Termination Period, to make,

use, sell, offer for sale, import or otherwise commercialize or exploit Wafers,

Cells and Modules. In addition, VentureCo hereby grants and agrees to grant to E

a world-wide, non-exclusive, non-transferable, perpetual, irrevocable, fully

paid up, royalty-free, fully sublicensable,

 

 

                                      -5-

 

<PAGE>

 

license, under the VentureCo Intellectual Property Rights, whenever developed,

[****] to make, use, sell, offer for sale, import or otherwise commercialize or

exploit Wafers, Cells and Modules. It is understood that the foregoing license

to E includes, without limitation, the right for E to change and make

improvements and extensions to such Technology licensed from VentureCo.

Furthermore, it is understood that E shall have the right to commercially

exploit said changes and improvements in accordance with such license.

 

     2.3 Reservation of Rights; No Implied Licenses. All rights not granted

herein are reserved. Nothing in this Agreement shall be deemed to constitute the

grant of any license or other right to a Party's Intellectual Property Rights or

Technology except as expressly set forth herein.

 

                                   ARTICLE 3

 

                              TECHNOLOGY TRANSFER

 

     3.1 Quarterly Meetings.

 

          (a) New Developments. During the Initial Period and [****] Post

Termination Period, the Parties shall meet on a quarterly basis (or as otherwise

agreed upon by the Parties) to discuss (and E shall advise VentureCo of) any

material or other E IP or VentureCo IP that was acquired, developed or became

Licensable since the prior quarterly meeting.

 

          (b) Defining Material New IP. During the quarterly meetings described

above, the Parties shall also determine whether new Intellectual Property Rights

and Technology of or Licensable by E comprise Material New IP. The Parties

intend that if E develops MNIP, it may be appropriate for E to receive royalty

for VentureCo's use thereof (and whichVentureCo has elected to acquire) in

accordance with ARTICLE 4 (Consideration and Payment). The Parties' obligations

with respect to MNIP will be governed by ARTICLE 4 (Consideration and Payment).

 

     3.2 Delivery of Technical Deliverables. E shall deliver to VentureCo at

least one copy of all E Technical Deliverables, in electronic form when

practicable, within [****] days after the License Effective Date or (as

applicable),

 

          (a) in the case of MNIP listed in EXHIBIT A PART 2, promptly upon

commercial availability (subject to applicable royalties),

 

          (b) in the case of MNIP available in the Initial Period (other than

that in EXHIBIT A PART 2), promptly after VentureCo's election to acquire that

MNIP (subject to applicable royalties), and

 

          (c) in the case of MNIP available after the E Interest Reduction Date

or Termination Date, promptly after VentureCo's election to acquire that MNIP

and determination of applicable royalties.

 

     Subject to ARTICLE 4 (Consideration and Payment), during the Initial Period

and the [****] Post Termination Period, E shall periodically and promptly

deliver to VentureCo copies of E

 

 

                                      -6-

 

<PAGE>

 

Technical Deliverables that have not been previously delivered, including E

Technical Deliverables relating to E IP acquired or Licensable after the License

Effective Date.

 

     3.3 Copies. VentureCo may copy, modify and otherwise use the E Technical

Deliverables in accordance with and subject to the restrictions and licenses set

forth herein as necessary to exercise the rights granted hereunder. VentureCo

agrees to maintain a document control system to control copies of such E

Technical Deliverables and otherwise treat such information as E's Confidential

Information subject to the provisions of ARTICLE 7 (Confidential Information).

 

     3.4 [****

 

          (a)  ****

 

          (b)  ****

 

          (c)  ****

 

          (d)  ****]

 

                                   ARTICLE 4

 

                           CONSIDERATION AND PAYMENT

 

     4.1 Royalty. Subject to exceptions in this Agreement, VentureCo shall pay

royalties to E for the use of MNIP. The royalty shall be based on two main

elements: the success of the relevant MNIP in achieving Cost Savings and the

success of that MNIP in achieving Added Value, [****]. For the sake of

commercial simplicity the product of the two base rate elements shall be

converted into a combined royalty rate, at intervals specified in relevant

Sections below. The detailed rules of royalty calculation, including exceptions,

follow below.

 

     The royalty and other fees (if any) (collectively "ROYALTY") payable for

the use of MNIP shall be [****] generally determined as set forth below. The

royalty payment obligations commence (with respect to Licensed Products Sold

incorporating that MNIP) the later of (1) January 1 2007, and (2) the date when

VentureCo first Sells Licensed Products that incorporate that MNIP.

 

     For purposes of this Agreement, Thin Ribbon Technology (as described in

Exhibit A, part [2] item [2], will be deemed MNIP.

 

          (a) Royalty Rate in General. The royalty rate applicable hereunder

("Royalty Rate") shall be as set forth in the following table shall continue

until [****] ("Royalty Renewal Date").

 

 

                                      -7-

 

<PAGE>

 

 

 

Licensed Product Revenue         Royalty Rate

------------------------         ------------

                             

$0 to $100 million                     5%

$100 million to $250 million         3.5%

$250 million to $1,000 million         2%

more than $1,000 million               1%

 

 

          (b) Annual Adjustments. The Royalty Rate may be adjusted on annual

basis as follows. While Annual Adjustments may be made as set forth below, in

making such adjustments, the Parties shall give deference to the above rates,

and any adjustments shall made primarily to account for changes after the above

rates were established. At least [****] days in advance of the [****] of the

Royalty Renewal Date, the Parties shall agree upon a new market based Royalty

Rate that shall be applicable for the next [****] year period commencing on the

[****] of the Royalty Renewal Date. In the event that VentureCo and E cannot

agree on the Royalty Rate applicable to such next [****] year period, or at the

election of either VentureCo and E, the Royalty Rate for currently used MNIP

shall be determined in accordance with Section 4.1(f) (Alternative Royalty Rate

Calculation Based on MNIP).

 

          (c) Exceptional Adjustments. The Royalty Rate may be modified before

the annual adjustment of Section 4.1(b) (Annual Adjustments) at the request of

either party as set forth below in Section 4.1(c)(i) (Performance) or Section

4.1(c)(ii) (Compared to Conventional Silicon).

 

               (i) Performance. In the event that the performance of the MNIP

used by VentureCo differs substantially from the performance anticipated at the

time the Royalty Rate was determined in accordance with 4.1(b) (Annual

Adjustments), the Royalty Rate may be modified in accordance with this Section

4.1(c) (Exceptional Adjustments) to reflect this unexpected performance. For a

difference in performance to merit a change of Royalty Rate under this section

4.1 (c) (Exceptional Adjustments), the change would comprise [****].

 

               (ii) Compared to Conventional Silicon. [****].

 

               (iii) New Royalty Rate. In the event that a change in Royalty

Rate is requested and the change in Royalty Rate is merited based on Section

4.1(b)(i) (Performance) or Section 4.1(b)(ii) (Compared to Conventional

Silicon), Parties agree to negotiate in good faith to determine the new

applicable Royalty Rate based on the actual and then anticipated performance of

the MNIP or change in Costs/Value of the Licensed Products respectively. The

Party asserting that the Royalty Rate should be changed shall have the burden of

proof of showing that a change should be made. In the event that the Parties do

not agree on the new applicable Royalty Rate merited based on Section 4.1(b)(i)

(Performance) or Section 4.1(b)(ii) (Compared to Conventional Silicon), the

Royalty Rate shall be determined based on the expected and actual performance of

the MNIP in accordance with Section 4.2 (Royalty Evaluation by Experts).

 

 

                                      -8-

<PAGE>

 

               (iv) Frequency of Adjustment. A request to adjust the Royalty

Rate under this Section 4.1(c) (Exceptional Adjustments) cannot be made more

frequently than [****].

 

          (d) Changes. Any adjustments to Royalty Rate under Section 4.1(c)

(Exceptional Adjustments) shall apply only to Sales made after the adjustment,

and all royalties paid or due hereunder are non-refundable. In no event shall

the Royalty Rate under this Agreement be less than zero.

 

          (e) Royalty Payments. If the Royalty Rate is determined under Section

4.1(a) (Royalty Rate in General), then VentureCo shall pay E a royalty equal to

the Royalty Rate multiplied by the Licensed Product Revenue. If the Royalty Rate

is determined in accordance with Section 4.1(f) (Alternative Royalty Rate

Calculation Based on MNIP), then (i) VentureCo shall pay E a royalty equal to

the respective Royalty Rate multiplied by Net Sales Price of each Licensed

Product Sold by VentureCo in the respective period that incorporates the MNIP

into or uses the MNIP in the manufacture of such Licensed Product, and (ii) if

the Royalty Rate is determined on a per unit basis (such as watts) then the Net

Sales Price will be determined on the identical units and the product of these

shall be multiplied by units Sold. VentureCo shall pay the royalty on a calendar

quarterly basis, within [****] days of the end of the respective calendar

quarter.

 

          (f) Alternative Royalty Rate Calculation Based on MNIP. The provisions

in this Section 4.1 (f) (Alternative Royalty Rate Calculation) shall be used to

determine the Royalty Rate, only in the particular circumstances for which this

Section is applicable as set forth in Section 4.1(a) (Royalty Rate in General).

 

               (i) The "Base Rate" means [****]% of the Cost Savings plus

[****]% of the Added Value that was not already captured by the Cost Savings.

The Royalty Rate applicable to any particular year shall depend on the [****]

and the Base Rate in accordance with the following:

 

 

 

Production [****]   Royalty Rate

-----------------   ------------

                

[****]              Base Rate

[****]:             [****] x Base Rate

[****]:             [****] x Base Rate

[****]:             [****] x Base Rate

[****]              [****] x Base Rate

[****]:             [****] x Base Rate

[****]:             [****] x Base Rate

[****].             [****] x Base Rate

 

 

               (ii) In accordance with the above table, the Royalty Rate equals

the Base Rate in the [****] and [****] thereafter. [****] in the above table to

which respective Royalty Rates apply start upon the date of the first sale in

commercial volumes of the Licensed Products

 

 

                                      -9-

 

<PAGE>

 

incorporating the respective MNIP. Successive [****] start on successive [****]

of the date of such first sale. For example, if such first sale were to take

place on [****].

 

               (iii) Notwithstanding the foregoing, the royalty for any

particular item of MNIP shall not exceed [****]% of (Net Sales Price of the item

embodying the MNIP (e.g., Wafer, Cell, or Module) - Incoming Product Purchase

Price) for thin ribbon MNIP through [****], and other than with respect to such

thin ribbon MNIP, the royalty for any particular item of MNIP shall not exceed

[****]% of (Net Sales Price of the item embodying the MNIP (e.g., Wafer, Cell,

or Module) - Incoming Product Purchase Price). If several different items of

MNIP are used for the same Licensed Product, royalty shall be due for each of

such items of MNIP, except that the total of all such royalties shall not exceed

[****]% of (Net Sales Price - [****]). [****] but not the [****], (ii) the cost

of [****] in the event that MNIP relates to [****] but not the respective

[****], and (iii) [****] with respect to all other MNIP. For the purpose of

determining the [****], the costs of such [****] and [****] shall be determined

based on the prices at which Evergreen sells such products to third parties in

arm's length transactions in commercial volumes in the respective quarter, or if

no such arm's length transactions occur during such quarter, the market price of

multicrystalline silicon [****] and [****] sold in arm's length sales by third

parties and Evergreen in the respective quarter.

 

               (iv) For the avoidance of doubt, it is understood that the above

royalty calculations are not based on reduction in costs or added value due to

factors other than the respective MNIP. Further, it is understood that to the

extent that the benefit is provided by more than one item of MNIP, the royalty

for the respective items of MNIP shall be determined so as not to double count

the same benefit provided for the same Licensed Product.

 

               (v) [Deleted]

 

               (vi) Notwithstanding the above, in the event that the value and

savings is not properly reflected through a royalty determined through the

requirements set forth above, the parties shall promptly determine through good

faith negotiation the [****] royalty applicable to such MNIP based on the value

of such MNIP to EverQ. For example, in the event that the respective MNIP is

predominantly a cost savings technology, the component of the Base Rate

determined under this Section 4.1 (f) (Alternative Royalty Rate Calculation

Based on MNIP) based on Cost Savings may be increased from [****]%, up to a

maximum of [****] %. It is further agreed that the Value Added component

attributable to thin wafer technology will be deemed to have value until [****].

Additionally, if the Royalty Rate determined in accordance with the above is not

commercially reasonable (e.g., either too high or too low) because of unforeseen

factors, the parties shall negotiate a Royalty Rate determined under this

Section 4.1 (f) (Alternative Royalty Rate Calculation Based on MNIP) that is

commercially reasonable in view of the value of the technology to EverQ and the

market for such technology. As another example, in the event that a royalty is

originally structured with a meaningful percentage attributed to Added Value and

the Parties later determine that the Added Value has been eliminated or

substantially reduced, the Parties agree to negotiate in good faith an increase

in the amount of component of the Base Rate attributed Cost

 

 

                                      -10-

 

<PAGE>

 

Savings as would have occurred had the royalty originally been structured around

Cost Savings alone.

 

               (vii) In the event that, in view of the respective [****]

(collectively, "COSTS/VALUE"), Licensed Products that include the MNIP are

[****] than products made with [****], then the Royalty Rate for such MNIP shall

be [****] such that in view of the Costs/Value, the Licensed Products having the

[****]. Notwithstanding the foregoing, the Royalty Rate shall never be less

[****].

 

               (viii) The Party asserting that, based on Sections 4.1(f)(v) -

(vi), a Royalty Rate should be different from a royalty determined in accordance

with the mechanism set forth in Sections 4.1(f)(i) - (iv) above, or that any

Royalty Rate or component thereof already established under Section 4.1(f)

should be changed in accordance with the mechanism set forth above, shall have

the burden of proof of showing that the alternative approach should be adopted.

 

               (ix) Any adjustments to royalty shall apply on a going forward

basis only (ie apply only to Sales made after the adjustments), and all

royalties paid hereunder are non-refundable. In the event that the parties do

not agree on the applicable Royalty Rate, the parties shall appoint a mutually

agreed independent auditor who shall determine the Royalty Rate in accordance

with the above and whose determination shall be binding; provided, however, that

the Royalty Rate may be readjusted [****] months or later after the auditor's

determination based on changed circumstances.

 

          (g) "Used For." MNIP is "USED FOR" Licensed Products (for purposes of

SECTION 4.1 (Royalty)) if incorporated into or used in the manufacture of those

Licensed Products

 

          (h) Royalty - MNIP developed and available in the [****] Post

Termination Period (not available in the Initial Period)

 

               (i) The royalty payable for the use of MNIP developed and

commercially available in the [****] Termination Period is the Market Rate

royalty. The Parties shall promptly enter into arm's length negotiations in good

faith to determine the Market Rate royalty applicable to MNIP (of that

description) that VentureCo wishes to acquire in that period. Either Party may

initiate valuation/determination of the Market Rate royalty by experts subject

to SECTION 4.2 (Royalty Evaluation by Experts).

 

               (ii) That royalty agreed or determined (as applicable) under this

Section 4.1(h) shall be the Market Rate royalty. The royalty will be calculated

on a quarterly basis on all Licensed Products for which the MNIP was used, that

were sold in that quarter.

 

          (i) Royalty - on E IP and MNIP Post Termination

 

               (i) VentureCo shall continue to be responsible for royalty for

MNIP used after the Termination Date. Additionally, VentureCo shall pay E a

royalty on any other E IP used (prior to and at the Termination Date) for

Licensed Products sold in volumes in excess of the

 

 

                                      -11-

 

<PAGE>

 

Termination Level Capacity. That royalty shall be [****] percent ([****]%) of

the Market Rate royalty during the the first [****] years after the Termination

Date and the Market Rate royalty thereafter.

 

               (ii) Parties shall enter into arm's length negotiations in good

faith to determine the Market Rate royalty at commencement of the Post

Termination Period for E IP not currently or previously subject to royalty

payments. Either Party may initiate determination or valuation of the Market

Rate royalty by experts subject to SECTION 4.2 (Royalty Evaluation by Experts).

The agreed or (as applicable) specified royalty shall be the Market Rate

royalty. The royalty will be calculated on a quarterly basis on all Licensed

Products for which the E IP or MNIP was used, that were sold in that quarter,

subject to SECTION 4.1 (Royalty Calculations).

 

          (j) Royalty - on external IPR offered by E. If E offers VentureCo IP

or MNIP which carries an external running cost to E (e.g. a license fee/royalty

to a third party holder of such Intellectual Property Rights), then the cost

incurred by E in connection with sub-licensing to VentureCo shall be borne in

its entirety by VentureCo; provided that the written agreement between VentureCo

and E for the licensing of such IP or MNIP expressly includes the amount of such

running cost. The aforementioned shall not reduce E's rights to royalty under

the rules above.

 

          (k) No royalty on VentureCo MNIP. Notwithstanding anything in this

Agreement, no royalty is due hereunder on Licensed Products incorporating any

MNIP, where the directly associated development costs of that MNIP are

substantially funded by VentureCo pursuant to written development agreements/

arrangements between VentureCo and E. This is without prejudice to the terms of

written development agreements/arrangements (if any) that provide for

proportionate or other royalty reduction, where those costs are partially funded

by VentureCo.

 

     4.2 Royalty Evaluation by Experts. If the Parties cannot agree on the

Market Rate royalty, Added Value or Cost Savings for MNIP within [****] days

after initiation or commencement of negotiations to determine such royalty or

value, then the following applies: Each Party shall retain at its expense an

independent professional Third Party expert with expertise evaluating licenses

in the photovoltaic industry.

 

          (a) Subject to execution of customary confidentiality agreements by

the independent experts, VentureCo and E shall provide or cause to be provided

to each expert all material information, including any material changes in such

information, reasonably necessary to make the determination or reasonably

requested by the experts.

 

          (b) Within [****] days after the [****] day period referenced above,

each Party shall submit a final proposal for the relevant Market Rate royalty,

Added Value or Cost Savings for MNIP with a supporting analysis prepared in

writing by its retained expert, to the other Party and to the "Arbitrator." The

Arbitrator shall be a person with expertise in evaluating licenses in the

photovoltaic industry, shall not have a material business relationship with

either Party and shall be reasonably acceptable to both Parties. If the Parties

have not agreed on an Arbitrator, the Parties will each select an Arbitrator

(within the stated [****] day period) satisfying the above criteria and the

 

 

                                      -12-

 

<PAGE>

 

selected Arbitrators will select a third. In that case, the decision of a

majority of the Arbitrators will control and shall be final and binding on both

Parties.

 

          (c) If one Party does not submit in a timely manner a final proposal,

then the proposal of the other Party shall be used to establish the relevant

Market Rate royalty, Added Value or Cost Savings for MNIP.

 

     4.3 Tax Authority Challenges. In the event that the tax authority

successfully challenges the adequacy or amount of the royalty or the applicable

tax provisions change, then the parties will use best reasonable efforts to

renegotiate to establish a royalty rate consistent with the requirements of

applicable law in a manner that does not adversely affect or increase the

financial burden on VentureCo.

 

     4.4 Royalty Calculations. Royalties shall not be due with respect to

Licensed Products for which the purchase price has been refunded within [****]

of delivery. In the event that only part of the purchase price is refunded, the

royalty shall be applied in proportion to the amount of the purchase price not

refunded.

 

     4.5 Payment. To the extent applicable, VentureCo shall, within [****] days

after the end of each calendar quarter during the term of this Agreement,

prepare a report summarizing the royalty payable to E pursuant to ARTICLE 4

(Consideration and Payment) including a description and basis of the calculation

thereof. VentureCo shall provide copies of such report to E, and VentureCo's

payment to E shall accompany such report.

 

     4.6 Currency. All payments hereunder shall be made in Euros.

 

     4.7 Taxes. With respect to royalties payable by VentureCo to E under this

Agreement, VentureCo shall promptly notify E of any requirement under applicable

law to deduct or withhold an amount on behalf of E on account of any tax and, if

so required under applicable law, VentureCo shall: (i) pay to the relevant

authorities the full amount required to be deducted or withheld promptly upon

determination by VentureCo that such deduction or withholding is required; and

(ii) promptly forward to E an official receipt (or certified copy), or other

documentation reasonably acceptable to E, evidencing such payment to such

authorities. To the extent that E cannot or will not be able to take a full

credit against its tax liability for the current or prior taxable years for the

full amount of the withholding tax deducted or withheld by VentureCo and is

otherwise unable to reduce or eliminate such withholding tax liability on its

own, then the Parties shall cooperate with each other and use all reasonable

efforts to reduce or eliminate such tax liability in a lawful and appropriate

manner to the extent such does not result in additional liability to VentureCo.

 

     4.8 Audit. Each Party shall maintain complete and accurate accounting

records, in accordance with sound accounting practices, to support and document

the royalties or payments payable in connection with this Agreement. Such

records shall be retained for a period of at least [****] years after the

royalties which relate to such records have been accrued and paid. Each Party

shall, upon written request from the other, provide access to such records to

such Party for the purposes of audit. If any such audit discloses a shortfall in

payment (or an overcharge, as the case

 

 

                                      -13-

 

<PAGE>

 

may be) of more than [****] percent ([****]%) for any quarter, the audited Party

agrees to pay or reimburse the other Party for the expenses of such audit, and

the Parties shall reconcile payments in accordance with the results of the

audit.

 

                                    ARTICLE 5

 

                          INTELLECTUAL PROPERTY RIGHTS

 

     5.1 Ownership

 

          (a) Joint Inventions. E and VentureCo shall Jointly Own all right,

title and interest in all Intellectual Property Rights that personnel of E and

VentureCo (including third parties working on each Party's behalf) jointly

create.

 

               (i) Definition. For purposes of this SECTION 5.1 (Ownership),

"JOINTLY OWN" means that, subject to the terms of the licenses granted and other

provisions of this Agreement, each Party or owner thereof is free to exploit

such rights and, subject to SECTION 5.2 (Enforcement of Jointly Owned

Intellectual Property Rights), authorize others to do so, with no obligation to

account to the other Party or owner, for profits or otherwise, and each Party

hereby waives any right it may have under the laws of any country to require

such consent or accounting. In the event that either or both Parties are

pursuing enforcement pursuant to SECTION 5.2 (Enforcement of Jointly Owned

Intellectual Property Rights), any licensing of the respective Jointly Owned

Intellectual Property Right to the alleged Third Party infringer shall be

pursued (with the intent that the actual or alleged infringement is regularized

by appropriate license terms) by the Party or Parties pursuing the action until

the conclusion of the respective action.

 

               (ii) PROSECUTION AND MAINTENANCE BY VENTURECO. SUBJECT TO SECTION

5.1(c) (Expenses and Assistance), VentureCo shall have the initial right, at its

option, to control the filing for, prosecution and maintenance of any

Intellectual Property Rights that claim or disclose inventions that the Parties

Jointly Own pursuant to SECTION 5.1(a) (Joint Inventions), provided that

VentureCo shall consult with and keep E reasonably informed on matters regarding

such filing, prosecution and maintenance. In such case, subject to 5.1(c)

(Expenses and Assistance), E shall reasonably assist VentureCo, as VentureCo

reasonably requests, in VentureCo's efforts to file for, prosecute and/or

maintain the Jointly-Owned Intellectual Property Rights. For purposes of this

SECTION 5.1(a) (Joint Inventions), "PROSECUTION AND MAINTENANCE" of Intellectual

Property Rights shall be deemed to include, without limitation, responding to

office actions, payment of maintenance and annuity fees, and conduct of

interferences or oppositions, and/or requests for re examinations, reissues or

extensions of patent terms.

 

               (iii) By the Jointly Owning Party. To the extent that VentureCo

elects not to file, prosecute or maintain any Intellectual Property Right

jointly owned by VentureCo and E and not Q or REC, or pay any fee related

thereto, E shall have the right, at its option, to control the filing,

prosecution and/or maintenance of any such Intellectual Property Right, provided

that E shall consult with and keep VentureCo reasonably informed of matters

regarding such filing, prosecution and maintenance. To the extent that VentureCo

elects not to file, prosecute or maintain any Intellectual

 

 

                                      -14-

 

<PAGE>

 

Property Right Jointly Owned by VentureCo, E, Q and REC, or pay any fee related

thereto, VentureCo shall notify E, Q and REC, and E, Q and REC shall have the

right, at their option, to jointly control the filing, prosecution and/or

maintenance of any such Intellectual Property Right, provided that E, Q and REC

shall consult with and keep VentureCo reasonably informed of matters regarding

such filing, prosecution and maintenance. To the extent that E, Q or REC elects

not to file, prosecute or maintain any such Jointly Owned Intellectual Property

Right, or pay any fee related thereto, it shall inform the other party(ies), and

such other party(ies) shall have the right, at its option, to control the

filing, prosecution and/or maintenance of any such Intellectual Property Right,

provided that such Party(ies) shall consult with the other party(ies) and

VentureCo and keep such party(ies) reasonably informed of matters regarding such

filing, prosecution and maintenance.

 

          (b) Sole Inventions. Subject to the foregoing, each Party shall own

all right, title and interest in all Intellectual Property Rights invented or

authored solely by such Party's personnel (including third parties working on

such Party's behalf). For purposes of clarification, E retains ownership of

Intellectual Property Rights developed as of the License Effective Date and

otherwise developed outside of its cooperation with VentureCo, including without

limitation any E Technology and E Intellectual Property Rights relating to

String Ribbon Technology.

 

               (i) Prosecution and Maintenance; Sole Inventions Related to E

Technology. Each Party shall have sole right, at its option, to control the

filing for, prosecution and maintenance of any Intellectual Property Rights that

claim or disclose inventions that the Party solely owns, subject to the

following. To the extent that VentureCo elects not to file, prosecute or

maintain any Intellectual Property Right relating to VentureCo's solely-owned

Intellectual Property Rights relating to the E IP provided under this Agreement,

or pay any fee related thereto, VentureCo shall notify E, and E shall have the

right, at its option, to control the filing, prosecution and/or maintenance of

any such Intellectual Property Right, and VentureCo, at E's written request,

shall transfer and assign all of its right, title and interest to such

Intellectual Property Right to E. In the event of such transfer, VentureCo

retains a world-wide, non-exclusive, non-transferable, perpetual, irrevocable,

royalty-free, sublicensable license of such transferred Intellectual Property

Rights.

 

               (ii) Other Prosecution and Maintenance. To the extent that

VentureCo elects not to file, prosecute or maintain any Intellectual Property

Right relating solely to VentureCo's solely-owned Intellectual Property Rights

other than Intellectual Property Rights relating to improvements to the E IP

provided under this Agreement or the Q IP provided under the Q License Agreement

or the REC IP provided under the REC License Agreement, VentureCo shall notify

E, Q and REC, and E, Q and REC shall have the right to jointly control the

filing, prosecution and/or maintenance of any such Intellectual Property Right,

and VentureCo, at E, Q and REC's written request, shall transfer and assign all

right to such Intellectual Property Right to the joint ownership of E, Q and

REC. In the event that either E, Q or REC elects not to participate in the

filing, prosecution or maintenance of any Right, the other party(ies) shall have

the right, at their/its option, to control the filing, prosecution and/or

maintenance of such Intellectual Property Right, and VentureCo shall, at such

party(ies') request, transfer and assign all of its right, title and interest to

such party(ies). In the event of such transfer, VentureCo retains a world-wide,

non-exclusive, non-

 

 

                                      -15-

 

<PAGE>

 

transferable, perpetual, irrevocable, royalty-free, sublicensable license of

such transferred Intellectual Property Rights which were originally solely owned

by VentureCo.

 

          (c) Expenses and Assistance. To the extent a Party controls the

foregoing filing, prosecution and maintenance activities of any Jointly Owned

Intellectual Property Rights (or, pursuant to SECTION 5.1 (Ownership), another

Party's Intellectual Property Right), such controlling entity shall be

responsible for all costs and expenses incurred in connection therewith. In such

cases, subject to the foregoing, VentureCo shall reasonably assist the Jointly

Inventing Parties, as the Jointly Inventing Parties reasonably request, in

Jointly Inventing Parties' efforts to file for, prosecute and/or maintain the

Jointly Owned Intellectual Property Rights.

 

          (d) Employee Inventors. VentureCo shall take all necessary measures to

secure all right, title and interest in inventions that are made by its

employees under the regulations of the German Employee Inventor Law

(Arbeitnehmererfindergesetz) to the maximum extent available under applicable

law such that VentureCo may carry out its obligations of this ARTICLE 5

(Intellectual Property Rights) and the Parties may obtain and exercise their

rights to the applicable Intellectual Property Rights to the full extent and

term available under applicable law. In connection therewith, VentureCo will

comply with all applicable laws including without limitation any obligations to

employees under applicable law with respect to employee inventions.

 

     5.2 Enforcement of Jointly Owned Intellectual Property Rights. Each Party

shall promptly notify the other Party if it becomes aware of a possible

infringement by a Third Party of any Jointly Owned Intellectual Property Rights.

If either Party desires to take any action against such an infringing or

misappropriating Third Party, such Party shall first notify the other Party

hereto and consult with such notified Party regarding such action. If the

notified Party desires to participate in such action, the Parties shall then

jointly and cooperatively pursue such action, in which event they shall bear all

costs equally and share in any damages, royalties, license fees or other

recoveries equally, provided that either Party may at any time decide not to

participate further in such action, in which case any further costs shall be

borne by and all damages, royalties, license fees and other recoveries shall be

received by the Party which continues to pursue such action. If a Party declines

to participate in such action, the other Party shall then have the right to

pursue such action alone, and shall bear all costs of and receive all damages,

royalties, license fees and other recoveries from such action. Notwithstanding

the foregoing, if a Party declines to participate in such an action or withdraws

from such an action, such Party shall nevertheless, at the request of the other

Party, cooperate with the other Party, at the cost of the other Party and

subject to any reasonable conditions (including indemnification against

counterclaims by the third party), to the extent which may be necessary to

enable the other Party to pursue such action effectively, including without

limitation joining such action as an indispensable party.

 

     5.3 Third Party Licenses. To the extent that VentureCo may desire or need

rights with respect to any Intellectual Property Rights not licensed hereunder

or covered by the representations or warranties of ARTICLE 6 (Warranties),

VentureCo shall be solely responsible for obtaining such licenses and paying the

associated costs.

 

 

                                      -16-

 

<PAGE>

 

     5.4 Further Cooperation. Each of the Parties hereto agrees, upon the

reasonable request of the other Party, to the extent consistent with this

Agreement, to deliver to the other such records, data or other documents

reasonably requested by the other, and to take or cause to be taken all such

other actions as are reasonably necessary or desirable in order to permit the

other to obtain the full benefits of this Agreement (including the execution of

any documents required in connection therewith).

 

                                    ARTICLE 6

 

                                   WARRANTIES

 

     6.1 Representations and Warranties. E hereby represents and warrants to

VentureCo that:

 

          (a) Registered E Intellectual Property. EXHIBIT B is a complete and

accurate list of all Registered E Intellectual Property Rights. E will

supplement EXHIBIT B bi annually during the Initial Period and (with respect

MNIP used by VentureCo in the [****] Post Termination Period) Post Termination

Period, as additional Registered E Intellectual Property Rights are applied for

or obtained.

 

          (b) Completeness. The E IP constitutes all (or a copy of all) of the

Intellectual Property owned or Licensable by E that is related to or reasonably

necessary for the conduct and operations of VentureCo as currently contemplated

to be conducted, including, without limitation, the design, development,

manufacture, use, marketing and sale of Licensed Products.

 

          (c) Non-Infringement. To the knowledge of E, VentureCo's use of the E

IP pursuant to this Agreement in the operation of VentureCo as it is

contemplated to be conducted following the Closing, including but not limited to

the design, development, manufacture, use, marketing and sale of Licensed

Products does not, and will not, infringe or misappropriate any Intellectual

Property Rights of any Third Party, violate any right of any Third Party

(including any right to privacy or publicity), or constitute unfair competition

or trade practices under the laws of any jurisdiction. Without limiting the

foregoing, E has not received notice from any Person claiming that such

operation or any act, product, Intellectual Property Rights, Technology or

service by E (including products, Intellectual Property Rights, Technology or

services currently under development) infringes or misappropriates any

Intellectual Property rights of any Person, violates any right of any Person or

constitutes unfair competition or trade practices under the laws of any

jurisdiction (nor does E have knowledge of any basis therefor). To the knowledge

of E, no Person is infringing or misappropriating any E IP.

 

          (d) Contracts. EXHIBIT C lists all contracts, licenses and agreements

under which both (1) E has been granted Intellectual Property Rights or rights

to Technology from Third Parties and (2) such rights are Licensable and

constitute E IP licensed hereunder.

 

 

                                      -17-

 

<PAGE>

 

     6.2 Remedy. E's sole obligation and liability for E's breach of the

representations and warranties provided in this ARTICLE 6 (Warranties) shall be

pursuant to ARTICLE 8 (Liability and Limitations of Liability) of the Master

Agreement.

 

     6.3 Disclaimer. EXCEPT FOR THE WARRANTIES SET FORTH IN THIS ARTICLE 6

(WARRANTIES) OR EXPRESSLY PROVIDED IN THE MASTER AGREEMENT, THE PARTIES MAKE NO

WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND SPECIFICALLY DISCLAIM

ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,

NONINFRINGEMENT AND TITLE. NEITHER PARTY MAKES ANY GUARANTEES TO THE OTHER

CONCERNING THE SUCCESS OR POTENTIAL SUCCESS OR COMMERCIAL VIABILITY OF THE

ACTIVITIES CONTEMPLATED UNDER THIS AGREEMENT.

 

                                    ARTICLE 7

 

                            CONFIDENTIAL INFORMATION

 

     7.1 Confidential Information. Any Confidential Information exchanged

pursuant to this Agreement (and the terms of this Agreement itself) will be

governed by SECTION 9.5 (Confidentiality) of the Master Agreement, with the

Parties hereunder deemed the Disclosing Party and/or Receiving Party as

applicable, provided that, notwithstanding anything to the contrary, each Party

may use and distribute any such confidential or proprietary information as

reasonably required to exercise its rights under the licenses granted pursuant

to ARTICLE 2 (Rights and Licenses).

 

                                    ARTICLE 8

 

                                      TERM

 

     8.1 Term. This Agreement shall become effective as of the Effective Date.

The license of SECTION 2.1 (E License Grant to VentureCo) becomes effective only

as of the License Effective Date. This Agreement may be terminated only as

follows:

 

          (a) [deleted].

 

          (b) This Agreement may terminate in the event that E and VentureCo

mutually agree in writing to terminate this Agreement (subject to the Master

Agreement).

 

     8.2 Special Termination Right. [****]

 

     8.3 Effect of Termination. Upon any termination or expiration of this

Agreement, the licenses continue as provided in this Agreement, unless otherwise

expressly agreed in writing by E and VentureCo. SECTIONS 2.2 (VentureCo License

Grant to E), 2.3 (Reservation of Rights), ARTICLE 3 (Technology Transfer),

ARTICLE 4 (Consideration and Payment), ARTICLE 7 (Confidential

 

 

                                      -18-

 

<PAGE>

 

Information), SECTION 8.3 (Effect of Termination) and ARTICLE 9 (General

Provisions) shall survive any termination or expiration of this Agreement.

SECTION 5.1 (Ownership) shall survive any termination or expiration of this

Agreement. Notwithstanding anything to the contrary, SECTION 2.1 (E License

Grant to VentureCo) will survive any termination of the Agreement pursuant to

SECTION 8.2 (Special Termination Right).

 

                                    ARTICLE 9

 

                               GENERAL PROVISIONS

 

     9.1 Limitation of Liability.

 

          (a) IN NO EVENT WILL EITHER PARTY HAVE ANY LIABILITY FOR ANY SPECIAL,

INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION

DAMAGES FOR LOSS OF PROFITS) THAT RELATE IN ANY WAY TO THIS AGREEMENT, HOWEVER

CAUSED ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), AND WHETHER OR NOT

SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH DAMAGES.

 

          (b) This SECTION 9.1 (Limitation of Liability) shall not limit the

remedies that may be available to the Parties pursuant to the Master Agreement

or Concurrent Agreements. To the extent required by applicable law, nothing in

this SECTION 9.1 (Limitation of Liability) shall limit the remedies that may be

available to the Parties for fraud, bodily injury or death.

 

     9.2 Notices. All notices, requests and other communications to any Party

hereunder shall be in writing (including facsimile transmission) and shall be

given as set forth in the Master Agreement as follows:

 

          As to VentureCo: As set forth in the Master Agreement.

 

          As to E, Inc.:

 

               Evergreen Solar, Inc.

               138 Bartlett Street

               Marlboro, MA 01752

               Attention: Richard Feldt

                          Richard Chleboski

 

 

                                      -19-

 

<PAGE>

 

          with a copy to:

 

               Wilson Sonsini Goodrich & Rosati

               12 East 49th Street

               New York, NY 10017 USA

 

               Attention: Robert Sanchez

                          Robert O'Connor

               Phone:     1 212 999-5800

               Fax:       1 650 493-6811

 

          and a copy to:  Taylor Wessing

                          Jagerstrasse 51

                          D-10117 Berlin, Germany

               Attention: Dr. Eberhardt Kuhne

                          Philipp von Alvensleben

               Phone:     ++49 30 885636 0

               Fax:       ++49 30 885636 46

 

          As to Q:        Q-Cells AG

                          Guardianstr. 16

                          D-06766 Thalheim

               Attention: Anton Milner

                          Dr. Hartmut Schuening

               Phone:     +49-34 94-66 8-60

               Fax:       +49-34 94-66 8-777

 

          with a copy to: VAN AUBEL Rechtsanwaelte

                          Leibnizstr. 49

                          D-10629 Berlin, Germany

               Attention: Dr. Thomas van Aubel

               Phone:     +49-30-31 51 90 0

               Fax:       +49-30-31 51 90 90

 

          As to REC:      Renewable Energy Coporation

                          Veritasveien 14, PO Box 280

                          N-1323  Hovik, Norway

               Attention: Erik Sauar

               Phone:     +47 67 81 52 53

               Fax:       +47 67 81 52 01

 

          With a copy to  Renewal Energy Corporation

                          Veritasveien 14, PO Box 280

                          N-1323 Hovik, Norway

 

 

                                      -20-

 

<PAGE>

 

               Attention: Bjorn Brenna

               Phone:     +47 67 81 52 74

               Fax:       +47 67 81 52 01

 

     or, in each case, at such other address as may be specified in writing to

the other Parties hereto.

 

     9.3 Language. All documentation, communication and services in connection

with this Agreement in shall be in English.

 

     9.4 Amendments and Waivers.

 

          (a) Any provision of this Agreement may be amended or waived if, but

only if, such amendment or waiver is in writing and is signed, in the case of an

amendment, by each Party to this Agreement, or in the case of a waiver, by the

Party against whom the waiver is to be effective. The same applies to any waiver

of this written form requirement.

 

          (b) No failure or delay by any Party in exercising any right, power or

privilege hereunder shall operate as a waiver thereof nor shall any single or

partial exercise thereof preclude any or other further exercise thereof or the

exercise of any other right, power or privilege. The rights and remedies herein

provided shall be cumulative and not exclusive of any rights or remedies

provided by law.

 

     9.5 Assignment. Other than as expressly otherwise provided herein, this

Agreement shall not be assignable or otherwise transferable by any Party hereto

without the prior written consent of the other Party hereto and the prior

written consent of Q and REC; provided, however, that neither Party shall be

obligated to obtain the consent of the other Party or other parties under this

SECTION 9.5 (Assignment) solely by virtue of a Change of Control of such Party,

and such Party shall have the right to assign this Agreement, in its entirety

including all rights and obligations, to such Party's successor in such Change

of Control. Subject to the foregoing, the provisions of this Agreement shall be

binding upon and inure to the benefit of the Parties hereto and their respective

successors and assigns. Any assignment or transfer (including through a change

of control) of this Agreement in violation of this SECTION 9.5 (Assignment)

shall be null and void.

 

     9.6 Prior Agreement; Entire Agreement; Severability. This Agreement

supersedes and replaces the Prior Agreement. This Agreement, together with the

Master Agreement and Concurrent Agreements, constitutes the entire agreement

between the Parties hereto and any of such Parties' respective affiliates with

respect to the subject matter of this Agreement and supersedes all prior

communications, agreements and understandings, both oral and written, with

respect to the subject matter of this Agreement. In the event any provision of

this Agreement becomes or is declared by a court of competent jurisdiction to be

illegal, unenforceable or void, this Agreement shall continue in full force and

effect without said provision, and the Parties agree to negotiate, in good

faith, a legal and enforceable substitute provision which most nearly effects

the Parties' intent in entering into this Agreement.

 

 

                                      -21-

 

<PAGE>

 

     9.7 Other Remedies; Specific Performance. Except as otherwise provided

herein, any and all remedies herein expressly conferred upon a Party will be

deemed cumulative with and not exclusive of any other remedy conferred hereby or

by law or equity upon such Party, and the exercise by a Party of any one remedy

will not preclude the exercise of any other remedy. The Parties hereto agree

that irreparable damage may occur in the event that any of the provisions of

this Agreement were not performed in accordance with their specific terms or

were otherwise breached. It is accordingly agreed that the Parties may be

entitled to seek an injunction to prevent breaches of this Agreement and to

enforce specifically the terms and provisions hereof in a German court, this

being in addition to any other remedy to which they are entitled at law or in

equity.

 

     9.8 Governing Law and Dispute Resolution. This Agreement shall be construed

in accordance with and governed by the laws of the Federal Republic of Germany.

 

     All disputes arising in connection with this Agreement or its validity or

any agreement provided herein which cannot be resolved by mutual agreement of

the Parties shall be finally settled in accordance with the Arbitration Rules of

the German Institution of Arbitration e.V. (DIS) without recourse to the

ordinary courts of law (except for challenges to the validity of shareholder

resolutions which shall be submitted to the competent court in Berlin, and

except where the Parties seek injunctions as provided in Section 9.7). The place

of arbitration is Berlin, Germany. The arbitral tribunal consists of three

arbitrators. The arbitrators must be capable of being appointed a judge in

accordance with the relevant German legal rules. The substantive law of the

Federal Republic of Germany is applicable to the dispute. The language of the

arbitral proceedings is English.

 

     9.9 Compliance with Laws and Regulations. Each Party will comply with all

applicable laws, regulations and ordinances.

 

     9.10 Export. No Party shall export or re export, directly or indirectly,

any technical information disclosed hereunder or direct product thereof to any

destination prohibited or restricted by the applicable export control

regulations, including the U.S. Export Administration Regulations and

regulations of Germany, without the prior authorization from the appropriate

governmental authorities. Without limiting the foregoing, E shall be responsible

for obtaining government approvals, permits or the like necessary for the export

of its technology from the United States to VentureCo in Germany, and VentureCo

shall be responsible for obtaining all government approvals, permits or the like

required for the import of any technology to VentureCo and into Germany and for

the export of any technology or products by VentureCo from Germany.

 

     9.11 Force Majeure. No Party shall be liable to another Party for failure

to perform its obligations under this Agreement if such failure is caused by any

event or condition not reasonably within the control and anticipation of the

affected Party, including, without limitation, by fire, flood, typhoon,

earthquake, explosion, strike, labor trouble or other industrial disturbance,

unavoidable accident, war (declared or undeclared), act of terrorism, sabotage,

embargo, riot, or any other cause beyond the control of the Parties, provided

that the affected Party promptly notifies the other Party

 

 

                                      -22-

 

<PAGE>

 

of the occurrence of such event or condition and takes reasonable steps

necessary to resume performance of its obligations so interfered with.

 

     9.12 Independent Contractors. The Parties hereto are independent

contractors. Nothing contained herein or done pursuant to this Agreement shall

constitute either Party the agent of the other Party for any purpose or in any

sense whatsoever, or constitute the Parties as partners or joint venturers.

 

     9.13 Third Party Beneficiaries. No provision of this Agreement is intended

to confer upon any person or entity other than the Parties hereto (and their

permitted assigns) any rights or remedies hereunder.

 

     9.14 Counterparts. This Agreement may be signed in any number of

counterparts, each of which shall be an original, with the same effect as if the

signatures thereto and hereto were upon the same instrument. This Agreement

shall become effective when each Party hereto shall have received a counterpart

hereof signed by the other Party hereto.

 

     9.15 Condition.

 

     This Agreement is entered into under the conditions precedent that (i) the

share capital in EverQ is increased to Euro [****]; (ii) that such capital

increase is registered with the commercial register, and (iii) after

registration of such capital increase, Evergreen, Q-Cells AG and Renewable

Energy Corporation ASA holds shares in a total amount of Euro [****] each.

 

     This Agreement is entered into under the further conditions precedent that

the Competent Cartel Offices have issued a letter or formal decision that they

will not prohibit the increase of share capital in EverQ or that the respective

waiting periods provided for in the national merger control laws have elapsed

without any formal decision rendered or that the Competent Cartel Offices

confirmed that the transactions contemplated herein are not notifiable under the

applicable merger control law. Competent Cartel Offices means any national or

international agency, body or other entity to which the transactions

contemplated herein have to be notified under the applicable merger control

jurisdictions.

 

            (The remainder of this page is intentionally left blank.)

 

 

                                      -23-

 

<PAGE>

 

     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be

duly executed by their respective authorized officers as of the day and year

first above written.

 

                                        EVERGREEN SOLAR, INC.

 

 

                                        BY: /s/ Phillipp von Alvensleben

                                            ------------------------------------

                                        NAME:

                                              ----------------------------------

                                        TITLE:

                                               ---------------------------------

 

 

                                        VENTURECO GMBH

 

 

                                        BY: /s/ Michael Naschke

                                            ------------------------------------

                                        NAME:

                                              ----------------------------------

                                        TITLE:

                                               ---------------------------------

 

 

                                      -24-

<PAGE>

 

                                    EXHIBIT A

 

                  E INTELLECTUAL PROPERTY RIGHTS & E TECHNOLOGY

 

                             PART 1 -INCLUDED ITEMS

 

****

 

1.   ****

 

2.   ****

 

3.   ****

 

4.   ****

 

5.   ****

 

6.   ****

 

7.   ****.

 

8.   ****

 

9.   ****

 

10.  ****

 

11.  ****

 

12.  ****

 

13.  ****

 

14.  ****

 

15.  ****

 

16.  ****

 

17.  ****

 

     ****

 

     ****

 

     ****

 

1.   ****

 

2.   ****

 

3.   ****

 

4.   ****

 

 

                                       -1-

 

<PAGE>

 

                             PART 3 -EXCLUDED ITEMS

 

     [****

 

1.   ****

 

2.   ****

 

3.   ****

 

4.   ****

 

5.   ****

 

6.   ****

 

7.   ****

 

     ****

 

1.   ****

 

2.   ****

 

3.   ****

 

4.   ****

 

5.   ****

 

6.   ****

 

7.   ****

 

8.   ****

 

9.   ****

 

10.  ****

 

11.  ****

 

12.  ****

 

13.  ****

 

14.  ****

 

15.  ****

 

16.  ****

 

17.  ****

 

18.  ****

 

19.  ****]

 

 

                                       -2-

 

<PAGE>

 

                                    EXHIBIT B

 

                    REGISTERED E INTELLECTUAL PROPERTY RIGHTS

 

    ****

 

1.  ****

 

2.  ****

 

3.  ****

 

4.  ****

 

5.  ****

 

6.  ****

 

7.  ****

 

8.  ****

 

9.  ****

 

10. ****

 

11. ****

 

12. ****

 

13. ****

 

14. ****

 

15. ****]

 

 

                                       -3-

 

<PAGE>

 

                                    EXHIBIT C

 

                      CONTRACTS INCLUDED AS LICENSABLE E IP

 

[****]