Common use of Earned Royalty Clause in Contracts

Earned Royalty. ImmuMetrix will pay Stanford earned royalties (Y%) on Net Sales as follows: ImmuMetrix or its sublicensee will pay Stanford a [***]% royalty on Net Sales of each Licensed Product sold. Earned royalties paid to third parties will offset Stanford earned royalties at a rate [***]% for each [***]% that ImmuMetrix pays to third parties provided that the third party technology for which ImmuMetrix pays earned royalties is reasonably useful and the earned royalty rate ImmuMetrix pays them is commercially reasonable for the type of technology and such license is reasonably useful to make, use and sell the Licensed Product, licensed hereunder. In no event shall the royalty be reduced by more than [***]%. In the event that a Licensed Product is sold in combination with one or more other products or components for which no royalty would be due hereunder if sold separately (“Other Product(s)”), Net Sales from such sales shall be calculated by multiplying the net selling price of the combination product by the fraction A/(A + B), where A is the average gross selling price during the applicable calendar quarter of the Licensed Product sold separately and B is the average gross selling price during the applicable calendar quarter of the Other Product(s). In the event that separate sales of the Licensed Product and/or of the Other Product(s) were not made during the applicable calendar quarter, then the Net Sales on the combination product shall be as reasonably as mutually agreed upon by Stanford and ImmuMetrix in good faith, between such Licensed Product and such Other Product(s), based upon their relative importance and proprietary protection. In the event that Stanford reasonably believes that the average gross selling price during the applicable calendar quarter of the Licensed Product sold separately and the Other Product(s) sold separately do not accurately reflect the relative importance and proprietary protection of the Licensed Product and such Other Product(s) for the purposes of determining Net Sales of a combination product, Stanford may provide ImmuMetrix notice thereof and the parties thereafter shall reasonably discuss and agree in good faith upon an alternative allocation with respect thereto. If the parties cannot so agree, the matter will be resolved by arbitration in accordance with Article 17. S09-367 : GWK For clarity, ImmuMetrix’s right to offset earned royalties for third party technology as set forth above shall not apply with respect to third party technology reasonably useful to make, use and sell a Licensed Product that is a combination product for which Net Sales is calculated as set forth in the preceding paragraph to the extent such third party technology is only useful for the making, using or selling the Other Product(s) in such combination product separately.