* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
LICENSE AGREEMENT
THIS AGREEMENT is effective upon the date of last signature by the
parties. Net Perceptions, Inc. (hereafter COMPANY), a corporation of
Delaware, that has a principal place of business at 0000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxxxx, XX 00000. and the Regents of the University of
Minnesota (hereafter UNIVERSITY), a non-profit corporation of the State
of Minnesota, having an office at 0000 Xxxxxxxxxx Xxxxxx X.. Xxxxx 000,
Xxxxxxxxxxx, XX 00000, agree as follows:
ARTICLE I - INTRODUCTION
1.1 COMPANY and the UNIVERSITY are occasionally referred to as "parties"
in singular or plural usage us indicated by the context.
1.2 Terms in this agreement which appear in upper case letters, other than
the names of the parties and article headings, have the meanings given
in Article II.
1.3 The UNIVERSITY possesses certain information, knowledge, and
intellectual property rights relating to an information filtering
technique based upon individual preferences developed by and under the
direction of Professors Xxxx Xxxxx and Xxxxxx Xxxxxxx comprising the
University of Minnesota Docket Number 96119.
1.4 COMPANY desires to obtain a license to further develop this
technology.
1.5 The UNIVERSITY and COMPANY agree to the following terms and conditions
in order to; develop such information and knowledge, utilize it in the
public interest and enter into a license agreement.
ARTICLE II - DEFINITIONS
2.1 TECHNOLOGY shall mean the inventions, methods, information, processes,
documentation, know-how and software relating to the "GroupLens"
system for personalized screening of information developed by or under
the direction of Xxxxxxxxx Xxxx Xxxxx or Xxxxxx Xxxxxxx which is
described in the attached invention disclosure form and attachments
(Appendix B).
2.2 IMPROVEMENTS shall mean any subsequent developments relating to
collaborative filtering developed by or under the direction of
Xxxxxxxxx Xxxx Xxxxx or Xxxxxx Xxxxxxx, provided that such professor
is acting within his employment at the UNIVERSITY.
2.3. U.S. APPLICATIONS shall mean any U.S. patent applications that may be filed
on TECHNOLOGY or IMPROVEMENTS, and any continuations,
continuations-in-part, and divisions of these applications.
2.4 FOREIGN APPLICATIONS shall mean any foreign patent applications that
correspond to U.S. APPLICATIONS.
2.5 U.S. PATENTS shall mean any patent that issues on U.S. APPLICATIONS,
including any reissues and reexaminations of these patents.
2.6 FOREIGN PATENTS shall mean any patents issuing on FOREIGN APPLICATIONS.
2.7 APPLICATIONS shall mean U.S. APPLICATIONS and FOREIGN APPLICATIONS.
2.8 PATENTS shall mean U.S. PATENTS and FOREIGN PATENTS.
2.9 PRODUCTS shall mean any product which incorporates the TECHNOLOGY or
IMPROVEMENTS.
2.10 SERVICES shall mean all services that utilize the TECHNOLOGY or
IMPROVEMENTS.
2.11 SUBLICENSEES shall mean all sublicensees of COMPANY under this agreement,
including sublicensees that are subsidiaries and affiliates of COMPANY.
ARTICLE III - APPLICATIONS, PATENTS, AND COPYRIGHTS
3.1 The UNIVERSITY agrees to use its best efforts, consistent with sound and
reasonable judgment, to file and prosecute U.S. APPLICATIONS and maintain
U.S. PATENTS that are requested by COMPANY or, if the UNIVERSITY declines
to do so, to allow COMPANY to file such applications and to sign and/or
have the inventors cooperate by signing the necessary declarations, powers,
and other documents. The UNIVERSITY agrees to provide information to
COMPANY on TECHNOLOGY and IMPROVEMENTS for review for patentable subject
matter.
3.2 The UNIVERSITY agrees to use its best efforts, consistent with sound and
reasonable judgment, to timely file and prosecute FOREIGN APPLICATIONS and
maintain FOREIGN PATENTS in countries requested by COMPANY. The UNIVERSITY
shall have the option, at its sole discretion and expense, to file and
prosecute FOREIGN APPLICATIONS and to maintain FOREIGN PATENTS in countries
not requested by COMPANY.
3.3 Subject to any rights COMPANY may have apart from this Agreement, the
UNIVERSITY shall have sole title to all APPLICATIONS and PATENTS.
3.4 The UNIVERSITY shall bear all expenses for filing and prosecuting U.S.
APPLICATIONS and maintaining U.S. PATENTS. COMPANY shall reimburse the
UNIVERSITY for all reasonable out-of-pocket expenses for COMPANY requested
filing, maintenance, and prosecution of U.S. and foreign APPLICATIONS and
PATENTS, which expenses are estimated to the COMPANY in advance. COMPANY
may withdraw a request at any time and will not be liable for new expenses
incurred after UNIVERSITY's receipt of notice of withdrawal.
3.5 The UNIVERSITY shall have final authority over all decisions concerning
prosecution of APPLICATIONS. However, the UNIVERSITY shall keep COMPANY
informed of its filing and prosecution activities, and shall give COMPANY
the opportunity to comment on major decisions concerning such activities.
COMPANY agrees to fully cooperate
with the UNIVERSITY in filing and prosecuting APPLICATIONS.
3.6 The UNIVERSITY shall register copyrights on copyrightable portions of the
TECHNOLOGY and IMPROVEMENTS at the request of COMPANY in such countries as
COMPANY requests. The UNIVERSITY shall bear the out-of packet expenses for
such COMPANY requested registrations, but COMPANY shall reimburse the
UNIVERSITY for all such expenses.
3.6 Nothing in this agreement shall be construed to give COMPANY rights in any
technologies developed by the UNIVERSITY other than those explicitly
specified in this agreement. Nothing in this agreement shall be construed
to give the UNIVERSITY rights in technologies developed by COMPANY other
than those explicitly specified in this agreement. The UNIVERSITY shall
have no rights in inventions and other intellectual property developed
solely by COMPANY employees.
ARTICLE IV - LICENSE GRANT AND COMMERCIAL EFFORTS
4.1 Subject to the terms and conditions of this agreement, the
UNIVERSITY hereby grants and COMPANY hereby accepts an exclusive
worldwide license to make, use, sell, lease or otherwise dispose of
PRODUCTS and SERVICES under, and otherwise exploit, any and all
UNIVERSITY rights with respect to the TECHNOLOGY and IMPROVEMENTS,
including but not limited to the UNIVERSITY's rights under copyright,
trade secret, and under APPLICATIONS and PATENTS. This license includes
the right to grant sublicenses. Notwithstanding the license granted
herein this license is subject to whatever nonexclusive rights to the
TECHNOLOGY and IMPROVEMENT (if any) that are retained by AT & T and its
subsidiaries as a result of AT & T's funding for at least some portions
of the TECHNOLOGY and possibly of IMPROVEMENTS as and only as originally
provided in the Agreement between the UNIVERSITY and AT&T dated January
10, 1996. This license is also subject to the non-exclusive rights the
United States government may have for government purposes and the
government statutory "march-in" rights with respect to IMPROVEMENTS, if
any, resulting from funding from a United States government agency. The
UNIVERSITY retains an irrevocable, nonexclusive, nonsublicensable and
nontransferable right to practice for its own educational and research
purposes the TECHNOLOGY and IMPROVEMENTS.
4.2 The term of the license granted in paragraph 4.1 shall be for the term of
this agreement as specified in paragraph 7.1.
4.3 The license granted by this agreement is to COMPANY alone and does not
grant any rights to third parties or to any subsidiary or affiliate of
COMPANY. However, COMPANY may transfer this agreement by way of acquisition
of COMPANY or its business or assets, through sale of assets, sale of
stock, merger, consolidation or otherwise, provided that such sale is not
primarily for the benefit of creditors. COMPANY shall also have the right
to grant sublicenses under this agreement. The COMPANY shall give the
UNIVERSITY notice of any sublicense promptly after its execution. COMPANY
shall be responsible to the UNIVERSITY for the payment of royalties on
sales made by SUBLICENSEES as though they were sales by COMPANY (this does
not apply to sales by SUBLICENSEES of PRODUCTS or SERVICES for which
COMPANY is obligated to pay a royalty).
4.4 COMPANY shall use diligent efforts, consistent with sound and reasonable
business
practices and judgment, to effect commercialization of PRODUCTS as soon as
practicable and to maximize these sales. "Diligent efforts" under this
clause will be satisfied through August of 1997 if COMPANY raises a minimum
of $200,000 in financing by the end of February 1997 and if it introduces
a PRODUCT for sale by the end of August 1997.
COMPANY shall provide the UNIVERSITY with brief written reports of
COMPANY's efforts and plans to effect commercialization. COMPANY shall
provide these reports quarterly with the royalty report specified in
paragraph 5.3. Such information is confidential to COMPANY and UNIVERSITY
will not disclose it.
4.5 COMPANY shall not use the name of the UNIVERSITY in advertising,
promotional literature, or press releases without prior written approval
from the UNIVERSITY.
4.6 COMPANY and SUBLICENSEES shall alone have the responsibility for any
PRODUCT they make, use, or sell, lease, or otherwise dispose of and any
SERVICE they provide (e.g., regarding defects and compliance with all
applicable government regulations).
ARTICLE V - PAYMENTS, ROYALTIES, REPORTS AND RECORDS
5.1 For the license granted hereunder, COMPANY shall make the following
specified payments and grant the UNIVERSITY the following additional
consideration:
(a) The COMPANY shall pay the UNIVERSITY [*] upon the COMPANY reaching
an aggregate total equity financing of [*]. If the COMPANY
does not reach such financing total by December 31, 1996, then this
[*] payment shall be due in equal installments at the end of each
calendar quarter in calendar year 1997.
(b) Pursuant to the attached Stock Purchase Agreement, which is
substantially similar to those signed by founders (with the exception
of terms relating to employment), the COMPANY shall provide the
UNIVERSITY with a number of shares of COMPANY common stock equal to
[*] of initial founders equity ([*] shares) issued in the name of
the Regents of the University of Minnesota. The founders are Xxxx
Xxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxx Xxxxxxxx, and Xxxxxx
Xxxxxx.
(c) In the event that APPLICATIONS are filed on IMPROVEMENTS, COMPANY and
the UNIVERSITY shall enter into good faith negotiation of a reasonable
royalty rate and terms to be paid to the UNIVERSITY for sales and
other dispositions of PRODUCTS that incorporate IMPROVEMENTS claimed
in such APPLICATIONS and PATENTS issuing thereon. If COMPANY and the
UNIVERSITY cannot agree on such royalty they will submit the issue for
binding arbitration to be handled in accordance with the following:
(a) unless the parties can agree on a single arbitrator, the parties
shall each select one independent arbitrator with expertise in
software royalty rates and the Internet within ten (10) days of
request of either party, (b) such arbitrators shall select in good
faith a third arbitrator within five (5) days (but, if they fail to do
so, either party may request appointment of the third arbitrator by
the American Arbitration Association (AAA)), (c) each party will have
one (1) day to present its case (presentation shall
* Confidential treatment requested for redacted portion.
be made on a date selected by the arbitrators which shall be at least
five (5) and no more than fifteen (15) days after selection of the
third arbitrator), (d) the arbitrators shall have ten (10) days from
completion of such presentation to render their decision (the decision
of a majority of the arbitrators will be deemed the decision of the
arbitrators), (e) if one party fails to timely appoint an arbitrator,
the arbitration shall be conducted solely by the other party's
arbitrator, and (f) such arbitration shall be informal and need not
conform to AAA or other established procedures. Unless otherwise
agreed to by the parties, arbitration will take place in Minnesota,
and arbitrator fees will be shared equally by the parties.
5.2 If royalties are payable as provided in 5.1(c), royalties shall be payable
only once with respect to the same unit of PRODUCT, regardless of the
number of PATENTS or APPLICATIONS.
5.3 All payments hereunder to the UNIVERSITY shall be made payable to the
Regents of the University of Minnesota and mailed to the address specified
in Article XI. Payments shall be made in United States dollars. Any
currency translations that are necessary to calculate payments shall be
made at the exchange rate used by COMPANY for financial accounting purposes
in accordance with generally accepted accounting principles. In the event
that royalties are payable as provided under 5.1(c), COMPANY shall provide
the UNIVERSITY with quarterly written reports of all royalty bearing sales,
leases or other dispositions of PRODUCTS by COMPANY and SUBLICENSEES. In
order to minimize COMPANY time spent on royalty reports, a brief one-page
Royalty Report Form is provided in Appendix A that will satisfy the
UNIVERSITY's reporting requirements. The report shall be made within sixty
(60) days of the end of each calendar quarter. The UNIVERSITY agrees to
keep the information in these reports confidential, except as may be
necessary to maintain an action against COMPANY for breach of this
agreement. Royalty payments for sales, leases, and other dispositions of
the PRODUCTS subject to royalty payments as provided in 5.1(c) invoiced
during a calendar quarter shall accompany the Royalty Report Form for that
quarter.
5.4 COMPANY and SUBLICENSEES shall keep and maintain records of royalty bearing
sales, leases, and other dispositions of PRODUCTS that are subject to
royalty payments as provided in 5.1(c). Such records shall be open to
inspection at reasonable times by a certified public accountant chosen by
the UNIVERSITY and acceptable to COMPANY. Such inspection shall be made at
the UNIVERSITY's expense. The UNIVERSITY agrees to itself hold such
records confidential and to require its certified public accountant to hold
such records confidential, except as may be necessary to maintain an action
against COMPANY for breach of this agreement. The records required by this
paragraph shall be maintained and available for inspection for a period of
five (5) years following the calendar quarter to which they pertain. This
paragraph shall survive termination of this agreement for one year.
ARTICLE VI - INFRINGEMENT
6.1 In the event that the UNIVERSITY or COMPANY determines that a third party
is making, using or selling a product that may infringe a PATENT or
copyright with respect to the TECHNOLOGY or IMPROVEMENTS, it will promptly
notify the other party in writing. COMPANY may, at its sole option, bring
suit against such alleged infringer and UNIVERSITY will cooperate
therewith. In the event COMPANY decides to bring suit, it shall give
prompt written notice to the UNIVERSITY of that fact. All
recoveries in such suit shall belong to COMPANY except that the UNIVERSITY
shall have the right to elect to pay up to fifty percent (50%) of the
litigation costs and receive a percentage of any recovery equal to the
percentage of litigation costs paid, provided that the percentage of the
recovery it receives after it recoups such litigation costs that it paid
will not exceed the royalty percentage for the applicable PATENT. The
UNIVERSITY must make such election within thirty (30) days of its receipt
of notice that COMPANY has decided to bring suit. The UNIVERSITY shall also
have the right to choose to be represented by separate counsel in any such
suit at its own expense. Such expense for separate counsel shall not be
considered as part of "litigation costs" for purposes of determining the
UNIVERSITY's share of any recovery in accordance with the sentence above.
If COMPANY elects not to bring a suit against the alleged infringer, it
shall promptly notify the UNIVERSITY of that fact and the UNIVERSITY shall
have the right to commence such actions at its own cost and expense, in
which case any recoveries shall belong to the UNIVERSITY, provided that the
percentage of the recovery it receives after it recoups such litigation
costs that it paid will not exceed the royalty percentage for the
applicable PATENT. In such suits by the UNIVERSITY, COMPANY shall have
rights of participation and recovery that are the same as the UNIVERSITY
rights as provided above when COMPANY elects to xxx.
ARTICLE VII - TERM AND TERMINATION
7.1 This agreement's term shall end when the last of all licensed rights has
either expired or been invalidated in an unappealed decision by a court
having jurisdiction. If no such rights exist, this agreement's term shall
end upon the. date no APPLICATION remains pending and no future application
could be filed.
7.2 Subject to the next paragraph, the UNIVERSITY shall have the right to
terminate this agreement upon sixty (60) days written notice by certified
mail to COMPANY under the following circumstances:
(1) if royalties due the UNIVERSITY are unpaid;
(2) if there is a material breach or default of this agreement by COMPANY;
provided that if UNIVERSITY asserts that COMPANY has failed to use its
diligent efforts to effect commercial sales of PRODUCT in accordance
with paragraph 4.4, and, upon sixty (60) days of receipt of such
notice, COMPANY either fails to cure or is in dispute of such claim,
the parties agree to submit to binding arbitration under the rules of
the American Arbitration Association, the result of such arbitration
will be: (1) a determination of whether the COMPANY is meeting the
diligent efforts criteria; (2) a specification of the measures
required to meet such criteria; and (3) a reasonable timeframe for
COMPANY to take the required measures.
If, and only if COMPANY does not cure a curable default, failure or breach
(or if it cannot reasonably be cured in that period, commences diligent
efforts to cure) within sixty (60) days of receipt of notice of termination
(or if there is a dispute, within 60 days of resolution thereof), such
termination shall become effective. Notwithstanding the above sentence, in
the case of a failure to use diligent effort to effect commercial sales of
PRODUCT, termination will become effective only if the COMPANY does not
take the measures required in the timeframe specified by the arbitration.
Notwithstanding the foregoing, if a failure, breach or default relates only
to a particular TECHNOLOGY or IMPROVEMENT, termination will apply only to
that
TECHNOLOGY or IMPROVEMENT
7.3 COMPANY may terminate the license granted hereunder (in whole or with
respect to any TECHNOLOGY or IMPROVEMENT) at any time upon sixty (60) days
notice by certified mail to the UNIVERSITY.
7.4 Upon end of term of this agreement in accordance with 7.1 above, COMPANY
shall have the unrestricted royalty-free right to make, use, and sell,
lease, or otherwise dispose of PRODUCTS anywhere in the world.
7.5 Upon termination of this agreement for any reason, including the end of
term as specified above, all rights and obligations under this agreement
shall terminate, except those that have accrued prior to termination (e.g.,
confidentiality and the obligation to report and pay royalty on sales made
under this agreement) and except as specified in this agreement (see
paragraphs 5.4, 7.4 and 9.3).
ARTICLE VIII - PUBLICATION
8.1 It is the policy of the UNIVERSITY to promote and safeguard free and open
inquiry by 'faculty, students and others. To further this policy, the
UNIVERSITY shall retain the right to publish the inventions described in
APPLICATIONS and PATENTS. However, the UNIVERSITY shall provide the
COMPANY with a copy of the manuscript no less than sixty (60) days prior to
publication for the purpose of review and comment, and, if filing of an
APPLICATION is requested, will delay publication up to 90 additional days
as necessary to allow time for filing patent applications. However, the
UNIVERSITY will hold confidential and not disclose any licensed source code
and source documentation.
ARTICLE IX - INDEMNIFICATION
9.1 COMPANY agrees to indemnify the UNIVERSITY and hold the UNIVERSITY harmless
against all liabilities, demands, damages, expenses, or losses arising (i)
from the manufacture, use, lease, sale, or other disposition of a PRODUCT
by COMPANY or a SUBLICENSEE, (ii) from a third party's use of a PRODUCT
purchased, leased, or otherwise acquired from COMPANY or a SIJBLICENSEE, or
(iii) from a third party's manufacture of a PRODUCT at the request of
COMPANY or a SUBLICENSEE, provided that COMPANY's indemnity obligation is
conditioned on COMPANY being given prompt notice of any claim or threat and
sole control of defense and settlement..
9.2 COMPANY agrees to maintain reasonable liability insurance to insure against
the above types of liabilities and to name the UNIVERSITY as coinsured. At
the UNIVERSITY's request, COMPANY shall provide UNIVERSITY with
certification of such insurance.
9.3 The provisions of this article shall survive termination of this agreement.
ARTICLE X - WARRANTIES AND LIMITATIONS
10.1 The UNIVERSITY and COMPANY each represent and warrant that they have the
right to enter into this agreement. The UNIVERSITY warrants that it has the
right to convey
to COMPANY the rights granted under this agreement.
10.2 The UNIVERSITY makes no representation or warranty that is the sole owner
of the TECHNOLOGY.
10.3 The UNIVERSITY makes no representation or warranty that filed APPLICATIONS
will result in issued PATENTS.
10.4 The UNIVERSITY makes no representations or warranties concerning the
validity of scope of any PATENTS.
10.5 The UNIVERSITY does not warrant that any PRODUCT made, used, or sold,
leased or otherwise disposed of under the license of this agreement is or
will be free from infringement of patents of third persons.
10.6 Nothing herein shall be construed to grant COMPANY rights under any patent
applications or patents other than APPLICATIONS and PATENTS.
10.7 The UNIVERSITY does not make any representations, extend any warranties of
any kind, express or implied, or assume any responsibility whatever
concerning the manufacture., use, or sale, lease or other disposition by
COMPANY or its vendees or transferees of PRODUCTS.
ARTICLE XI - MISCELLANEOUS PROVISIONS
11.1 This agreement shall be binding upon and be to the benefit of the parties
hereto and their heirs, successors and assignees. However, neither party
shall assign this agreement, in whole or in part, without the written
consent of the other, except as provided in Section 4.3.
11.2 This agreement shall be governed by the Laws of the State of Minnesota.
11.3 For purposes of mailings of notices, payments, or other communications,
the addresses of the parties are given below. A party may change its address by
giving written notice to the other party.
In the case of the UNIVERSITY:
Regents of the University of Minnesota
Patents and Technology Marketing
0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000-0000
In the case of COMPANY:
Xxxxxx X. Xxxxxx, Ph.D.
President and Chief Executive Officer
Net Perceptions, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Notices shall be deemed given as of the date of mailing by certified mail,
postage prepaid, to the above addresses (or such other addresses as may be
specified in writing by a party).
11.4 No term or provision of this agreement shall be waived and no breach
excused unless such waiver or consent shall be in writing and signed by the
party claimed to have waived or consented. No waiver of a breach shall be
deemed to be a waiver of a different or subsequent breach.
11.5 This agreement may not be modified, changed or terminated orally. No
change, modification, addition or amendment shall be valid unless in
writing and signed by the parties hereto.
11.6 In the event any provision of this agreement is determined to be invalid or
unenforceable, the remaining provisions shall remain in full force and
effect.
11.7 This agreement constitutes and contains the entire agreement of the parties
respecting its subject matter and supersedes any and all prior negotiations,
correspondence, understandings, and agreements, whether written or oral, between
the parties respecting its subject matter.
IN WITNESS of this agreement, the UNIVERSITY and COMPANY have caused this
agreement to be executed by their duly authorized officers on the dates
indicated.
REGENTS OF THE UNIVERSITY OF MINNESOTA NET PERCEPTIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------------- ---------------------------------
Xxxxxxx X. Xxxxxxx
Title: Director, MCEB Technologies Title: President and CEO
Research and Technology Transfer --------------------------------
Date: 7-31-96 Date: 7/31/96
------------------------------ -------------------------------
By their signatures below, Xxxxxxxxx Xxxx Xxxxx and Xxxxxxxxx Xxxxxx Xxxxxxx
acknowledge and
agree to be personally bound by the provisions of 2.2 and 4.1 which require that
they not engage in UNIVERSITY research related to collaborative filtering which
would grant rights to a sponsor in conflict with the license granted hereunder.
Xxxxxxxxx Xxxx Xxxxx and Xxxxxxxxx Xxxxxx Xxxxxxx also acknowledge and agree to
be personally bound by the provisions of 8.1 which requires prior review of
proposed publications related to the TECHNOLOGY and IMPROVEMENTS.
/s/ Xxxx Xxxxx /s/ Xxxxxx Xxxxxxx
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Xxxxxxxxx Xxxx Xxxxx Xxxxxxxxx Xxxxxx Xxxxxxx
31 July 96 7/30/96
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Date Date
