LICENSE AGREEMENT
This Agreement, made and entered into this 26th day of September, 1995,
by and between Macrovision, Inc., a corporation organized and existing under
the laws of California, with its principal place of business located at 1341
Orleans Drive, Sunnyvale, California, 94089, U.S.A. ('Macrovision'), Victor
Technobrain Co., Ltd., a juridical person organized and existing under the
laws of Japan, with its principal place of business located at 804 Futowo-cho,
Kohoku-ku, Yokohama-shi, Kanagawa-ken 222, Japan ('Technology Licensee') and
Kabushiki-Kaisha, Video Bunka Kenkyu-sho (Video Cultural Institute,
Inc.)(VCII), a juridical person organized and existing under the laws of
Japan, with its principal place of business located at 2-13-7 Minami-Aoyama,
Minato-ku, Tokyo, Japan ('User Licensee').
W I T N E S S E T H
WHEREAS, Macrovision is the owner of all rights, title and interest in and
to certain technology and inventions relating to certain video and audio
scrambling processes, used to protect video material from unauthorized access
in connection with program transmission, and certain anti-copying technology,
used to protect video material from unauthorized copying in connection with
pay-per-view transmissions; and
WHEREAS, User Licensee wishes to establish a movie distribution service
known as EMDES, as hereinafter specified.
WHEREAS, Technology Licensee wishes to acquire from Macrovision a license
to use certain Macrovision Technology, as hereinafter defined, to design,
develop, manufacture, sell and license certain products for Electronic Movie
Distribution and Exhibition System (EMDES) applications, as hereinafter
specified, in Japan; and
WHEREAS, User Licensee wishes to acquire from Macrovision a license to use
certain Macrovision Technology, as hereinafter defined, to distribute, lease
and license certain products and to
sell services for EMDES applications, as hereinafter specified, in Japan; and
WHEREAS, Macrovision is willing to grant a license to Technology Licensee
to use the Macrovision Technology in the design, development, manufacture,
distribution, sale and license of certain products in Japan in accordance
with the terms and conditions of, and subject to the limitations of, this
Agreement; and
WHEREAS, Macrovision is willing to grant a license to User Licensee to use
the Macrovision Technology in the distribution and license of certain
products in Japan in accordance with the terms and conditions of, and subject
to the limitations of, this Agreement; and
WHEREAS, Macrovision wishes to acquire a license to utilize Technology
Licensee's Resulting Technology, as hereinafter defined, and Technology
Licensee is willing to grant to Macrovision a license to such Resulting
Technology, in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
covenants and conditions set forth in this Agreement, the parties hereto
do agree as follows:
Article 1: Definitions
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1 The 'Products' shall mean those products, including, but not limited
to, the encoder, the decoder, software control system and card authorization
system, set forth on Appendix 1 hereto, to be developed hereunder by
Technology Licensee, utilizing the Macrovision Technology and the Resulting
Technology, as defined herein, for decoding EMDES video signals that have
been scrambled using the Macrovision Technology.
1.2 The 'Resulting Technology' shall mean and include all designs,
drawings, blueprints, computer programs in source code and object code form,
technical specifications, manufacturing equipment requirements, performance
standards, quality control
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standards and requirements, and all other information and technical data
relating to the design, development, manufacture, production and/or use of
the Products, and all Intellectual Property Rights therein. Excluded from
Resulting Technology is any technology developed by Technology Licensee
independent of this Agreement and technology obtained from a non-party to
this agreement.
1.3 'PhaseKrypt' shall mean Macrovision's proprietary video and audio
scrambling technology used to scramble and protect video and audio signals
from unauthorized access, which technology has been granted United States
Patent No. 5,058,175, and 5,438,620 pending United States Patent Application
No. 08-145066.
1.4 The 'Anti-Copying Process' ('ACP') shall mean Macrovision's
proprietary process of modifying a video signal by (i) the addition of a
plurality of unipolar pulses and bipolar pulse pairs in and around the
vertical blanking interval; and (ii) by pseudo randomly phase modulating the
color bursts, which process is protected by the United States Patents Nos.
4,631,603, 4,577,216 and 4,819,098. Japanese Patent number 1,925,090 is the
Japanese equivalent of US Patent no. 4,631,603.
1.5 The 'Macrovision Technology' shall mean and include (i) PhaseKrypt, as
defined in Article 1.3 hereof; (ii) the Anti-Copying Process, as defined in
Article 1.4 hereof; and (iii) any and all Intellectual Property Rights
embodied therein or related thereto.
1.6 'User Licensee's Authorized EMDES Applications' shall mean specific
market applications that the parties mutually agree in writing prior to start
of businesses related to each specific market application. Market application
that the parties mutually agree shall include following two types of
systematic application of Macrovision Technology.
a) services operated by User Licensee that provide the delivery of
scrambled real time video programming via cable, satellite, and/or
terrestrial transmission with subsequent direct recording on VCRs and
decoding said recorded material at a
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customer site employing a card-based access authorization system for which
the recipient pays a fee on a pay-per view basis;
b) distribution of scrambled video cassettes by User Licensee for
subsequent decoding and play back at a customer site employing a card-based
access authorization system for which the recipient pays a fee on a
pay-per-view basis.
1.7 'Pay-Per-View' shall mean video programming for which the direct
recipient pays for each viewing of each program received.
1.8 'Intellectual Property Rights' shall mean and include any and all
patents, copyrights, semiconductor design rights, trademarks, service marks,
trade names and other, similar proprietary rights, and all applications
therefor and all registrations thereof.
1.9 'Confidential Information' shall mean and include any and all trade
secrets, data and other information, not in the public domain, which are
embodied in, relate to, or are associated with any of (i) the Macrovision
Technology; (ii) the Products; (iii) the Resulting Technology; or (iv) the
business or affairs of Macrovision, Technology Licensee or User Licensee, as
the case may be. Any information furnished, disclosed or revealed by one
party hereto another party shall be deemed 'Confidential Information' for
purposes of this Agreement if (i) it is in tangible form and has been marked
'confidential' by one of the parties; (ii) the party receiving such
information has been advised in writing of its confidential nature; or (iii)
due to its character or nature, a reasonable person in a like position and
under like circumstances would treat such information as confidential.
1.10 'Application Master Sublicensee' shall mean a licensee to which User
Licensee shall sublicense the technology and application identified in the
Technical Specification dated January 20, 1995 (Appendix 5) on a specific
market application basis.
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1.11 'Retail Level Sublicensee' shall mean a licensee who is granted
either by User Licensee or by Application Master Sublicensee the right to
provide the PhaseKrypt and/or ACP encoded programs with retail level end
users.
1.12 'Gross Revenues' shall mean all revenues of either User Licensee or
Application Master Sublicensee derived from the distribution, lease or
license of the Products and of the sale of PhaseKrypt and/or ACP encoded
programs for customers of either User Licensee or Application Master
Sublicensee within Japan as reflected on User Licensee's or Application
Master Sublicensee's invoices, provided that such invoices include all the
revenues that Right Holders, Technology Licensee, and all other vendors to
either User Licensee or Application Master Sublicensee ought to receive from
either User Licensee or from Application Master Sublicensees due to EMDES
business. If any revenues that Right Holders, Technology licensee, and all
other vendors to either User Licensee or Application Master Sublicensee ought
to receive due to EMDES business are excluded from the invoices of either
User Licensee or Application Master Sublicensee to customers and Retail Level
Sublicensees by any means, such revenues which are excluded from the invoices
should be added back to the nominal amount on the invoices to constitute the
definition of the 'Gross Revenue' made in the section 1.12.
1.13 'Retail Transaction Value' shall mean all revenues that User
Licensee's customers or User Licensee's Retail Level Sublicensees receive
from retail level customers for the sale of PhaseKrypt and/or ACP encoded
programs for User Licensee's Application Master Sublicensees EMDES
Applications within Japan.
1.14 The 'Effective Date' of this Agreement shall be the date on which all
applicable approvals (if required) of the United States and Japanese
Governments of this Agreement shall have been obtained by the parties hereto,
including, but not limited to, the approval of the United States Department
of State, in accordance with the provisions of Article 11 hereof.
1.15 'Rights Holders' shall mean such persons, corporations, partnerships
or other entities holding ownership of copyrights
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and other intellectual property rights in the movies or other video material
to be distributed or exhibited.
1.16 'MPAA Rights Holders' shall mean any of the seven studios and their
Japanese video or pay-per-view distributors.
Article 2: Grant and Scope of License
2.1 Subject to the terms and conditions of this Agreement, including the
attached agreed Technical Specification dated January 20, 1995 (Appendix 5)
Macrovision hereby grants to Technology Licensee, and Technology Licensee
hereby accepts from Macrovision, a limited non-transferable, non-exclusive
license to utilize the Macrovision Technology and all Intellectual Property
Rights related thereto for the design, development, manufacture and sale to
User Licensee of the Products for User Licensee's Authorized EMDES
Applications, solely in Japan.
2.2 Macrovision shall provide to Technology Licensee such documents and
other materials that contain, embody and/or disclose the Macrovision
Technology and such other Macrovision Confidential Information as
Macrovision, in its reasonable discretion, determines to be necessary or
appropriate for Technology Licensee's design, development, manufacture and
distribution of the Products hereunder. Technology Licensee hereby
acknowledges and agrees that, except as specifically provided in this
Agreement, Technology Licensee shall not acquire any rights, title or
interests in or to any of the Macrovision Technology or other Macrovision
Confidential Information contained, embodied or disclosed by any of the
documents or other materials furnished by Macrovision to Licensee under this
Article 2.2.
2.3 Subject to the terms and conditions of this Agreement, Macrovision
hereby grants to Technology Licensee, and Technology Licensee hereby accepts
from Macrovision, a right to sub-license its rights to the Macrovision
Technology to ShibaSoku Co. Ltd. (SSC) to utilize the Macrovision Technology
and all Intellectual Property Rights related thereto for the design,
development, manufacture of the Products for Technology Licensee
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for User Licensee's Authorized EMDES Applications, solely in Japan.
2.4 Technology Licensee also hereby acknowledges and agrees to the
limited scope of the license granted to Technology Licensee by Macrovision
hereunder. Technology Licensee shall not utilize any of the Macrovision
Technology for any purpose outside the scope of User Licensee's Authorized
EMDES Applications or outside of Japan.
2.5 Subject to the terms and conditions of this Agreement, including the
attached agreed Technical Specification dated January 20, 1995 (Appendix 5),
Macrovision hereby grants to User Licensee, and User Licensee hereby accepts
from Macrovision, a limited non-transferable, exclusive license to utilize
the Macrovision Technology and all Intellectual Property Rights related
thereto to solely distribute, lease or license Products and to solely sell
services for User Licensee's Authorized EMDES Applications, solely in Japan.
User Licensee is authorized to start each specific market application as
described in Article 1.6 only after mutual agreement between Macrovision and
User Licensee on the specific market and the related service royalty unique
to each specific market.
2.5.1 The exclusivity as described in Article 2.5 above is limited to
the technology and application identified in the Technical Specification date
January 20 1995 (Appendix 5). This exclusivity does not apply outside of the
Products and Resulting Technology to any individual Macrovision Anti-copy
Protection Technology, PhaseKrypt Technology, CineGuard Technology and / or
other technologies in a EMDES application within Japan.
2.5.2 The exclusivity of this license is dependent upon a signature date
of this contract being no later than September 28, 1995 and the payment of
the first installment provided for in Article 6.1 by October 31, 1995.
2.6 User Licensee also hereby acknowledges and agrees to the limited
scope of the license granted to User Licensee by Macrovision hereunder. User
Licensee shall not utilize any of the Macrovision Technology for any purpose
outside the scope of
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User Licensee's Authorized EMDES Applications or outside of Japan. Any such
use of the Macrovision Technology for any purpose outside the scope of the
User Licensee's Authorized EMDES Application or outside of Japan will be
considered a material breach of this agreement.
2.6.1 User Licensee is hereby granted a right of first refusal for
licensing the Macrovision Technology for User Licensee's Authorized EMDES
Application in the Asian countries listed in Appendix 4.
Article 3: Technology Licensee's Obligations
3.1 Upon delivery of the Macrovision Technology and other Macrovision
Confidential Information to Technology Licensee, in accordance with Article
2.2 of this Agreement, Technology Licensee shall initiate the design and
development of the Products. It is anticipated that the design and
development of the Products hereunder will be completed within 120 days after
the Effective Date of this Agreement, and Technology Licensee shall provide
Macrovision with written notice of completion of the design and development
of the Products within 120 days after the date thereof.
3.2 During the period between the execution date of this agreement and
March 31, 1996, such period to be used for the early establishment of an
EMDES Karaoke Application, Macrovision agrees to grant Technology Licensee
and Technology Licensee accepts all rights and obligations to check the
design of all Products manufactured before March 31, 1996. Any encoder
manufactured before March 31, 1996 will be subject to corrections and/or
modifications by Technology Licensee considered by Macrovision.
3.3 Prior to April 30, 1996, Technology Licensee shall deliver to
Macrovision a data package, which shall include all of the Resulting
Technology relating to the Products, for review and design evaluation by
Macrovision. Macrovision shall use commercially reasonable efforts to
complete its review and design evaluation of the Resulting Technology, and
shall provide
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Technology Licensee with written notice of the results of that review and
design evaluation, within 30 days after receipt of Technology Licensee's data
package under this Article 3.3; provided, however, that Technology Licensee
shall not continue manufacture and distribution of any of the Products until
Macrovision has given Technology Licensee written notice that the results of
that review and design evaluation of the Resulting Technology conform to
Macrovision's specifications, standards and requirements and are otherwise
reasonably satisfactory to Macrovision.
3.4 Technology Licensee shall employ or cause to be employed such
design, manufacturing and quality standards to manufacture the Products
capable of using Macrovision Technology. In the event that Macrovision
reasonably determines that the Resulting Technology does not conform to
Macrovision's specifications, standards and requirements, Macrovision shall
provide Technology Licensee with a detailed list of all deficiencies in the
Resulting Technology. Technology Licensee shall utilize its best efforts to
correct all such deficiencies in the Resulting Technology within 60 days
after receipt of Macrovision's written notice under this Article 3.4. Upon
correction of all such deficiencies in the Resulting Technology, Licensee
shall provide Macrovision with a revised data package, in order to permit
Macrovision to confirm that all such deficiencies have been corrected, and
that the Resulting Technology conforms to the requirements of Article 3.2
hereof.
3.5 Upon receipt of Macrovision's written confirmation that the
Resulting Technology conforms to the requirements of Article 3.3 of this
Agreement, Technology Licensee shall commence manufacture of the Products.
3.6 All Products manufactured by Technology Licensee hereunder shall
bear a plaque or label, in a form specified by Macrovision, indicating that
such Products were manufactured under license from Macrovision, and including
all other markings, proprietary rights notices and other information as
reasonably required by Macrovision to protect Macrovision's rights in the
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Macrovision Technology and all Intellectual Property Rights relating thereto.
3.7 Technology Licensee shall use its best efforts to maximize the use
and license of the Products for User Licensee's Authorized EMDES Applications
within Japan. In furtherance of Licensee's 'best efforts' obligation
hereunder, Technology Licensee shall not sell or license any of the Products
(i) for use outside of User Licensee's Authorized EMDES Applications; to any
party other than VCII; or (iii) for use outside of Japan, without the prior
written authorization of Macrovision.
3.8 Technology Licensee hereby acknowledges and agrees that, in order to
protect Macrovision's Intellectual Property Rights in and to the Macrovision
Technology, all Products shall be sold only to User Licensee.
3.9 Technology Licensee shall provide Macrovision with monthly reports
of Technology Licensee's activities in manufacturing and distributing the
Products hereunder. Each such monthly report shall be substantially in the
form of Appendix 2 hereto, shall be provided within thirty (30) days after
the end of each month to which it corresponds, and shall include, inter alia:
(a) a statement of the number and description of the Products
manufactured and distributed by Technology Licensee during each month; and
(b) a description of all technical and functional problems with any of
the Products reported to Technology Licensee by any of Technology Licensee's
customers during each month, together with the steps taken by Technology
Licensee to correct such technical and functional problems.
3.10 Upon reasonable written notice from Macrovision, Technology
Licensee shall permit Macrovision's representatives to inspect Technology
Licensee's facilities and records, during normal business hours, in order to
permit Macrovision to confirm Technology Licensee's compliance with its
obligations under this Agreement. Without limiting the generality of this
Article 3.10, Macrovision shall have the right, at its own expense, to audit
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Technology Licensee's books and records of account, in order to confirm the
accuracy of the reports submitted by Technology Licensee under Article 3.9
hereof.
3.11 Technology Licensee shall use its best efforts to obtain patent
protection for the Resulting Technology within Japan. Technology Licensee
shall apply for patent protection in the European Patent Office, the United
States and any other country that Macrovision and the Technology Licensee
mutually agree. Technology shall assign these non-Japanese patent
applications to Macrovision. Macrovision at its sole discretion shall
prosecute the patent applications to allowance and pay all maintenance or
annuity fees.
3.12 Technology Licensee hereby grants to Macrovision, and Macrovision
hereby accepts from Technology Licensee, an exclusive, fully transferable,
royalty-free license to utilize all of the Resulting Technology in the
design, manufacture, distribution, sale and use of such products as
Macrovision, in its sole discretion, shall deem appropriate, throughout
the world, except Japan.
3.13 Technology Licensee shall furnish User Licensee with such other
technical assistance with respect to the Macrovision Technology and/or use of
the Products within User Licensee's Authorized EMDES Applications in Japan,
as User Licensee shall reasonably request. User Licensee shall pay Technology
Licensee's then-prevailing standard technical assistance fee for all such
technical assistance furnished by Technology Licensee under this Article
3.10. Upon receipt of any request by Technology Licensee for any technical
assistance under this Article 3.13, Technology Licensee shall provide User
Licensee with written notice of Technology Licensee's then-prevailing
technical assistance fee. User Licensee shall pay all technical assistance
fees payable under this Article 3.10 within 45 days after the date of
Technology Licensee's invoice therefor.
Article 4: User Licensee's Obligations
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4.1 User Licensee shall use its best efforts to maximize the use of the
Products for User Licensee's Authorized EMDES Applications within Japan. In
furtherance of User Licensee's 'best efforts' obligation here, User Licensee
shall not sell or license any of the Products for use outside of (i) User
Licensee's Authorized EMDES Applications; or (ii) Japan, without the prior
written authorization of Macrovision.
4.2 User Licensee shall coordinate contacts and negotiations with MPAA
Rights Holders with Macrovision. No contract or agreement will be concluded
with a MPAA Rights Holder without Macrovision's approval or consent, such
approval or consent not being unreasonably withheld.
4.3 User Licensee hereby acknowledges and agrees that, in order to
protect Macrovision's Intellectual Property Rights in and to the Macrovision
Technology, all Products shall be licensed to and not sold to customers using
the decoders for commercial purposes within Japan. User Licensee shall cause
each such commercial customer to enter into a license agreement, in a form
reasonably satisfactory to Macrovision, which prohibits the unauthorized
appropriation, use, disclosure or infringement of any of Macrovision's
Technology. User Licensee shall provide Macrovision with copies of all such
license agreements relating to the Products upon reasonable written request
by Macrovision. Decoders may be sold to consumers for non-commercial home use
only. All Products will contain a patent notice/license satisfactory to
Macrovision.
4.4 In connection with the marketing and distribution of the Products
within User Licensee's Authorized EMDES Applications in Japan, User Licensee
may, at its own expense, develop promotional and marketing materials relating
to the Products as User Licensee determines to be necessary or appropriate;
provided, however, that all such promotional and marketing materials
developed by User Licensee hereunder shall be submitted to, and shall be
reviewed in writing by, Macrovision prior to their release or distribution by
User Licensee to potential customers of the Products.
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4.5 User Licensee shall maintain adequate service and support
facilities for the Products within Japan, and shall provide its customers
with such support services relating to User Licensee's Authorized EMDES
Applications in accordance with the Resulting Technology and such other
standards as User Licensee and Macrovision shall establish by mutual
agreement. User Licensee hereby acknowledges and agrees that it shall be
solely responsible for the service and support of all Products distributed by
User Licensee hereunder.
4.6 User Licensee shall provide Macrovision with monthly reports of
User Licensee's activities in licensing and distributing the Products
hereunder. Each such monthly report shall be substantially in the form of
Appendix 2 hereto, shall be provided within thirty (30) days after the end of
each month to which it corresponds, and shall include, inter alia:
(a) a statement of the number and description of the Products licensed
and distributed by User Licensee during each month;
(b) a statement, certified by an authorized officer of User Licensee,
(1) User Licensee's Gross Revenue of the products and of the sale of
PhaseKrypt and/or ACP encoded programs for User Licensee's customers and
Retail Level Sublicensees and of (2) User Licensee's and Retail Level
Sublicensee's Retail Transaction Value during the month, together with the
amount of royalties payable thereon to Macrovision, in accordance with 6.3,
hereof;
(c) a description of all technical and functional problems with any of
the Products reported to User Licensee by any of User Licensee's customers,
user sublicensees or MPAA Rights Holders, during the month, together with the
steps taken by User Licensee to correct such technical and functional
problems; and
(d) income statement and balance sheets with sufficient level of
detail, only if negotiated service royalties of any EMDES market application
are either below ten (10) percent of User Licensee's Gross Revenue from the
sale of PhaseKrypt and/or ACP encoded programs to user Sublicensee's or below
five (5) percent of 'Retail Transaction Value'.
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4.7 Upon reasonable written notice from Macrovision, User Licensee
shall permit Macrovision's representatives to inspect User Licensee's
facilities and records, during normal business hours, in order to permit
Macrovision to confirm User Licensee's compliance with its obligations under
this Agreement. Without limiting the generality of this Article 4.7,
Macrovision shall have the right, at its own expense, to audit User
Licensee's books and records of account, in order to confirm the accuracy of
the reports submitted by User Licensee under Article 4.6 hereof, and the
amounts of royalties paid by User Licensee to Macrovision pursuant to Article
6.3 hereof; provided, however, that User Licensee shall reimburse Macrovision
for all costs and expenses incurred by Macrovision in connection with any
such audit which reveals an underpayment by User Licensee of royalties of
more than ten (10%) percent of the total royalties actually payable by User
Licensee hereunder during any calendar quarter.
4.8 User Licensee hereby grants to Macrovision, and Macrovision hereby
accepts from User Licensee, a non-exclusive, fully transferable, royalty-free
license to utilize all of the Resulting Technology in distribution, sale and
use of such products as Macrovision, in its sole discretion, shall deem
appropriate, throughout the world, except Japan.
Article 5: Macrovision's Obligations
5.1 Macrovision shall provide a two week training course in the
Macrovision Technology for not more than four (4) of Technology Licensee's
engineers, at Macrovision's facility in the United States. All such training
of Technology Licensee's engineers under this Article 5.1 shall be provided
by Macrovision at no additional charge to Technology Licensee; provided,
however, that Technology Licensee shall bear all travel, accommodation, meal,
employee per diem and other expenses incurred in connection with sending its
engineers to Macrovision's facility for training in accordance with this
Article 5.1.
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5.2 Upon completion of prototypes of the Products manufactured by
Technology Licensee in accordance with Article 3.3 hereof, Macrovision shall
provide Technology Licensee with such technical assistance in the
integration, system verification and testing of the Products as Technology
Licensee shall reasonably request. All such technical assistance under this
Article 5.2 shall be provided by Macrovision at no additional charge to
Technology Licensee; provided, however, that Macrovision shall have the right
to utilize the results of such integration, system, verification and testing,
in connection with the license of the Resulting Technology granted by
Technology Licensee to Macrovision pursuant to Article 3.12 of this
Agreement, for such purposes as Macrovision shall determine to be necessary
or appropriate for the exercise of its rights and the performance of its
obligations under that license to the Resulting Technology.
5.3 Macrovision shall assist User Licensee with contacts, negotiations
and agreements with MPAA Rights Holders to obtain permission to use movies or
other video material for use in User Licensee's Authorized EMDES Applications.
Article 6: Financial Considerations
6.1 In consideration for the rights and licenses granted by Macrovision
to User Licensee under this Agreement, User Licensee shall pay to Macrovision
an initial technology transfer fee in the amount of Five Hundred Thousand
United States Dollars (US$500,000.00). This technology transfer fee shall be
paid in two (2) installments, each in the amount of Two Hundred and Fifty
Thousand United States Dollars (US$250,000.00), the first of which shall be
paid no later than October 31, 1995, and the second of which shall be
paid within 30 days after Technology Licensee's commencement of manufacture
of the Products, pursuant to Article 3.2 hereof.
6.2 In consideration for Technology Licensee providing the design and
development of the Products, in addition to any payments by User Licensee to
Technology Licensee, Macrovision
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shall pay Technology Licensee a fee of One Hundred Thousand United States
Dollars (US$100,000.00). The fee shall be paid in two (2) installments, each
in the amount of Fifty Thousand Dollars (US$50,000), the first shall be within
30 days after Macrovision's receipt of the first installment of the initial
technology fee from User Licensee (as described in Article 6.1) and the
second which shall be paid within 30 days after Macrovision's receipt of the
second installment of the initial technology fee from User Licensee (as
described in Article 6.1).
6.3 As additional consideration for the rights and licenses granted by
Macrovision to User Licensee under this Agreement, User Licensee shall pay
to Macrovision the following royalties:
(a) Four (4) percent of User Licensee's Gross Revenues from the
distribution, lease or use of decoder Products; provided, however, that the
royalty payable under this Article 6.2(a) per each unit of the decoder
Products shall not be less than Three United States Dollars (US$3.00); and
(b) As service royalties a certain percent of User Licensee's Gross
Revenues from the sale of PhaseKrypt and/or ACP encoded programs to User
Licensee's customers or Retail Level Sublicensees or a certain percent of
'Retail Transaction Value', whichever is larger. These percents should be
mutually agreed by the parties prior to start of business of each specific
market application that the parties are to mutually agree.
(c) Under Article 2.5 User Licensee is authorized to start each
specific new market application as described in Article 1.6 only after mutual
agreement between Macrovision and User Licensee on the specific market and
the related service royalty unique to each specific market.
(d) As part of the exclusive license granted to User Licensee, User
Licensee may sub-license the technology and application identified in the
Technical Specification date January 20, 1995 (Appendix 5) to a new
Application Master Sublicensee on each specific new market application
basis. User Licensee agrees to share with Macrovision the initial up-front
technology sublicensing fee received from a new Application
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Master Sublicensee by User Licensee on 75/25 ratio, with Macrovision
receiving the 25% portion. No new application master sublicense will be
granted by Macrovision to said new Application Master Sublicensee without
such an up front fee paid in full by a new Application Master Sublicensee or
User Licensee. New Application Master Sublicensee is not authorized to start
each specific new market application as described in 1.6 unless mutual
agreement between Macrovision and Application Master Sublicensee on the
service royalty unique to each specific market is made as described in 6.3
(b) Additionally, four (4) percent of a new Application Master Sublicensee
gross revenues from the distribution, lease, or use of decoder products
should be paid to Macrovision either by User Licensee or by a new
Application Master Sublicensee provided that the royalty payable under this
Article 6.3(a) per each unit of the decoder products shall not be less than
Three United States Dollars (US$3.00).
(e) In the case of sublicensing from User Licensee to a new Application
Master Sublicensee on a particular market application basis, such a new
Application Master Sublicensee shall have to fulfill the same obligations as
the User Licensee, described in through 4.1 to 4.8.
(f) In the case of sublicensing from User License to a new Application
Master Sublicensee; Macrovision, User Licensee and Application Master
Sublicensee shall enter into a new three party agreement which defines the
obligations, and financial considerations of each party in line with this
agreement for the said new application.
6.4 All royalties payable by User Licensee or by Application Master
Sublicensee to Macrovision pursuant to Article 6.3 shall be paid on a monthly
basis, within ninety (90) days after the close of the calendar month to which
such royalties correspond. Unless otherwise specified by Macrovision in
writing, all such royalties, and all other payments hereunder, shall be paid
in United States Dollars. For purposes of determining the United
States Dollar amount of all royalties payable by User Licensee to Macrovision
hereunder during any month, Japanese Yen shall be
17
converted into United States Dollars at the Bank of Tokyo's published rate of
exchange between the Japanese Yen and the United States Dollar in effect on
the last day of that calendar month.
6.5 At Macrovision's option and sole discretion, Macrovision shall have
the right to waive its right to receive the royalties provided for in Article
6.3 of this Agreement. In consideration for Macrovision's waiver of such
royalties under this Article 6.5, User Licensee shall issue to Macrovision
that number of shares of User Licensee's common stock that represents ten
(10) percent of the total number of shares of User Licensee's common stock
outstanding after issuance of shares to Macrovision under this Article 6.5
In the event Macrovision elects its option under this Article 6.5,
Macrovision shall provide written notice thereof to User Licensee within 60
days after receiving a written report describing the results of a six month
trial of EMDES in the Karaoke room public exhibition. Macrovision shall have
the additional option of electing to waive its right to receive royalties
provided for in Article 6.3, within 60 days of the anniversary of receiving
the written report. This additional option shall be available annually
throughout the term of the agreement.
6.6 In the event that User Licensee or Application Master Sublicensee
is required to withhold any taxes on royalties payable to Macrovision
hereunder, in accordance with the laws and regulations of Japan, User
Licensee or Application Master Sublicensee shall furnish to Macrovision
official tax receipts or other evidence of payment of such withholding taxes,
on a timely basis, sufficient to permit Macrovision to demonstrate payment of
such taxes, in order to establish Macrovision's right to a credit for such
taxes against Macrovision's United States income tax liability. User Licensee
or Application Master Sublicensee shall provide Macrovision with all
assistance reasonably requested by Macrovision, in connection with any
application by Macrovision to qualify for the benefit of a reduced rate of
withholding
18
taxation, under the terms of Article 14 of the United States-Japan Income Tax
Treaty.
6.7 In the event that User Licensee or Application Master Sublicensee
shall fail to pay any amount payable to Macrovision under this Agreement
within 30 days of the date on which such payment is due, User Licensee or
Application Master Sublicensee shall pay interests to Macrovision on such
overdue amount at a rate of one and one-half (1-1/2) percent per month, or
the maximum rate permitted by law, whichever is less, until the overdue amount
has been paid in full by User Licensee or by Application Master Sublicensee.
Article 7: Warranties and Limitations of Liability
7.1 Macrovision hereby warrants to Technology Licensee and User Licensee
that Macrovision is the owner, or authorized licensee, of all rights, title
and interests in and to the Macrovision Technology, and all Intellectual
Property Rights related thereto. Macrovision further warrants that it has the
right to grant to Technology Licensee and User Licensee the rights and
licenses provided for in this Agreement.
7.2 Macrovision hereby warrants that the documents and materials
furnished to Technology Licensee pursuant to Article 2.2 hereof include all
of the Macrovision Technology and other Macrovision Confidential Information
that Technology Licensee should require for the design, development,
manufacture and distribution by Technology Licensee of the Products.
Macrovision makes no representation or warranty whatsoever, however, that
Technology Licensee will realize any benefit from such Macrovision Technology
or other Macrovision Confidential Information furnished to Technology
Licensee hereunder. In the event that Technology Licensee reasonably believes
that the documents and materials furnished by Macrovision to Technology
Licensee under Article 2.2 hereof are defective or incomplete, Technology
Licensee shall give written notice thereof to Macrovision, and Macrovision
shall correct any such defect or furnish any missing documents or materials
within 45 days after
19
receipt of Technology Licensee's written notice hereunder. Technology
Licensee acknowledges and agrees that the remedy provided for in this Article
7.2 shall constitute Technology Licensee's sole remedy in the event that any
of the documents and materials furnished by Macrovision under Article 2.2
hereof fail to conform to Macrovision's warranty, as set forth in this
Article 6.2.
7.3 THE OBLIGATIONS OF MACROVISION UNDER ARTICLES 7.1 AND 7.2 OF THIS
AGREEMENT ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES BY
MACROVISION WITH RESPECT TO THE MACROVISION TECHNOLOGY AND MACROVISION
CONFIDENTIAL INFORMATION FURNISHED BY MACROVISION TO TECHNOLOGY LICENSEE AND
USER LICENSEE HEREUNDER. EXCEPT AS SPECIFICALLY PROVIDED IN ARTICLES 7.1 AND
7.2 HEREOF, ALL SUCH MACROVISION TECHNOLOGY AND MACROVISION CONFIDENTIAL
INFORMATION ARE LICENSED TO TECHNOLOGY LICENSEE AND USER LICENSEE 'AS IS', AND
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ALL WARRANTIES WITH
RESPECT TO THE CONDITION OF PHASEKRYPT, THE DECODING PROCESS AND THE ENCODING
PROCESS, AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE ARE HEREBY DISCLAIMED AND EXCLUDED. UNDER NO CIRCUMSTANCES
SHALL MACROVISION BE LIABLE TO TECHNOLOGY LICENSEE OR USER LICENSEE OR ANY
OTHER PERSON, FIRM OR ENTITY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
INCIDENTAL DAMAGES ARISING FROM, OR ATTRIBUTABLE TO, THIS AGREEMENT AND/OR
MACROVISION'S PERFORMANCE HEREUNDER, EVEN IF MACROVISION IS ON NOTICE OF THE
POSSIBILITY OF SUCH DAMAGES.
7.4 Technology Licensee shall extend to its customers such warranties
with respect to the Products as Technology Licensee and shall determine to be
necessary or appropriate for the effective marketing and distribution of the
Products within User Licensee's Authorized EMDES Applications in Japan. Any
and all such warranties shall be solely in the name of, and shall constitute
the obligation solely of, Technology Licensee, and Technology Licensee shall
defend, indemnify and hold Macrovision harmless against any and all claims,
losses, damages and liabilities attributable to any misrepresentation by
Technology
20
Licensee of, or any breach by Technology Licensee of any Warrant with respect
to, any of the Products.
7.5 User Licensee shall extend to its customers such warranties with
respect to the Products as User Licensee and shall determine to be necessary
or appropriate for the effective marketing and distribution of the Products
within User Licensee's Authorized EMDES Applications in Japan. Any and all
such warranties shall be solely in the name of, and shall constitute the
obligation solely of, User Licensee, and User Licensee shall defend,
indemnify and hold Macrovision harmless against any and all claims, losses,
damages and liabilities attributable to any misrepresentation by User
Licensee of, or any breach by User Licensee of any warrant with respect to,
any of the Products.
Article 8: Confidential Information
8.1 No party hereto shall disclose to any other person, firm or entity
any other party's Confidential Information which is furnished, disclosed or
revealed to such party (the 'receiving party') pursuant to this Agreement. Any
such Confidential Information shall be used by the receiving party solely in
connection with its performance of its obligations under this Agreement, and
for no other purpose whatsoever. Each party shall take all appropriate steps,
and implement all appropriate procedures, to prevent the unauthorized use
and/or disclosure of any other party's Confidential Information, and each of
the receiving party's employees to whom any such Confidential Information is
made available hereunder shall have entered into a non-disclosure agreement
which prohibits the unauthorized use and/or disclosure of such Confidential
Information.
8.2 The receiving party's duty under Article 8.1 of this Agreement shall
not apply to the extent, but only to the extent, that the other party's
Confidential Information:
(a) passes into the public domain through no fault of the receiving party;
(b) is disclosed to the receiving party by a third party that is under
no obligation of non-disclosure to the other party;
21
(c) was known to the receiving party at the time of disclosure by the
other party; or
(d) is required to be disclosed under the laws, regulations or
governmental orders of the United States or Japan.
8.3 The parties' respective obligations under Article 8.1 hereof shall
survive the termination of this Agreement for any reason whatsoever. Within
30 days after the termination of this Agreement for any reason whatsoever,
Technology Licensee and User Licensee shall return to Macrovision all
documents and other materials in Technology Licensee's and User Licensee's
possession that contain, embody and/or disclose any of the Macrovision
Technology or any of Macrovision's Confidential Information; provided,
however, that nothing in this Article 8 shall affect Macrovision's rights
with respect to the Resulting Technology following the termination of this
Agreement.
Article 9: Macrovision's Intellectual Property Rights
9.1 Technology Licensee hereby acknowledges that Macrovision is the
owner of all rights, title and interests in and to all of the Macrovision
Technology, including all Intellectual Property Rights therein, and
Technology Licensee shall acquire no rights whatsoever with respect to any of
the Macrovision Technology or any such Intellectual Property Rights, except
as specifically provided in this Agreement. During the continuance of this
Agreement and thereafter, Technology Licensee shall take no action which, in
the reasonable opinion of Macrovision, may adversely affect or impair any of
Macrovision's rights, title or interests in and to the Macrovision
Technology or any Intellectual Property Rights therein.
9.2 Technology Licensee shall take all such action, and shall provide
Macrovision with all such assistance, as Macrovision shall reasonably
request, in order to perfect and protect Macrovision's rights, title and
interests in and to the Macrovision Technology and all Intellectual Property
Rights related thereto within Japan.
22
9.3 Technology Licensee shall immediately notify Macrovision of any and
all infringements of any of the Macrovision Technology, or any of the
Intellectual Property Rights related thereto, within Japan that come to the
attention of Technology License. Macrovision, as the owner of the Macrovision
Technology and those Intellectual Property Rights, shall be responsible for
taking any action, in the courts, administrative agencies or otherwise, to
prevent any such infringement, and Technology Licensee shall provide
Macrovision with such assistance as Macrovision shall reasonably request in
connection with any such action.
9.4 User Licensee hereby acknowledges that Macrovision is the owner of
all rights, title and interests in and to all of the Macrovision Technology,
including all Intellectual Property Rights therein, and User Licensee shall
acquire no rights whatsoever with respect to any of the Macrovision
Technology or any such Intellectual Property Rights, except as specifically
provided in this Agreement. During the continuance of this Agreement and
thereafter, User Licensee shall take no action which, in the reasonable
opinion of Macrovision, may adversely affect or impair any of Macrovision's
rights, title or interests in and to the Macrovision Technology or any
Intellectual Property Rights therein.
9.5 User Licensee shall take all such action, and shall provide
Macrovision with all such assistance, as Macrovision shall reasonably
request, in order to perfect and protect Macrovision's rights, title and
interests in and to the Macrovision Technology and all Intellectual Property
Rights related thereto within Japan.
9.6 User Licensee shall immediately notify Macrovision of any and all
infringements of any of the Macrovision Technology, or any of the
Intellectual Property Rights related thereto, within Japan that come to the
attention of License. Macrovision, as the owner of the Macrovision Technology
and those Intellectual Property Rights, shall be responsible for taking any
action, in the courts, administrative agencies or otherwise, to prevent any
23
such infringement, and User Licensee shall provide Macrovision with such
assistance as Macrovision shall reasonably request in connection with any
such action.
Article 10 Indemnification
10.1 Mutual Indemnification
(a) Macrovision's Indemnification of Technology Licensee.
Macrovision will indemnify and hold harmless Technology Licensee from
and against any and all damages, claims, costs or other liabilities,
including costs and reasonable attorney's fees that arise from or out of or
are in connection with:
(i) any third party claims that the Macrovision Technology infringes any
patents, copyright or other proprietary rights (which claims, the parties
understand and agree, shall not constitute incidental or consequential
damages for purposes of this Agreement). Notwithstanding the foregoing,
Macrovision shall not be obligated to indemnify Technology Licensee for any
claim described in this Section 10.1(a)(i) due to any modification of the
Macrovision Technology or the combination of the Macrovision Technology with
any other equipment, software or hardware if Macrovision can demonstrate that
such claim would have been avoided in the absence of such modification or
combination; or
(ii) a breach of any of its obligations thereunder, including without
limitation, Macrovision's representations and warranties of ownership and
technology operation set forth in Section 7.1 and 7.2
(b) Macrovision's Indemnification of User Licensee.
Macrovision will indemnify and hold harmless User Licensee from and
against any and all damages, claims, costs or other liabilities, including
costs and reasonable attorney's fees that arise from or out of or are in
connection with:
(i) any third party claims that the Macrovision Technology infringes any
patents, copyright or other proprietary rights (which claims, the parties
understand and agree, shall not
24
constitute incidental or consequential damages for purposes of this
Agreement). Notwithstanding the foregoing, Macrovision shall not be obligated
to indemnify User Licensee for any claim described in this Section 10.1(b)(i)
due to any modification of the Macrovision Technology or the combination of
the Macrovision Technology with any other equipment, software or hardware if
Macrovision can demonstrate that such claim would have been avoided in the
absence of such modification or combination; or
(ii) a breach of any of its obligations thereunder, including without
limitation, Macrovision's representations and warranties of ownership and
technology operation set forth in Section 7.1 and 7.2.
(c) Technology Licensee's Indemnification of Macrovision.
Technology Licensee will indemnify and hold harmless Macrovision and its
Affiliates from and against any and all damages that arise from or out of or
are in connection with a breach of any of its obligations thereunder.
(d) User Licensee's Indemnification of Macrovision.
User Licensee will indemnify and hold harmless Macrovision and its
Affiliates from and against any and all damages that arise from or out of or
are in connection with a breach of any of its obligations thereunder.
(e) Notification. If any claim for indemnification arises under this
Section 10.1, the indemnified party shall notify the indemnifying party and
shall consult with and keep the indemnifying party reasonably informed with
respect to the defense, compromise, settlement, resolution or other
disposition of any such claim. Upon the indemnifying party's request, which
requests may be subject to a reservation of rights, which must be in writing
and received by indemnified party within 30 days of the notification, the
indemnifying party shall be entitled to control the defense of such claim by
counsel of the indemnifying party's choosing and at the indemnifying party's
sole expense. In this case, the indemnified party shall reasonably cooperate
with the indemnifying party in connection with the defense of any
25
such claim, provided that such cooperation is not adverse to the indemnified
party's legal or business interest, as reasonably determined by the
indemnified party and promptly communicated to the indemnifying party upon
such determination. In turn, the indemnifying party shall promptly inform the
indemnified party of all material aspects of such defense, compromise, any
proposed settlement, resolution or other disposition of any such claim. Upon
the indemnified party's reasonable request, the indemnifying party shall be
entitled to participate fully and cooperatively in the defense of any such
claim at its own expense and with counsel of its choosing. No party shall
admit any liability with respect to, or settle, compromise, resolve or
discharge any such claim without the other party's prior written consent,
which consent shall not be unreasonably withheld in the case of any
settlement, resolution, compromise or discharge involving only the payment of
money.
10.2 Alleged Infringement: Discontinuance of Use.
(a) If any legal action alleging patent, copyright or other
proprietary rights infringement is commenced, or any threat thereof is made,
against Macrovision or Technology Licensee with respect to the use of the
Macrovision Technology, Macrovision shall have the right, but not the
obligation, to (i) procure for the benefit of Technology Licensee, at
Macrovision's expense, the right or license to any technology alleged to have
been infringed and/or (ii) modify the Macrovision Technology (at
Macrovision's sole cost and expense) such that the Macrovision Technology (as
modified) is no longer subject to such legal action or threat of legal action
(but all of Macrovision's obligations set forth in this Agreement as to the
Macrovision Technology shall apply to such modified Macrovision Technology);
and
(b) If any legal action alleging patent, copyright or other
proprietary rights infringement is commenced against Macrovision or
Technology Licensee with respect to the use of the Macrovision Technology
then Macrovision shall have the right to request in writing that Technology
Licensee cease the use of the Macrovision Technology. As of a specified date,
which date shall
26
be no earlier than 60 days after the date on which Technology Licensee
receives the notice in response, Technology Licensee shall have the option to
continue use, after the cessation date, of the Macrovision Technology and be
indemnified by Macrovision pursuant to Section 10.1 (a) of this Agreement;
provided, however, such indemnification shall be applicable only for damages
arising from or out of or in connection with events occurring on or before
the cessation date.
(c) If any legal action alleging patent, copyright or other
proprietary rights infringement is commenced, or any threat thereof is made,
against Macrovision or User Licensee with respect to the use of the
Macrovision Technology, Macrovision shall have the right, but not the
obligation, to (i) procure for the benefit of User Licensee, at Macrovision's
expense, the right or license to any technology alleged to have been
infringed and/or (ii) modify the Macrovision Technology (at Macrovision's
sole cost and expense) such that the Macrovision Technology (as modified) is
no longer subject to such legal action or threat of legal action (but all of
Macrovision's obligations set forth in this Agreement as to the Macrovision
Technology shall apply to such modified Macrovision Technology); and
(d) If any legal action alleging patent, copyright or other
proprietary rights infringement is commenced against Macrovision or User
Licensee with respect to the use of the Macrovision Technology then
Macrovision shall have the right to request in writing that User Licensee
cease the use of the Macrovision Technology. As of a specified date, which
date shall be no earlier than 60 days after the date on which Technology
Licensee receives the notice in response, Technology Licensee shall have the
option to continue use, after the cessation date, of the Macrovision
Technology and be indemnified by Macrovision pursuant to Section 10.1 (a) of
this Agreement; provided, however, such indemnification shall be applicable
only for damages arising from or out of or in connection with events
occurring on or before the cessation date.
10.3 Cap on Macrovision Damages.
27
(a) Notwithstanding anything to the contrary in this Agreement, in no
event shall Macrovision be liable for monetary damages in connection with any
breach of this Agreement (other than willful misconduct or breaches arising
from fraud, for which misconduct or breaches there shall be no limitation on
damages) in excess of the aggregate amount of all money received by
Macrovision from Technology Licensee in connection with this Agreement.
(b) Notwithstanding anything to the contrary in this Agreement, in no
event shall Macrovision be liable for monetary damages in connection with any
breach of this Agreement (other than willful misconduct or breaches arising
from fraud, for which misconduct or breaches there shall be no limitation on
damages) in excess of the aggregate amount of all money received by
Macrovision from User Licensee in connection with this Agreement.
Article 11: Security and Export Control
11.1 The parties hereby acknowledge and agree that this Agreement is
subject to the Export Regulations of the United States Department of State.
Article 12: Duration and Termination
12.1 This Agreement shall enter in full force and effect on the
Effective Date hereof, and shall remain in force for a period of 5 years from
the Effective Date, unless terminated earlier in accordance with the terms
and conditions of this Article 12. The parties agree to negotiate a renewal
of the present agreement during the six month period prior to the expected
termination date.
12.2 In the event that any party hereto (the 'breaching party') shall
commit any breach or default of any of its obligations under this Agreement,
the non-breaching party shall give to the breaching party written notice of
such breach or default, and shall request that such breach or default be
cured immediately. In the event that the breaching party fails to cure such
breach or default within thirty (30) days after the date of
28
notice of such breach or default, the non-breaching party may terminate this
Agreement by giving written notice of termination to the breaching party.
Termination of this Agreement pursuant to this Article 12.2 shall not affect
or impair the non-breaching party's right to pursue any legal remedy,
including, but not limited to, the right to recover damages, for any harm
suffered or incurred as a result of such breach.
12.3 In addition to the rights of termination provided in Articles 8.3
and 12.2 hereof, Macrovision shall have the right to terminate this Agreement
upon giving written notice of termination to Technology Licensee, upon the
occurrence of any of the following events:
(a) Technology Licensee enters into bankruptcy (hasan), composition
(wagi), reorganization (Kosei), liquidation (seison), or arrangement (seiri)
proceedings, is declared insolvent, makes an assignment for the benefit of
creditors, or suffers the appointment of a receiver or trustee over all or
substantially all of its assets;
(b) The United States Government fails to issue, or revokes, any export
license or other approval required for the performance of this Agreement;
(c) Any law, regulation or governmental order is enacted or issued in
Japan which has a materially adverse effect on Macrovision's rights, title
and interests in and to the Macrovision Technology and/or the Intellectual
Property Rights related thereto; or
(d) Technology Licensee breaches its obligations under Article 7
hereof, relating to the nondisclosure of Macrovision's Confidential
Information, or under Article 8 hereof, relating Macrovision's Intellectual
Property Rights.
12.4 Upon the expiration or termination of this Agreement, Technology
Licensee shall immediately cease all use of the Macrovision Technology and
all Macrovision Confidential Information, and shall immediately cease all
manufacture and distribution of the Products. The expiration or termination
of this Agreement for any reason whatsoever shall not relieve
29
Technology Licensee of its obligations (i) of non-disclosure with respect to
Macrovision's Confidential Information under Article 7 hereof; (ii) with
respect to Macrovision's Intellectual Property Rights, under Article 8
hereof; (iii) to indemnify an hold Macrovision harmless under Articles 9.2
and 9.3 hereof; and (iv) with respect to United States export control
requirements.
12.5 The expiration or termination this Agreement shall not affect any
of Macrovision's rights or obligations with respect to the Resulting
Technology, licensed to Macrovision under Article 3.09 hereof. Except as
provided in this Article 12.5, upon expiration or termination of this
Agreement, Macrovision shall have no further obligations whatsoever hereunder
to Technology Licensee.
12.6 In addition to the rights of termination provided in Articles 9.2
and 12.2 hereof, Macrovision shall have the right to terminate this Agreement
upon giving written notice of termination to User Licensee, upon the
occurrence of any of the following events:
(a) User Licensee enters into bankruptcy (hasan), composition (wagi),
reorganization (kosei), liquidation (seison), or arrangement (seiri)
proceedings, is declared insolvent, makes an assignment for the benefit of
creditors, or suffers the appointment of a receiver or trustee over all or
substantially all of its assets;
(b) The United States Government fails to issue, or revokes, any export
license or other approval required for the performance of this Agreement;
(c) Any law, regulation or governmental order is enacted or issued in
Japan which has a materially adverse effect on Macrovision's rights, title
and interests in and to the Macrovision Technology and/or the Intellectual
Property Rights related thereto; or
(d) User Licensee breaches its obligations under Article 7 hereof,
relating to the nondisclosure of Macrovision's Confidential Information, or
under Article 8 hereof, relating Macrovision's Intellectual Property Rights.
30
(e) User Licensee repeatedly fails to make payments due Macrovision, as
per Article 6, on a timely basis.
12.7 Upon the expiration or termination of this Agreement, User
Licensee shall immediately cease all use of the Macrovision User and all
Macrovision Confidential Information, and shall immediately cease all
manufacture and distribution of the Products. The expiration or termination
of this Agreement for any reason whatsoever shall not relieve User Licensee
of its obligations (i) to pay any and all royalties which have accrued under
Article 5.2 hereof, but which remain unpaid as of the date of expiration or
termination; (ii) of non-disclosure with respect to Macrovision's
Confidential Information under Article 7 hereof; (iii) with respect to
Macrovision's Intellectual Property Rights, under Article 8 hereof; (iv) to
indemnify and hold Macrovision harmless under Articles 9.4 and 9.5 hereof;
and (v) with respect to United States export control requirements.
12.8 The expiration or termination this Agreement shall not affect any
of Macrovision's rights or obligations with respect to the Resulting User,
licensed to Macrovision under Article 3.11 hereof. Except as provided in this
Article 11.5, upon expiration or termination of this Agreement, Macrovision
shall have no further obligations whatsoever hereunder to User Licensee.
Article 13: Compliance with Applicable Laws
13.1 In the exercise of their respective rights, and the performance of
their respective obligations under this Agreement, each party shall comply
with all applicable laws, regulations and governmental orders of the United
States and Japan. Each party hereby acknowledges and agrees that the
Macrovision Technology, and all Macrovision Confidential Information directly
related thereto, are subject to United States export controls, as provided in
Article 10 hereof. In conformance with such United States export controls,
Macrovision will make all commercially reasonable efforts to obtain all
required United States export licenses and other governmental approvals
necessary or appropriate for the delivery of the Macrovision Technology and
31
such Macrovision Confidential Information to Technology Licensee, or User
Licensee, but Macrovision shall have no liability or responsibility hereunder
to Technology Licensee or User Licensee in the event that, despite
Macrovision's commercially reasonable efforts, the United States Government
declines to issue any or all such United States export licenses and other
approvals.
13.2 Technology Licensee shall, at its own expense, obtain and maintain
in full force and effect at all times during the continuance of this
Agreement, all licenses, permits, authorizations and government approvals,
and shall make all registrations, notifications, filings and reports to all
governmental agencies, required under any applicable law, regulation or
governmental order of Japan for Technology Licensee to exercise its rights
and perform its obligations under this Agreement. In the event that any such
license, permit, authorization or approval, or the approval of any such
registration, notification, filing or report, is conditioned upon an
amendment or modification to this Agreement which is unacceptable to
Macrovision, Macrovision shall have the right to terminate this Agreement
without any further obligations hereunder to Technology Licensee, by giving
written notice of termination to Technology Licensee. Macrovision shall have
the right to participate in the procedures for obtaining any such licenses,
permits, authorizations or approvals in Japan, and shall have the right to
inspect any document to be submitted to any governmental authority in
connection with any such registration, notification, filing or report, or any
application for any such license, permit, authorization or approval, prior to
its submission to the competent Japanese Government agency.
13.3 User Licensee shall, at its own expense, obtain and maintain in
full force and effect at all times during the continuance of this Agreement,
all licenses, permits, authorizations and government approvals, and shall
make all registrations, notifications, filings and reports to all
governmental agencies, required under any applicable law, regulation or
governmental order of Japan for User Licensee to
32
exercise its rights and perform its obligations under this Agreement. In the
event that any such license, permit, authorization or approval, or the
approval of any such registration, notification, filing or report, is
conditioned upon an amendment or modification to this Agreement which is
unacceptable to Macrovision, Macrovision shall have the right to terminate
this Agreement without any further obligations hereunder to User Licensee, by
giving written notice of termination to User Licensee. Macrovision shall have
the right to participate in the procedures for obtaining any such licenses,
permits, authorizations or approvals in Japan, and shall have the right to
inspect any document to be submitted to any governmental authority in
connection with any such registration, notification, filing or report, or any
application for any such license, permit, authorization or approval, prior to
its submission to the competent Japanese Government agency.
13.4 Each party hereto shall execute such documents, and shall provide
such assistance as is reasonably requested by the other party, in connection
with the performance by such other party of its obligations under Article
13.1, Article 13.2, or Article 13.3, as the case may be.
Article 14: General Provisions
14.1 Assignment: Technology Licensee and User Licensee shall not have
the right or the power to assign or sublicense any of its rights, or
delegate or subcontract the performance of any of its obligations, under this
Agreement without the prior written authorization of Macrovision.
14.2 Independent Contractors: In the exercise of their respective
rights, and the performance of their respective obligations, the parties are,
and shall remain, independent contractors. Nothing in this Agreement shall be
construed to constitute either party as the agent of the other party for any
purpose whatsoever, and neither party shall bind, or attempt to bind, the
other party to any contract or the performance of any obligation, or
represent to any third party that it is authorized
33
to enter into any contract or binding obligation on behalf of the other party
hereto.
14.3 Notices: All notices, reports and other communications between
the parties hereunder shall be sent by registered mail, postage prepaid and
return receipt requested, or by facsimile, with a confirmation copy sent by
registered mail within two (2) days after the date of facsimile transmission,
addressed as follows:
Macrovision: Macrovision Corporation
1341 Orleans Drive
Sunnyvale, CA 94089
U.S.A.
Attention: Vice President Finance and CFO
Fax: (408) 743-8610
Technology Licensee: Victor Technobrain Co., Ltd.
804 Futowo-cho, Kohoku-ku, Yokohama-shi
Kanagawa-ken 222, Japan
Attention: President
Fax: 045-546-5940
User Licensee: Kabushiki-Kaisha, Video Bunka Kenkyu-sho
2-13-7 Minami-Aoyama
Minato-ku, Tokyo, Japan
Attention: President
Fax: 03-5474-2634
34
All notices, reports and other communications shall be deemed received:
(i) if sent by registered airmail, 10 days after the date of mailing; and
(ii) if sent by facsimile, twenty-four (24) hours after the date and time of
transmission.
14.4 Governing Law: This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of California, U.S.A.,
excluding conflicts of laws rules.
14.5 Arbitration: Any dispute between the parties arising out of, or
relating to, the validity, construction, interpretation or performance of
this Agreement that cannot be resolved amicably shall be submitted to binding
arbitration, to be held in San Francisco, California, U.S.A., in accordance
with the rules of the American Arbitration Association. Any such arbitration
proceeding shall be conducted before an arbitration panel composed of three
(3) arbitrators, one (1) member of which shall be designated by each of the
parties and the third of which shall be designated by the other two (2)
arbitrators. In any arbitration proceeding under this Article 13.5, the
decision and award of the arbitrators shall (i) be in writing; (ii) state the
reasons therefor; (iii) be based solely on the terms and conditions of this
Agreement, as interpreted under the laws of the State of California, U.S.A.;
and (iv) shall be final and binding upon the parties. The decision and award
of the arbitrators in any such arbitration proceeding may be enforced in any
court of competent jurisdiction.
14.6 Injunctive Relief: Notwithstanding the provisions of Article
14.15 hereof, Macrovision may seek relief in any court of competent
jurisdiction, including, but not limited to, the courts of Japan, in order to
prevent the misappropriation or unauthorized use, disclosure or infringement
of any of Macrovision's Intellectual Property Rights and/or Macrovision's
Confidential Information.
14.7 Entire Agreement and Amendments: This Agreement constitutes the
entire agreement between the parties, and supersedes all prior agreements,
understandings and other
35
communications between the parties with respect to the subject matter hereof.
No modification or amendment to this Agreement shall be binding upon the
parties unless in writing and executed by the duly authorized representatives
of the parties.
14.8 Waivers: The failure of either party to assert any of its rights
hereunder, including, but not limited to, the right to terminate this
Agreement in the event of a breach or default by the other party hereto,
shall not be deemed to constitute a waiver by that party thereafter to
enforce each and every provision of this Agreement in accordance with its
terms.
14.9 Governing Language: This Agreement is made in the English
language. In the event that a translation of this Agreement into any other
language is made, that translation shall be for convenience only, and in the
event of any conflict between the English language version of this Agreement
and any translation hereof, the English language version shall be the
controlling document.
14.10 Counterparts: This Agreement may be executed in several
duplicate originals, each of which shall be deemed to constitute an original,
but all of which shall constitute one and the same instrument.
14.11 Headings: The subject headings of this Agreement are included
for purposes of convenience only, and shall not affect the construction or
interpretation of any provision hereof.
36
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives, this day of September,
1995.
Victor Technobrain Co., Ltd. Kabushiki-Kaisha,
Video Bunka Kenkyu-sho
by /s/ illegible by /s/ illegible
--------------------------------- ---------------------------------
Macrovision Corporation
by /s/ John O. Ryan
---------------------------------
37
AMENDMENT NUMBER ONE TO
LICENSE AGREEMENT
This amendment to the license agreement ('agreement') dated June 30th, 1996,
between MACROVISION CORPORATION ('MACROVISION'), VICTOR TECHNOBRAIN CO., LTD.
('Technology Licensee') and KABUSHIKI-KAISHA VIDEO BUNKA KENKYU-SHO ('User
Licnesee') amends the agreement and amendment number one as follows:
1. Article 6.1 is hereby deleted in its entirety, and replaced as follows:
'In consideration of the rights and licenses granted by Macrovision to
User Licensee under this agreement, User Licenseee shall pay to
Macrovision an initial technology transfer fee in the amount of Five
Hundred Thousand United States Dollars (US$500,000.00) as follows:
1.1 First installment of Two Hundred and Fifty Thousand United States
Dollars (US$250,000.00) shall be paid no later than October 31,
1995, (this amount has been paid).
1.2 Second installment of Fifty Thousand United States Dollars
(US$50,000.00) shall be paid no later than July 24, 1996.
1.3 Third installment of Fifty Thousand United States Dollars
(US$50,000.00) shall be paid no later than September 24, 1996.
1.4 Fourth installment of Fifty Thousand United States Dollars
(US$50,000.00) shall be paid no later than November 24, 1996.
1.5 Fifth installment of Fifty Thousand United States Dollars
(US$50,000.00) shall be paid no later than January 24, 1997.
1.6 Sixth installment of Fifty Thousand United States Dollars
(US$50,000.00) shall be paid no later than March 24, 1997.'
2. Article 6.2 is hereby deleted in its entirety, and replaced as follows:
'In consideration of Technology Licensee providing the design and
development of the Products, in addition to any payments by User Licensee
to Technology Licensee, Macrovision shall pay Technology Licensee a fee
of One Hundred Thousand United States Dollars (US$100,000.00). This fee
shall be paid in two (2) installments each in the amount of Fifty
Thousand United States Dollars (US$50,000.00), the first within thirty
(30) days after Macrovision's receipt of the first installment of the
initial technology fee from User Licensee (as described in Article 6.1)
and the second within thirty (30) days after Macrovision's receipt of the
last (sixth) installment of the initial technology fee from User Licensee
(as described in Article 6.1).'
3. Article 6.3(a) is hereby deleted in its entirety, and replaced as
follows: 'The royalty payable per unit of the decoder Products shall be
Three United States Dollars (US$3.00), only exceptionally limited to the
units which shall start to be leased from User Licensee to Karaoke
studios for one year from May 25, 1996, through May 24, 1997. However,
after May 24, 1997, the royalty payable per unit of the decoder Products
shall be the
1
greater of four percent (4%) of User Licensee's Gross Revenues from the
distribution, lease or use of decoder Products or Three United States
Dollars (US$3.00).'
4. Appendix 3 is hereby deleted in its entirety, and replaced as follows:
'SPECIFIC MARKET APPLICATION AGREEMENT'
-Karaoke room public exhibition-
Macrovision, Technology Licensee, and User Licensee mutually agree to
initiate Karaoke room public exhibition application of EMDES, on a full
fledged basis, starting May 25, 1996.
The service royalties to be paid from User Licensee to Macrovision for
Karaoke room public exhibition application shall be as follows:
(I) If the sale of PhaseKrypt encoded programs to User Licensee's customers
(individual Karaoke studios where licensed decoder Products are
installed) is not earlier than the home video window, the service
royalties will be calculated as follows:
(a) When the installed decoder Product base is less than 1,000 units,
3.3% of wholesale minimum guarantee price of PhaseKrypt encoded
cassettes charged to Karaoke studios and 3.3% of each wholesale
Pay-Per-View transaction price of the PhaseKrypt encoded cassette
charged to Karaoke studios;
(b) When the installed decoder Product bases is greater than 1,000
units and less than 2,000 units, 4.5% of wholesale minimum
guarantee price of PhaseKrypt encoded cassettes charged to Karaoke
studios and 4.5% of each wholesale Pay-Per-View transaction price
of the PhaseKrypt encoded cassettes charged to Karaoke studios;
(c) When the installed decoder Product base is greater than 2,000 units
and less than 4,000 units, 5.5% of wholesale minimum guarantee
price of PhaseKrypt encoded cassettes charged to Karaoke studios
and 5.5% of each wholesale Pay-Per-View transaction price of the
PhaseKrypt encoded cassettes charged to Karaoke studios;
(d) When the installed decoder Product base is greater than 4,000 units
and less than 8,000 units, 6.2% of wholesale minimum guarantee
price of PhaseKrypt encoded cassettes charged to Karaoke studios
and 6.2% of each wholesale Pay-Per-View transaction price of the
PhaseKrypt encoded cassettes charged to Karaoke studios;
(e) When the installed decoder Product base is greater than 8,000
units, 6.6% of wholesale minimum guarantee price of PhaseKrypt
encoded cassettes charged to Karaoke studios and 6.6% of
each wholesale Pay-Per-View transaction price of the PhaseKrypt
encoded cassettes charged to Karaoke studios;
(II) If the sale of PhaseKrypt encoded programs to User Licensee's customers
(individual Karaoke studios where licensed decoder Products are
installed) is earlier than the home video window, the service royalties
shall be determined before such earlier than home
2
video window is made available to Karaoke room public exhibition
application based on good faith negotiation between Macrovision and User
Licensee.
5. All other terms of the agreement not specifically mentioned herein
remain unchanged. Defined terms used herein and not expressly defined in
this amendment have the meaning attributed to them in the agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment Number One to
License Agreement to be executed by their duly authorized representatives,
this 30th day of September, 1996.
VICTOR TECHNOBRAIN CO., LTD. KABUSHIKI-KAISHA
VIDEO BUNKA KENKYU-SHO
By: /s/ Akira Hirota By: /s/ Takaaki Iwamoto
---------------------------------- -------------------------------
(Authorized Signature) (Authorized Signature)
Name: Akira Hirota Name: Takaaki Iwamoto
-------------------------------- -----------------------------
(Print) (Print)
Title: President Title: President
-------------------------------- -----------------------------
(Print) (Print)
MACROVISION CORPORATION
By: /s/ Robert J. Netter, Jr.
----------------------------------
(Authorized Signature)
Name: Robert J. Netter, Jr.
--------------------------------
(Print)
Title: Vice President Finance and CEO
--------------------------------
(Print)
3
AMENDMENT NUMBER TWO TO
LICENSE AGREEMENT
This amendment to the license agreement ('agreement') dated September 30th,
1996, between MACROVISION CORPORATION ('MACROVISION'), VICTOR TECHNOBRAIN
CO., LTD. ('Technology Licensee') and KABUSHIKI-KAISHA VIDEO BUNKA KENKYU-SHO
('User Licnesee') amends the agreement and amendment number one as follows:
1. Article 1 of Amendment Number One to License Agreement is hereby deleted
in its entirety, and replaced as follows: 'In consideration of the rights
and licenses granted by Macrovision to User Licensee under this
agreement, User Licensee shall pay to Macrovision an initial technology
transfer fee in the amount of Five Hundred Thousand United States Dollars
(US$500,000.00) as follows:
1.1 First installment of Two Hundred and Fifty Thousand United States
Dollars (US$250,000.00) shall be paid no later than October 31,
1995, (this amount has been paid).
1.2 Second installment of Fifty Thousand United States Dollars
(US$50,000.00) shall be paid no later than July 24, 1996.
1.3 Third installment of Fifty Thousand United States Dollars
(US$50,000.00) shall be paid no later than November 24, 1996.
1.4 Fourth installment of Fifty Thousand United States Dollars
(US$50,000.00) shall be paid no later than December 24, 1996.
1.5 Fifth installment of Fifty Thousand United States Dollars
(US$50,000.00) shall be paid no later than February 24, 1997.
1.6 Sixth installment of Fifty Thousand United States Dollars
(US$50,000.00) shall be paid no later than April 24, 1997.'
2. Articles 12.6 of License Agreement is hereby deleted in its entirety and
replaced as follows:
2.1 User Licensee fails to make any payment due Macrovision as per
Article 6 on a timely basis.
3. All other terms of the agreement not specifically mentioned herein remain
unchanged. Defined terms used herein and not expressly defined in this
amendment have the meaning attributed to them in the agreement.
1
IN WITNESS WHEREOF, the parties have caused this Amendment Number One to
License Agreement to be executed by their duly authorized representatives,
this 30th day of September, 1996.
VICTOR TECHNOBRAIN CO., LTD. KABUSHIKI-KAISHA
VIDEO BUNKA KENKYU-SHO
By: /s/ Akira Hirota By: /s/ Takaaki Iwamoto
---------------------------------- -------------------------------
(Authorized Signature) (Authorized Signature)
Name: Akira Hirota Name: Takaaki Iwamoto
-------------------------------- -----------------------------
(Print) (Print)
Title: President Title: President
-------------------------------- -----------------------------
(Print) (Print)
MACROVISION CORPORATION
By: /s/ Victor Viegas
----------------------------------
(Authorized Signature)
Name: Victor Viegas
--------------------------------
(Print)
Title: CFO
--------------------------------
(Print)
License Agreement - Macrovision Inc., Victor Technobrain Co. Ltd. and Kabushiki-Kaisha, Video Bunka Kenkyu-sho (Video Cultural Institute Inc.)(VCII)
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