Exhibit 10.7
CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS. OMITTED INFORMATION HAS BEEN REPLACED BY [*].
Version 1.1
CSS LICENSE AGREEMENT
This CSS LICENSE AGREEMENT (the "License Agreement"), including the related
CSS PROCEDURAL AND TECHNICAL SPECIFICATIONS (together, the "Specifications") and
the Exhibits and Attachments to the License Agreement and Specifications
(collectively, this "Agreement"), is made and entered into by and between: (i)
the DVD Copy Control Association, Inc., a Delaware nonprofit corporation, having
offices located at 000X Xxxxxxxx Xxxxxx, Xxxxxx Xxxx, XX 00000 ("Licensor"); and
(ii) InterVideo, Inc., a California corporation having offices located at 00000
Xxxxxxx Xxxx., Xxxxxxx, XX 00000 ("Licensee"). This Agreement shall be effective
as of the date of the later signature below ("Effective Date").
RECITALS
A. Matsushita Electric Industrial Co., Ltd. ("MEI") and Toshiba Corporation
("Toshiba") have developed a Content Scramble System (as defined below) to
provide reasonable security for content on DVD Discs and thereby, together with
the terms and conditions of this Agreement, to provide protection for such
copyrighted content against unauthorized consumer copying, and have filed patent
applications with respect to the Content Scramble System.
X. XXX and Toshiba have licensed the Content Scramble System to Licensor
for purposes of further licensing the system and administering such licenses in
relation to the protection of content utilizing the DVD Video Specification for
content encoded on DVD Discs.
C. Licensor desires to license the Content Scramble System to Licensee, and
Licensee desires to license the Content Scramble System from Licensor, subject
to the terms and conditions set forth in this Agreement:
AGREEMENT
1. DEFINITIONS. In addition to the other capitalized terms used in this
Agreement and in addition to the terms defined in the CSS Procedural
Specifications (which terms shall have the same meanings set forth in the
Procedural Specifications), the following terms shall have the following
meanings:
1.1 "Absolutely Necessary Claim" shall mean any claim(s) of patent(s) or
--------------------------
patent application(s) which are infringed by the manufacture, import, use or
sale of CSS Compliant Products because: (i) those portions of the CSS
Specifications which are required to implement CSS are read on by such claim(s);
or (ii) such CSS Compliant Products, solely because of the requirement to
implement the portions of the CSS Specifications which are required to implement
CSS, cannot be manufactured, used, distributed, offered to be sold, sold,
imported, or otherwise transferred without infringing such claim(s).
1.2 "Affiliate" shall mean any corporation, partnership or other
---------
entity that, directly or indirectly, owns, is owned by, or is under common
ownership with, Licensee, for so long as such ownership exists. For purposes of
the foregoing, "own" "owned" or "ownership" shall mean holding ownership of, or
the right to vote, more than fifty percent (50%) of the voting stock or
ownership interest entitled to elect a board of directors or a comparable
managing authority.
1.3 "Associate Licensee" shall mean any third party that enters into
------------------
an agreement, containing substantially the same terms as those set out in one or
both of the documents entitled "Assembler Associate License" and "Reseller
Associate License."
1.4 "Associate Licensee Reseller" shall mean an Associate Licensee
---------------------------
entering into a Reseller Associate License for the purpose of being authorized
to purchase and resell Schedule 1 and Schedule 2 Products, subject to the
redistribution requirements of the Reseller Associate License.
1.5 "By-Laws" shall mean the document, or specified section thereof,
-------
entitled "By-Laws DVD Copy Control Association, Inc.," as amended from time to
time.
1.6 "Confidential Information" shall mean Proprietary Information that
------------------------
is either marked "confidential," when disclosed in tangible form or designated
as "confidential" when disclosed orally (or otherwise in intangible form) and
confirmed in writing within thirty (30) days after such disclosure.
1.7 "Controlled Company" shall mean (i) any Affiliate, or (ii) any
------------------
other entity that controls, is controlled by, or is under common control with
another entity. For purposes of this Section, "control" means possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of an entity with respect to the matters set out in this Agreement,
whether through the possession of voting power or by contract encompassing such
matters. In determining whether an entity is included in (ii) above, where (x) a
Licensee's control does not extend to directing the commencement or termination
of legal actions as described herein or (y) where causing such entity to take a
particular action would constitute a breach of Licensee's fiduciary obligations
to such entity, "control" is deemed not to be present.
1.8 "CSS" or "Content Scramble System" shall mean the Content Scramble
---- -----------------------
System developed by MEI and Toshiba which is designed to provide reasonable
protection for content encoded onto DVD Discs using the DVD Video Specification,
as such system has been licensed by MEI and Toshiba to Licensor and as more
fully described in the CSS Specifications, as amended in accordance with
Sections 4.2 and 10.7 of this License Agreement. CSS does not include any
technology referenced by or used with the CSS Specifications such as MPEG
technology, DVD technology (including, but not limited to, DVD disc structure),
data compression and decompression, embedded data technology, watermarking, nor
any other independent technology mandated or permitted in connection with any
amendments to the CSS Specifications.
1.9 "CSS Complaint Products" shall mean DVD Products which are
----------------------
compliant with the CSS Specifications in accordance with Section 4.2 of this
License Agreement.
-2-
1.10 "CSS Interim License Agreement" shall mean an agreement
-----------------------------
(including all documents incorporated therein by reference) entered into by
either MEI as the licensor of CSS and thereafter assigned to Licensor by MEI or
DVD CCA in its role as interim licensor of CSS.
1.11 "CSS Agreement" shall mean an agreement between Licensor and
-------------
another party that contains the same terms as this Agreement (including this
License Agreement and all documents incorporated herein by reference), or terms
that have been modified consistent with Sections 4.2 and 10.7 of this License
Agreement.
1.12 "CSS Licensee" shall mean any third party that enters into a CSS
------------
Agreement with Licensor that is valid and in effect. A third party that has a
CSS Interim License Agreement that is valid and in effect shall be included
within the meaning of "CSS Licensee."
1.13 "CSS Specifications" shall mean the documentation relating to CSS
------------------
entitled "CSS Specifications" (including the Procedural Specifications and the
Technical Specifications) that Licensor makes available to Licensee, as such
documentation may be revised from time to time consistent with Sections 4.2 and
10.7 hereof. Except where otherwise specifically stated, all references to "CSS
Specifications" shall be deemed to include all or any portion of the
documentation referenced in the preceding sentence.
1.14 "Disc IP" shall mean any copyright, trade secret, or other
-------
intellectual property inherent in the CSS Specifications pertaining to CSS, or
any patent claim(s) (including but not limited to any Absolutely Necessary
Claims or Relatively Necessary Claims) that are infringed by any implementation
of CSS in any DVD Disc.
1.15 "DVD Products" shall mean the following products if they
------------
incorporate any portion of CSS: DVD Players, DVD Drives, Descramblers,
Authenticators, Scramblers, CSS Decryption Modules (implemented in Hardware as
CSS Decryption Hardware and/or in software as CSS Decryption Software), CSS Disc
Formatters, DVD Discs, Special Purpose DVD Players, Special Purpose DVD Drives,
Verification Products and Integrated Products.
1.16 "DVD Video Specification" shall mean the DVD Specifications for
-----------------------
Read-Only Disc, Version 1.0 (August 1996), as that document may be amended from
time to time.
1.17 "Highly Confidential Information" shall mean Proprietary
-------------------------------
Information that constitutes or discloses: (i) the algorithms used for
scrambling, descrambling, authentication and key recovery; (ii) master, disc,
title or authentication keys; or (iii) information developed by MEI and/or
Licensor for testing product compliance with CSS where such information makes
use of or reveals information described in (i) or (ii). Such information shall
be marked, if disclosed in written form, or designated, if disclosed in
electronic form, as "Highly Confidential" when disclosed to Licensee.
1.18 "Licensed Rights" shall mean all Absolutely Necessary Claims, all
---------------
Relatively Necessary Claims, copyrights, trade secret rights, and other
proprietary rights in any jurisdiction, and in all applications and
registrations therefor, in and to CSS (including the Proprietary Information),
that Licensor (during the term of this Agreement) owns or has the right to grant
licenses of the scope
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granted herein without the agreement of, or requirement for payment (or
provision of other consideration) to any person or entity.
1.19 "Motion Picture Company" shall mean any person which (a)
----------------------
designates itself as a Motion Picture Company on its Membership Application, and
(b) is engaged in the production and distribution of theatrical motion pictures
in the United States on a substantial scale, as evidenced by production, box
office receipts and number of releases annually.
1.20 "Ombudsman" shall mean that individual designated by Licensor to
---------
perform this function.
1.21 "Proprietary Information" shall mean any and all information
-----------------------
relating to CSS made available to Licensee directly by MEI, Licensor, or any
other CSS Licensee, or revealed to Licensee pursuant to Section 5.3 prior hereto
or during the term of this Agreement, including, without limitation, CSS
Specifications, Software, Hardware, documentation, designs, flow charts,
technical data, outlines, blueprints, notes, drawings, prototypes, templates,
systems, manuals, know-how, processes, and methods of operation.
1.22 "Protected" shall mean a configuration in which a data stream or
---------
signal is not output except (1) via encrypted, scrambled, or otherwise secure
link or method authorized hereunder either through a device's or component's
authorized output or to the next component or device which in turn has an
authorized output; or (2) directed as uncompressed video data to a graphics
subsystem via an internal computer path in a manner consistent with Section 6.2
the CSS Procedural Specifications. For purposes of this definition, authorized
outputs and methods hereunder are those compliant with the requirements
contained in Section 6.2 of the CSS Procedural Specifications, including any
upgrades or modifications thereto adopted in accordance with Sections 4.2 and
10.7 of this License Agreement. By way of example and not limitation, the
following CSS Compliant Products, if so configured, would be considered to be
Protected:
(a) CSS Decryption Hardware incorporating MPEG decoding and any
or all of the following outputs:
(i) NTSC with appropriate AGC and Colorstripe;
(ii) Computer Monitor SVGA (or other computer monitor RGB);
or
(iii) Uncompressed digital video directed via an internal
computer path to a computer graphic subsystem for display.
(b) CSS Decryption Software incorporating MPEG decoding and
supporting the output described in subsection (a)(iii).
(c) A CSS Decryption Module which implements the interrogation or
identification functions referenced in Section 6.2.11.4 of the CSS Procedural
Specifications; and
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(d) A DVD Player which meets the requirements of Section
6.2.1 of the CSS Procedural Specifications.
1.23 "Relatively Necessary Claim" shall mean, any claim(s) of
--------------------------
patent(s) or patent application(s), that: (i) are not Absolutely Necessary
Claims; and (ii) with respect to which the implementation of all or any portions
of the CSS Specifications pertaining to CSS involves a design-around to such
patent claim(s) which would have a commercially significant effect on
performance, manufacturability or manufacturing cost, although the cost of
designing-around itself shall not be taken into account. Relatively Necessary
Claims shall not include claims which if licensed by Licensor to Licensee or by
Licensee to another CSS Licensee would require a payment of royalties or other
fees by Licensor or Licensee, as appropriate, to unaffiliated third parties.
1.24 "Reseller" shall mean a CSS Licensee or Associate Licensee
--------
Reseller that purchases Schedule 1 or Schedule 2 Products from a CSS Licensee
for the purpose of reselling such products without modification and only to a
CSS Licensee or an Associate Licensee authorized to receive such products.
1.25 "Restricted Schedule 1 Product" shall mean a CSS Compliant
-----------------------------
Product licensed hereunder which is a Verification Product.
1.26 "Schedule 1 Product" shall mean a CSS Compliant Product
------------------
which:
(a) is not a Schedule 2 or 3 Product, or
(b) is
(i) an Authenticator, or
(ii) a Descrambler, or
(iii) a CSS Decryption Module or partial implementation
thereof, or
(iv) any other device which has an output which is not
permitted in a Schedule 2 or 3 Product, or
(c) is a CSS Disc Formatter.
1.27 "Schedule 2 Product" shall mean a DVD Product that is a CSS
--------------------
Compliant Product except that such product is not Protected and which outputs
descrambled CSS Video Data only in decompressed form.
1.28 "Schedule 3 Product" shall mean (a) a CSS Compliant Product
-----------------
which outputs CSS Data only in a Protected manner or (b) a DVD Disc.
-5-
2. LICENSES GRANTED.
2.1 Nonexclusive License. Subject to the terms and conditions of this
--------------------
Agreement, Licensor grants to Licensee a worldwide, royalty-free, non-exclusive,
nontransferable right, under the Licensed Rights:
(a) to use and implement CSS to develop, design, manufacture and use
DVD Products that are in the Membership Categories selected by Licensee and to
practice any methods necessary for the manufacture or use of such DVD Products;
and
(b) according to Licensee's Membership Categories, to receive DVD
Products in accordance with this Agreement and to distribute, offer to sell,
sell, import and otherwise transfer DVD Products made in accordance with this
Agreement, such distribution, offer to sell, sale, importation or other transfer
of CSS Compliant Products to be allowable only as follows:
(i) Restricted Schedule 1 Products only to CSS Licensees in the
DVD Disc Replicator Membership category;
(ii) Schedule I Products only to CSS Licensees or to Associate
Licensee Resellers;
(iii) Schedule 2 Products only to CSS Licensees or to Associate
Licensees;
(iv) Schedule 3 Products to any person or entity; or
(v) Special Purpose DVD Players or Special Purpose DVD Drives
only to purchasers that are required by contract with Licensee (x) to use the
Special Purpose DVD Players or Special Purpose DVD Drives, as the case may be,
for the purpose of the authorized playback of content originally encrypted on
DVD Discs using CSS where such DVD Discs are designated as Region 8 discs and
where such playback is intended to be in the commercial setting in which the
viewer of the movie does not own the Special Purpose DVD Player or Special
Purpose DVD Drive, whether or not such viewing is considered a public
performance, or non-public performance, of the movie (e.g., airline, cruise
ship, hotel or similarl applications); and (y) to sell or otherwise dispose of
or distribute any such Special Purpose DVD Players or Special Purpose DVD Drives
to another party only in circumstances in which such other party is legally
prohibited from using such Special Purpose DVD Players or Special Purpose DVD
Drives, as the case may be, other than in the use described in (x), above.
Licensee further agrees that with respect to any such contract, it will either
provide for third party beneficiary rights for Motion Picture Companies or will
itself take all reasonable efforts necessary to enforce the provisions of such
contracts as described in (x) and (y), above. Records of sales of Special
Purpose DVD Players and Special Purpose DVD Drives must be separately maintained
by Licensee, and the names and addresses of each purchaser of Special Purpose
DVD Players and Special Purpose DVD Drives shall be provided by Licensee to
Licensor upon request by Licensor. Copies of contracts for such sales must be
available for inspection by Licensor, at least with respect to the provisions
relevant to the requirements of this subparagraph. With respect to any sales of
Special Purpose DVD Players or Special Purpose DVD
-6-
Drives made prior to the effective date of this Agreement, Licensee agrees (a)
that any such sale will be subject to the recordkeeping and reporting
requirements of this subparagraph, (b) that it will submit to Licensor, within
30 days of the effective date of this Agreement, a specific certification from
Licensee that, to the best of Licensee's knowledge and belief, each purchaser
intends to use the Special Purpose DVD Players and/or Special Purpose DVD Drives
solely for the purpose described in this subparagraph; and (c) that Licensee
will make all commercially reasonable efforts to amend the contract for such
sale(s) to incorporate the restrictions required for such contracts entered
after the effective date of this Agreement; and
(c) to provide prototype or sample DVD Products incorporating
CSS to prospective customers or retained test companies in situations that are
not covered by Section 2.1(b), in each case solely for evaluation in
contemplation of a purchase of such products or performance of specified testing
of such products, as applicable, and to provide related technical information
necessary for the evaluation or testing purposes, as applicable, provided,
however, that: (i) Licensee shall not provide to any such customers or test
companies any CSS Highly Confidential Information; and (ii) any disclosure of
CSS Confidential Information shall be made only pursuant to a written agreement
providing at least equivalent protections as are provided in this Agreement; but
(d) not to distribute, offer to sell, sell, import or otherwise
transfer any DVD Products that Licensee makes or receives under this Agreement
or that it made or received under an CSS Interim License Agreement that it
entered into, except in accordance with Sections 2.1(b) and (c) above.
2.2 Copyright License. Subject to the terms and conditions of this
-----------------
Agreement, including without limitation the confidentiality provisions of
Section 5.2 and the prohibition on copying Highly Confidential Information
contained in Section 5.2(b)(iii), for any copyrightable information included in
the CSS Specifications and other documentation, including Proprietary
Information, provided by Licensor in connection with this Agreement, Licensor
grants Licensee a worldwide, royalty-free, non-exclusive, nontransferable
copyright license to use and reproduce the CSS Specifications and such other
documentation for internal purposes solely in connection with the implementation
of CSS and marketing of CSS Compliant Products as permitted under Section 2.1
hereof.
2.3 Right to Have Designated or Have Made. Licensee shall have the
-------------------------------------
right under the licenses granted herein to have third parties design and/or make
CSS Compliant Products or subparts thereof for the sole account of Licensee, but
only if said CSS Compliant Products or subparts thereof:
(a) are to be sold, used, leased or otherwise disposed of, by or
for Licensee under the trademark, tradename, or other commercial indicia
(i) of Licensee or
(ii) of a person or entity to which Licensee is authorized
by this Agreement to sell
-7-
(1) the CSS Compliant Product that is the subject of
the "have designed," and/or "have made" agreement or
(2) an Integrated Product that is a CSS Compliant
Product made using such CSS Compliant Product, and
(b) are designed and/or made by such third parties using design
specifications or manufacturing drawings supplied by or for Licensee.
Such third parties shall be required to be CSS Licensees if such design and/or
manufacture requires disclosure to such third parties of (1) Confidential
Information; or (2) other information or materials from which Confidential
Information could reasonably be derived. Further, such parties shall be required
to be CSS Licensees if such design and/or manufacture requires disclosure to
such third parties of (1) Highly Confidential Information; or (2) other
information or materials from which Highly Confidential Information could
reasonably be derived. Licensee agrees and acknowledges that the fact that it
has contracted with a third party pursuant to this provision does not relieve
Licensee of any of its obligations under this Agreement and that Section 5.5 of
this License Agreement includes obligations applicable to its relationship with
third parties engaged pursuant to this provision. Licensee agrees that, with
respect to third parties that are not CSS Licenses, Licensee will contractually
obligate such third party to adhere to the same reverse engineering prohibitions
and limitations as are contained in Section 5.3 of this Agreement. Such third
parties shall receive no license, sublicense, or implied license with respect to
CSS, and the duration of the "have designed" or "have made" rights granted under
this provision shall not extend beyond the term of this Agreement, including any
termination thereof pursuant to Section 6.2.
2.4 Sublicenses to Affiliates. Subject to the requirements of the
-------------------------
following subsections (a) and (b), Licensee shall have the right to sublicense
the rights granted to Licensee hereunder to any of its Affiliates ("Permitted
Sublicensees").
(a) Licensee shall have the right to sublicense to any of its
Permitted Sublicensees at Licensee's sole discretion, any of Licensee's rights
under Sections 2.1, 2.2 and 2.3, provided that: (i) Licensee notifies Licensor
of the identity of each Permitted Sublicensee receiving a sublicense and the
type of Confidential Information or Highly Confidential Information provided to
such Permitted Sublicensee; (ii) each such Permitted Sublicensee receiving a
sublicense shall abide by the terms of this Agreement with the same rights (but
without the right to grant any further sublicense) and the same obligations and
prohibitions as Licensee, including without limitation, the non-assertion and
patent license offer provisions of Section 5.1 hereof; (iii) such sublicense
coterminates with this Agreement, or terminates at any time such Permitted
Sublicensee ceases to qualify as an Affiliate or whenever Licensee determines
that an Affiliate is no longer engaged in activities requiring a sublicense,
provided that Licensee shall notify Licensor whenever Licensee terminates any
sublicense previously granted; (iv) such Permitted Sublicensees receiving a
sublicense shall execute and deliver to Licensor a written acknowledgment and
agreement, in the form provided for in Exhibit "A" hereto, that the Permitted
Sublicensee has read and agrees to abide by the terms of this Agreement; and (v)
Licensee may sublicense only those rights for the Membership Categories to which
Licensee currently belongs; provided that in the case of a Permitted Sublicensee
that is an Affiliate that is owned directly or indirectly by Licensee ("Owned
-8-
Affiliate"), Licensee agrees that any failure to comply with clause (iv) of this
Section 2.4(a) shall be remedied by either or both of the following: (1)
Licensee shall consent to a judgment for specific performance of the obligation
for each Owned Affiliate to execute and deliver such acknowledgment and
agreement, and (2) Licensee shall cause any Owned Affiliate not to defend
against any enforcement action by Licensor or by an Eligible Licensee pursuant
to Section 9.5 on the ground that this Agreement does not apply to such Owned
Affiliate or that any obligation imposed by the Agreement is not applicable to
Controlled Affiliate, and provided further that Licensor and any CSS Licensee
seeking to enforce the obligation imposed by clause (iv) of this Section 2.4(a)
agree that these will be the sole remedies for any failure to obtain the
executed acknowledgment and agreement from such a Owned Affiliate.
(b) Licensee shall be responsible for its Permitted Sublicensees'
compliance with the terms and conditions of this Agreement, and Licensee and
each of its Permitted Sublicensees shall be jointly and severally liable for any
noncompliance by such Permitted Sublicensee with the terms and conditions of
this Agreement.
2.5 No Sublicense or Implied License. Except as set forth in Section
--------------------------------
2.4, Licensee shall not have any right to sublicense any rights granted
hereunder and no products or services provided by Licensee shall give rise to
any implied licenses to third parties, provided that there shall be no
limitation or restriction on the use, resale or other transfer or distribution
of CSS Compliant Products that are Schedule 3 Products. Licensee acknowledges
and agrees that the licenses granted herein are the only licenses granted to
Licensee, and that no other licenses are granted, expressly, by implication or
by estoppel, now or in the future. As between Licensor and Licensee, all rights
not expressly granted to Licensee under this Agreement in and to CSS and the
Proprietary Information are reserved and retained by Licensor.
3. MEMBERSHIP CATEGORIES AND ADMINISTRATION FEE.
3.1 Selection of Membership Categories. Upon the execution of this
----------------------------------
Agreement, and upon each annual renewal of its membership, Licensee shall select
one or more Membership Categories. Licensee may from time to time add or delete
Membership Categories upon providing Licensor prior written notice and payment
of the Administration Fee (as defined below) for each additional Membership
Category in accordance with Section 3.2 hereof.
3.2 Administration Fee. Concurrent with Licensee's selection of the
------------------
Membership Categories pursuant to Section 3.1, Licensee shall pay Licensor a
nonrefundable sum for each Membership Category selected by Licensee (the
"Administration Fee"), which fee shall be used to offset the costs associated
with Licensor's administration of CSS. The amount of the Administration Fee
shall be determined from time to time by Licensor and set forth on a fee
schedule that shall be made available to Licensee at the time of Licensee's
selection of Membership Categories and at the time of Licensee's annual renewal.
Licensee understands and acknowledges that: (1) the Administration Fee is
payable on an annual basis and that failure to make timely payment of such
Administration Fee is a breach of this Agreement, (2) payment of the
Administration Fee shall entitle Licensee to Non-Voting Membership in DVD CCA,
with such rights and privileges as are associated with such membership pursuant
to the By-Laws, and (3) that Licensee shall not be entitled to any refund in
connection with any deletion of Membership Categories during the term of
-9-
this Agreement or upon or after termination of this Agreement. Licensee is not
required to accept the Non-Voting Membership referenced in (2), above and may
resign such membership at any time, provided that Licensee shall remain liable
for Administration Fees pursuant to this Section 3.2.
4. CSS SPECIFICATIONS.
------------------
4.1 Delivery of CSS Specifications. Upon Licensee's selection of one
------------------------------
or more Membership Categories in accordance with Article 3 and the payment of
the appropriate Administration Fee(s), Licensor shall distribute to Licensee the
portions of Proprietary Information and/or CSS Specifications appropriate to its
Membership Category or Categories that Licensee has not previously received from
MEI. In the event Licensee deletes any Membership Categories or does not select
all of the Membership Categories with respect to which it has previously
received proprietary information and/or CSS Specifications from MEI, Licensee
shall within thirty (30) days thereafter return or destroy, providing a written
certification of such destruction, such portions of Proprietary Information
and/or CSS Specifications relevant to the Membership Categories it has deleted
or not selected.
4.2 Compliance with CSS Specifications.
----------------------------------
4.2.1 General. Licensee shall comply with the CSS Specifications,
-------
as may be amended by Licensor from time to time in accordance with the By-Laws.
Each DVD Product shall comply with the version of the CSS Specifications which
is in effect at the time such DVD Product is manufactured, taking into account
specific effective date provisions in amendments to the CSS Specifications.
4.2.2 Compliance with Changes to CSS Specifications. With respect
---------------------------------------------
to any changes to the CSS Specifications made after the Effective Date of this
Agreement, the following rules shall apply. Changes to the CSS Specifications
shall be made in accordance with procedures set forth in the By-Laws. All
changes shall be notified to all CSS Licensees and shall provide Licensee with
sufficient information to incorporate any necessary changes into the design and
manufacture of DVD Products to ensure that such products continue to be CSS
Compliant Products. All changes shall be applied on a non-discriminatory basis
among all CSS Licensees. Licensor shall specify in its notice either the
specific date by which the changes shall be implemented in affected products or
the specific basis on which Licensee must itself determine that compliance with
a change is required. In general, Licensor will follow the following time
periods in requiring that changes to the CSS Specifications be implemented in
affected products, provided that nothing in the following provisions shall be
interpreted so as to alter any time limitations set forth in the CSS Procedural
Specifications in effect as of the Effective Date of this Agreement.
4.2.2.1 Licensor may make changes to clarify or amplify elements
of the CSS Specifications in order to preserve essential functions of the CSS
Specifications ("Emergency Changes"). Licensee shall implement an Emergency
Change as soon as reasonably possible, taking into account the danger to Content
Providers being addressed by the Emergency Change. In general, Licensee will be
expected to implement an Emergency Change not later than sixty (60) days from
receipt of the notice of the Emergency Change if such Emergency Change does not
require a material change in product design or manufacturing process.
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4.2.2.2 In general, unless otherwise specified in relation
to a particular change, Licensee shall implement all changes that are not
Emergency Changes within eighteen (18) months of the date on which Licensor
notifies Licensee of a change in the CSS Specifications. Licensor may request
that Licensee agree to implement a specific change in less time than the
eighteen (18) months normally provided, and Licensee agrees not to unreasonably
withhold consent to such a request. Licensee may request that the normal
eighteen (18) month time period be extended with respect to a specific change in
the CSS Specifications, and Licensor agrees not to unreasonably withhold its
consent to such request.
4.3 Audio Data Covered by this Agreement. The CSS Specifications
------------------------------------
govern audio material only to the extent that such material is CSS Audio Data.
All other audio data are outside the scope of this Agreement.
5. ADDITIONAL LICENSEE OBLIGATIONS.
5.1 Access to Intellectual Property.
-------------------------------
(a) Absolutely Necessary Claim. Licensee shall not, and shall
--------------------------
cause each of its Controlled Companies not to, assert any Absolutely Necessary
Claim(s) reading on the portions of the CSS Specifications pertaining to CSS
against Licensor or any CSS Licensee (including its Permitted Sublicensees) or
vendor, distributor, purchaser or other person in the chain of distribution for
the manufacture, use, distribution, offer to sell, sale, import, or other
transfer of a CSS Compliant Product which was made under license from Licensor
or under a CSS Interim License Agreement entered into by Licensee, provided that
this Section 5.1(a) only applies to those aspects of such CSS Compliant Product
which are required and used for compliance with the portion of the CSS
Specifications pertaining to CSS and which cannot be implemented without
infringing (but for this covenant) the Absolutely Necessary Claim(s); and,
further provided, that this covenant shall not apply in favor of any entity and
any of its Controlled Companies, if such entity or any of its Controlled
Companies, is asserting an Absolutely Necessary Claim against Licensee (of any
of its Permitted Sublicensees).
(b) Disc Immunity. Licensee shall not, and shall cause each of
-------------
its Controlled Companies not to, assert any claim(s) based on Disc IP against
any CSS Licensee which is a Content Provider, Authoring Studio, or DVD Disc
Replicator or vendor, distributor, purchaser or other person in the chain of
distribution for the manufacture, use, distribution, offer to sell, sale,
import, or other transfer of a DVD Disc that: (i) is a CSS Compliant Product;
and (ii) was made under license from Licensor or under a CSS Interim License
Agreement entered into by Licensee, provided that (1) this Section 5.1(b) only
applies to those aspects of such DVD Discs which are present for the purpose of
complying with the portions of the CSS Specifications pertaining to CSS; and (2)
this Section 5.1 shall only apply to DVD Discs, and shall not apply to any
apparatus for the manufacture thereof.
(c) Termination of Suits.
--------------------
(i) If Licensee or any of its Controlled Companies asserts
any Absolutely Necessary Claim(s) or Disc IP claim(s) in violation of Section
5.1(a) or (b), Licensee
-11-
shall terminate or cause to be terminated such assertion of claim, provided that
this obligation shall not arise with respect to any assertion by a Controlled
Company alleged to be in violation of such section unless Licensee has received
a written notice of such assertion.
(ii) In the case of an entity which is not a Controlled
Company but in which Licensee or any of its Controlled Companies holds any
voting security or any other ownership interest (a "Partially Owned Company"),
Licensee shall not knowingly vote, and shall cause each Controlled Company not
to knowingly vote, any voting security or ownership interest in any such
Partially Owned Company in favor of asserting any claim which Licensee would be
prohibited from asserting hereunder, provided that this paragraph (ii) shall not
apply where such action conflicts with Licensee's or Such Controlled Company's
fiduciary duty. Licensee agrees to use reasonable efforts to vote, and use
reasonable efforts to cause each Controlled Company to vote, all voting
securities and ownership interests in each Partially Owned Company to terminate
any such claim(s).
The termination of any such claim(s) under Absolutely Necessary Claim(s) or
Disc IP claim(s), as the case may be, shall relieve Licensee of all liability
for any failure to comply with its obligations pursuant to this Section 5.1(c).
(d) Patent License Offer. Upon request by a CSS Licensee,
--------------------
Licensee shall offer, and shall cause its Controlled Companies to offer, a
patent license for any of its/their claims for which Relatively Necessary
Claim(s) exist, provided that such license may be limited to Relatively
Necessary Claim(s) that are within the scope of the other CSS Licensee's license
from Licensor. Such license shall be made available on reasonable and
nondiscriminatory terms to any CSS Licensee in good standing and/or its
Permitted Sublicensees with respect to a CSS Compliant Product that is or was
made under license from Licensor or under a CSS Interim License Agreement
entered into by Licensee. To the extent that a Relatively Necessary Claim that
would otherwise be governed by this Section 5.1(d) is subject to the Disc
Immunity governed by Section 5.1(b), such Relatively Necessary Claim shall be
governed by Section 5.1(b) rather than this Section 5.1(d).
(e) Applicability.
-------------
(i) The provisions of this Section 5.1 regarding
Absolutely Necessary Claims, Disc IP, and Relatively Necessary Claims shall be
limited to CSS as such system was described in the CSS Specifications on the
date this Agreement is entered and does not include any amendments to the CSS
Specification that are made after the date of this Agreement, unless Licensee
has agreed in writing that the provisions of this Section 5.1 shall apply to
such amendment.
(ii) Subject to the terms of Section 6.2 hereof, the
covenant set forth in Section 5.1 shall remain in effect for the life of any
patent issued throughout the world with a first priority date prior to or during
the term of the license granted to Licensee under Article 2.
(iii) Any executed patent license entered into pursuant to
Section 5.1(d) shall survive the termination of this Agreement in accordance
with its terms.
-12-
(iv) Notwithstanding the termination of this Agreement, the
obligation to offer a patent license under Section 5.1(d) shall continue after
such termination with respect to CSS Compliant Products that were made prior to,
or are in production as of, the date of such termination for a license period
ending concurrently with the applicable permitted period of distribution set
forth in Section 6.2(a) or (b), as the case may be.
5.2 Confidentiality.
---------------
(a) Residuals. Licensor acknowledges that Licensee may, as a
---------
result of receipt of or exposure to Confidential Information and/or Highly
Confidential Information, increase or enhance the knowledge and experience
retained in the unaided memories of each of its directors or employees.
Notwithstanding anything to the contrary in this Agreement, Licensee and its
directors and employees may use and disclose such knowledge and experience in
their respective businesses, provided that the Licensee, or any of its directors
or employees, has not (a) intentionally memorized the Confidential Information
or Highly Confidential Information so as to reduce it to an intangible form for
the purpose of creating a residual or using the same; (b) avoided its obligation
to maintain the confidentiality of Confidential Information or Highly
Confidential Information merely by having a person commit such information to
memory so as to reduce it to an intangible form; or (c) deliberately and
knowingly utilized Confidential Information or Highly Confidential Information
in its business, provided further that Licensee shall not use Confidential
Information or Highly Confidential Information or any mentally-retained
recollections thereof to circumvent or copy the methods disclosed in Proprietary
Information, Confidential Information, or Highly Confidential Information or to
circumvent any obligations under this Agreement. Licensor shall have neither any
rights in any business endeavors of Licensee that may use such knowledge and
experience nor any right to compensation, other than as may be provided for
breach of this Agreement, related to any such use of such knowledge and
experience.
(b) Highly Confidential Information. Licensee and its Permitted
-------------------------------
Sublicensees shall maintain the confidentiality of Highly Confidential
Information in the following manner:
(i) Licensee and its Permitted Sublicensees shall each
employ procedures for safeguarding Highly Confidential Information at least as
rigorous as Licensee and its Permitted Sublicensees, respectively, would employ
for its own most highly confidential information, such procedures to include, at
a minimum:
(1) maintaining on Licensee's and/or Permitted
Sublicensees' premises a secure location in which any and all Highly
Confidential Information shall be stored, where such a location may include
electronic storage provided that any such electronic storage must meet at least
the following minimum security requirements. Such electronic storage must
provide a technical means of providing security that is:
(x) at least equivalent to the security provided
by a common key form of encryption with a key length of at least 40 bits;
-13-
(y) not subject to known security breaches that
effectively negate its use for secure storage of Highly Confidential
Information; and
(z)
(A) proprietary to Licensee and, with respect
to any elements of such technical means used for secure storage of Highly
Confidential Information that must be maintained as confidential in order for
the security to be effective, protected by Licensee at the same level of
protection as required for trade secrets; or
(B) subject, with respect to any elements of
such technical means used for secure storage of Highly Confidential Information
that must be maintained as confidential in order for the security to be
effective, to a legally binding requirement that such element or elements be
maintained as confidential at the time such encryption system is employed to
provide secure storage of Highly Confidential Information.
(2) that any Highly Confidential Information stored in
such a location shall be accessible only by Authorized Employees (as defined
below);
(3) that
(x) where Highly Confidential Information is
stored in a location that is physically secure, Authorized Employees visiting
such location shall sign in and out each time that they visit such location; and
(y) where Highly Confidential Information is
stored securely in an electronic form, Authorized Employees having access to
such Highly Confidential Information in unsecure form shall sign in and out each
time that they have such access; and
(4) when Highly Confidential Information is not in
use, such information shall be stored in a locked safe at such secure location
or shall be stored electronically using technical protection that meets the
requirements of (1), above.
(ii) Licensee may disseminate Highly Confidential
Information only to the strictest minimum possible number of full-time employees
of Licensee or its Permitted Sublicensees: (1) who have an absolute need to know
such Highly Confidential Information in order to enable Licensee or its
Permitted Sublicensees to implement CSS in compliance with the CSS
Specifications; (2) who are bound in writing by obligations of confidentiality
sufficient to protect the Highly Confidential Information in accordance with the
terms of this Agreement; and (3) who, prior to the disclosure of such Highly
Confidential Information, have: (x) been identified in writing by Licensee to
Licensor; and (y) read and executed the acknowledgment attached as Exhibit "B"
hereto (a copy of such executed acknowledgment to be sent to Licensor) (each an
"Authorized Employee"). For Authorized Employees who signed an acknowledgement
containing the same terms as Exhibit B pursuant to a CSS Interim License
Agreement entered into by Licensee, such prior acknowledgements are deemed to be
sufficient for purposes of this provision. Licensee and its Permitted
Sublicensees shall at all times cause Authorized Employees to strictly abide by
their obligations hereunder and shall use the same efforts to enforce the
confidentiality obligations of each
-14-
Authorized Employee after the termination of his/her employment as Licensee uses
to enforce with respect to Licensee's own similarly confidential information,
provided that Licensee shall not use less than reasonable efforts in such
enforcement. Licensee and its Permitted Sublicensees shall make reasonable
efforts to assist Licensor in relation to any claim, action, suit, proceeding,
or litigation with respect to the access of the former employee to Confidential
Information and Highly Confidential Information provided under this Section 5.2.
Notwithstanding any contrary provision, Licensee shall not disseminate any CSS
Keys to more than three (3) Authorized Employees ("Key Employees") for each
Membership Category to which Licensee is licensed and is entitled to disclosure
of CSS Keys from Licensor, unless Licensee has notified Licensor in advance of
its intention to increase the number of Key Employees to an additional increment
of up to three (3) such employees. Licensee may make such notifications of
additional increments of Key Employees without limit, but in doing so shall
abide by the terms of clauses (1), (2), and (3), above. Licensee may substitute
another employee for a Key Employee only in the event of death, permanent or
long-term disability or resignation or termination of employment of an existing
Key Employee or reassignment of an existing Key Employee to a substantially
different business unit that is not involved in the development, manufacture, or
sale of CSS Compliant Products. Licensee shall inform Licensor in writing prior
to the substitution or addition of any Key Employee. Licensee may also disclose
Highly Confidential Information to an employee of another CSS Licensee where
such other CSS Licensee is authorized to possess such Highly Confidential
Information and where the employee to whom disclosure is made is an Authorized
Employee and, where CSS Keys are to be disclosed, a Key Employee, for such other
CSS Licensee. Prior to any disclosure pursuant to the preceding sentence,
Licensee must assure itself that such other CSS Licensee is, in fact, authorized
to possess the Highly Confidential Information to be disclosed, that the
employee to whom such disclosure is to be made is entitled to possess the Highly
Confidential Information to be disclosed, and that the method to be used to
disclose Highly Confidential Information is as secure as the methods used by
Licensor to disclose the same information to CSS Licensees.
(iii) Licensee shall not make any copies of any document
containing Highly Confidential Information. Licensee may request Licensor to
provide Licensee with additional copies of such documents. Licensor may, in its
sole discretion, fulfill any such request, provided that Licensor shall not
unreasonably refuse to provide requested additional copies.
(c) Confidential Information. Licensee may disclose Confidential
------------------------
Information only to (i) full-time employees and individuals retained as
independent contractors subject to confidentiality obligations equivalent to
those applicable to full-time employees of Licensee and/or its Permitted
Sublicensees, in each case, who have a reasonable need-to-know and are bound in
writing by obligations of confidentiality sufficient to protect the Confidential
Information in accordance with the terms of this Agreement, (ii) other CSS
Licensees provided that Licensee may disclose to such parties only information
that such parties are entitled to receive under their CSS License; or (iii)
Licensee's attorneys, auditors or other agents who owe Licensee a duty of
confidentiality as a result of a fiduciary relationship. Licensee and/or its
Permitted Sublicensees shall use the same degree of care, but no less than a
reasonable degree of care, to avoid unauthorized disclosure or use of
Confidential Information as such party employs with respect to its comparably
important confidential information. Licensee may discuss or disclose
Confidential Information with other CSS Licensees, provided such CSS Licensees
are licensed to receive the same type of Confidential Information and are
obligated in writing to treat the Confidential Information as if
-15-
received directly from Licensor. Licensee may disclose to potential customers or
suppliers the fact that Licensee has obtained a license to CSS from Licensor,
and show a certificate to such effect provided by Licensor to Licensee. Upon
Licensee's written request to Licensor, Licensor shall maintain the fact that
such Licensee is a CSS Licensee confidential during the period prior to
Licensee's public announcement of its DVD Product intentions or its actual
marketing of a DVD Product, whichever is earlier. Except as provided in the
immediately preceding sentence, Licensor shall have the right to disclose to
third parties the fact that Licensee has a license to CSS and the Membership
Categories to which such license is applicable.
(d) Contact Person and Provision of CSS Information.
-----------------------------------------------
Licensee shall designate a single Authorized Employee who shall receive all
Confidential Information and Highly Confidential Information (the "Licensee
Contact") disclosed by Licensor and may designate a single alternative
Authorized Employee ("Alternate Licensee Contact") who shall be entitled to
receive such Confidential or Highly Confidential Information in the event that
Licensee Contact is absent at the time such information is to be provided.
Licensee may also designate additional employees ("Additional Licensee
Contacts") where Licensee has a legitimate business need to have Confidential
Information and/or Highly Confidential Information provided to locations other
than where the Licensee Contact is located. The Licensee Contact and any
Alternate Licensee Contact shall be the same person(s) as designated under a CSS
Interim License Agreement entered into by Licensee or those persons designated
by Licensee on Exhibit "D" hereto. Prior to the provision of any Highly
Confidential Information to the Licensee Contact, Alternate Licensee Contact or
Additional Licensee Contact, such Licensee Contact, Alternate Licensee Contact,
or Additional Licensee Contact shall have complied with all of his/her
obligations under Section 5.2(b) hereof.
(e) No Publication. Except as, and only to the extent,
--------------
otherwise expressly provided in Sections 2.2 and 5.2, Licensee shall not
publish, disseminate or otherwise disclose or make available Confidential
Information or Highly Confidential Information received hereunder to any person,
firm or corporation without prior written consent of Licensor.
(f) Notification of Unauthorized Use or Disclosure. Licensee
----------------------------------------------
shall notify Licensor in writing immediately upon discovery of any unauthorized
use or disclosure of Confidential Information or Highly Confidential
Information, and will cooperate with Licensor in every reasonable way to regain
possession of Confidential Information and Highly Confidential Information and
prevent its further unauthorized use of disclosure.
(g) Disclosure Required by Law. In the event Licensee or a
--------------------------
Permitted Sublicensee is required by law, regulation or order of a court or
other authority of competent jurisdiction to disclose Confidential Information
or Highly Confidential Information, (1) Licensee shall take reasonable steps to
notify Licensor prior to disclosure, or (2), where notice to Licensor prior to
disclosure is not reasonably possible, Licensee shall take reasonable steps to
challenge or restrict the scope of such required disclosure and notify Licensor
as soon as possible thereafter. In either case, Licensee shall take reasonable
steps to seek to maintain the confidentiality of the information required to be
disclosed and to cooperate with Licensor in any effort undertaken by Licensor to
challenge or restrict the scope of such required disclosure.
-16-
(h) Confidentiality Exceptions. Provided that the
--------------------------
applicability of any one or more of the following exceptions shall have no
effect on Licensee's other obligations under this Agreement, the confidentiality
restrictions contained in Sections 5.2(a), (b) and (c) herein shall not apply
to, or shall be modified in accordance with the provisions set forth below with
respect to, Confidential Information or Highly Confidential Information that
Licensee can demonstrate:
(i) is Confidential Information which is or becomes
generally known to the public through no breach of Licensee's obligations owed
to Licensor hereunder;
(ii) is Highly Confidential Information which is or
becomes generally known to the public through no breach of Licensee's
obligations owed to Licensor hereunder unless such Highly Confidential
Information is the subject of one or more injunctions prohibiting its public
availability, provided that at least one such injunction has been obtained not
later than one (1) year of the date on which the Highly Confidential Information
became generally known to the public and further provided that at least one
proceeding seeking an injunction was initiated by Licensor not later than one
hundred twenty (120) days following the date on which the Highly Confidential
Information became generally known to the public; further provided, however,
that if such proceeding is not initiated within 120 days, or, in the case where
such proceeding is initiated within 120 days but such injunction has not been
obtained by Licensor within one (1) year, any Highly Confidential Information
that is or becomes generally known to the public shall be treated as
Confidential Information subject to the confidentiality obligations in Sections
5.2(a) and (c) applicable to Confidential Information, and such information
shall no longer be subject to the special obligations applicable to Highly
Confidential Information in Section 5.2(b), beginning (x) in the event no
proceeding is filed within one hundred twenty (120) days and without regard to
whether an injunction is thereafter obtained, on the date that is one hundred
twenty-one (121) days after such Highly Confidential Information has become
generally known to the public, or (y) in the event that a proceeding is filed
within one hundred twenty (120) days but no injunction is obtained within one
(1) year, on the date that is one (1) year after such Highly Confidential
Information has become generally known to the public;
(iii) is Highly Confidential Information which is or
becomes generally known to the public through no breach of Licensee's
obligations owed to Licensor hereunder and is used in DVD Products that are
widely sold in significant commercial markets and that make use of the revealed
Highly Confidential Information in such a way that such DVD Products are not
compliant with Section 6.2.4 or Section 6.2.5, as applicable, of the Procedural
Specifications;
(iv) is or has been developed by Licensee's employees
(whether independently or jointly with others) without having access (whether
directly or through any intermediaries) to any such Confidential Information or
Highly Confidential Information (or any translation, derivation or abstractions
of Confidential Information or Highly Confidential Information) and without any
breach of Licensee's obligations to Licensor, provided that the confidentiality
restrictions shall continue to apply to CSS Keys provided to Licensee; or
(v) is or has been disclosed to Licensee by a third
party which had developed (whether independently or jointly with others) such
information without any access
-17-
(whether directly or through any intermediaries) to any Confidential Information
or Highly Confidential Information and without any breach of any such third
party's obligations to Licensor, provided that this clause (vii) shall not
excuse Licensee from maintaining as confidential the fact that such information
is CSS-related and, to the extent Licensee uses the information in its CSS
implementation(s), the information itself.
(i) Confidentiality Period. The confidentiality obligations set
----------------------
forth in this Section 5.2 shall be in effect during the term of this Agreement
and shall continue thereafter until (1) with respect to Confidential
Information, the later of (i) 5 years after the termination of this Agreement
and (ii) the date on which Licensor or any successor licensor of CSS ceases to
license CSS; and (2) with respect to Highly Confidential Information, the later
of (i) three (3) years after the last commercial use of CSS by Licensor or any
CSS Licensee; and (ii) the expiration of the last copyright that protects any
CSS-encrypted scrambled content which then exists in any country adhering to the
Agreement on Trade Related Aspects of Intellectual Property Rights of the World
Trade Organization dated April 15, 1994.
(j) Prior Agreements. The obligations of this Section 5.2 shall
----------------
apply to any and all disclosures of Confidential Information or Highly
Confidential Information to Licensee prior to the execution of this Agreement.
This Agreement shall supersede any inconsistent provisions contained in any CSS
confidentiality agreement between the parties hereto, including any CSS
nondisclosure agreement between Licensee and either MEI or Licensor and any CSS
Interim License Agreement entered into by Licensee.
(k) Licensor Confidentiality Obligations. To the extent that
------------------------------------
Licensee provides any information to Licensor that Licensee designates as
confidential or highly confidential, including but not limited to any such
information disclosed in the context of the activities of the Ombudsman,
Licensor shall treat that information with equivalent levels of care as if the
information were Confidential or Highly Confidential Information. Any breach of
such obligation by Licensor shall be subject to monetary damages in the amount
of actual damages proven to the satisfaction of a court of competent
jurisdiction and shall, in any event, not exceed [*] dollars.
5.3 Reverse Engineering. Licensee shall under no circumstances
-------------------
reverse engineer, decompile, disassemble or otherwise determine the operation of
CSS Specifications, including, without limitation, any encryption/decryption or
scrambling/descrambling algorithm or logic of CSS, except that Licensee may, to
the minimum extent necessary for the purposes of testing, debugging, integration
or tuning of Licensee's own CSS Compliant Product to ensure that it works in its
intended operational environment with other CSS Compliant Products (the
"Analysis Purpose"), conduct performance or electrical analyses with respect to
the operation of other CSS Compliant Products that form part of such intended
operational environment ("Analysis"), subject to the following conditions:
(a) Licensee shall not perform any Analysis, in whole or in
part, for the purpose of deriving or discovering CSS Specifications that have
not been made available and licensed by Licensor to Licensee hereunder (the
"Derived Information").
-18-
(b) To the extent Licensee obtains Derived Information that is or
should have been identified by Licensee as being part of the CSS Specifications,
whether Licensee's obtaining of such information is inadvertent or otherwise,
Licensee shall immediately notify Licensor, and upon the instruction of
Licensor, Licensee shall within ten (10) days thereafter turn over to Licensor
or destroy any portion of Derived Information that is not solely necessary for
the Analysis Purpose and cease any use of the same for any other purpose.
(c) Subject to Section 5.3(b) above, the Derived Information: (i)
shall only be used for the Analysis Purpose and for no other purposes; and (ii)
shall be treated as confidential in the manner corresponding to the same type of
information as specified in Section 5.2.
(d) Nothing herein shall be construed as an inducement for Licensee to
reverse engineer any products of any CSS Licensee or third party.
(e) For purposes of this Section 5.3: (i) "testing" shall mean a
process of evaluating Licensee's CSS Compliant Product to ensure proper
operation; (ii) "debugging" shall mean a process of finding the cause of an
error in a Licensee's CSS Compliant Product, or another CSS Compliant Product,
to the extent Licensee is seeking to ensure that such other product works with
one or more of Licensee's products, but not analysis for the purpose of exposing
possible design features; (iii) "integration" shall mean a process of evaluating
the performance of Licensee's CSS Compliant Product in combination with other
CSS Compliant Products to ensure that they properly operate together, and (iv)
"tuning" shall mean a process of evaluating and improving Licensee's CSS
Compliant Products to work more efficiently with other CSS Compliant Products.
5.4 Export. Licensee will comply with all applicable rules and regulations
------
of the United States, Japan and other countries and jurisdictions relating to
the export or re-export of commodities, software and technical data insofar as
they relate to the activities under this Agreement, and shall obtain an approval
required under such rules and regulations whenever it is necessary for such
export or re-export. Licensee agrees that commodities, software and technical
data provided under this Agreement may be subject to restrictions under the
export control laws and regulations of the United States, Japan and other
countries and jurisdictions, as applicable, including but not limited to the
U.S. Export Administration Act and the U.S. Export Administration Regulations
and the Japanese Foreign Exchange and Foreign Trade Law, and shall obtain any
approval required under such laws and regulations whenever it is necessary for
such export or re-export.
5.5 Controls Against Theft. Licensee agrees to maintain reasonable
----------------------
controls against theft or misappropriation with respect to Schedule 1 and
Schedule 2 Products. This obligation shall be considered to be fulfilled, for
example, if Licensee utilizes controls at least equivalent to the controls that
it maintains for other of its similarly sensitive products or components.
Licensee understands and acknowledges that the obligation imposed by this
Section 5.5 requires that it maintain such reasonable controls with respect to
any Schedule 1 or Schedule 2 Products provided to a party that it may engage
pursuant to Section 2.3 of this License Agreement.
-19-
5.6 Good Faith.
----------
(a) Licensee agrees to the extent that future versions of the
By-Laws provide authority for Licensee to vote, object or otherwise express its
views pursuant to the procedures with respect to proposed changes in the
Specifications, it will do so in good faith.
(b) Licensee agrees that in the event it is or shall become a
member of a body established as the Content Protection Advisory Committee
("XXXX") of Licensor as that committee or any like or successor committee or
group may be provided for in a future version of the ByLaws, Licensee shall (1)
comply with the requirements of paragraph (a), above, with respect to its
participation on XXXX as well as otherwise; and (2) work intensively and in good
faith, exercising all reasonable and positive efforts, in cooperation with other
XXXX members, in the process by which the technologies described in Section
6.2.13 of the Procedural Specifications are solicited, developed and/or
evaluated and in the process by which related amendments to the CSS
Specifications are drafted to implement such technologies as are agreed to be
adopted.
6. TERM/TERMINATION.
6.1 Termination. This Agreement shall be effective upon the Effective
-----------
Date and shall continue until terminated in accordance with any of the following
events:
(a) Breach Due to Failure to Pay Fees Owed. If Licensee breaches
--------------------------------------
this Agreement by failing to pay in a timely fashion the fees owed pursuant to
Section 3.2 of this License Agreement, Licensor may terminate this Agreement,
provided that Licensor may not terminate this Agreement for any such non-payment
until Licensor has provided Licensee with notice and at least ninety (90) days
from the date of such notice to cure the non-payment.
(b) Other Breach.
------------
(i) If a party hereto materially defaults on any of its
obligations under this Agreement (the "Defaulting Party"), the other party
hereto (the "Non-Defaulting Party") shall have the right to seek termination or
enforcement of this Agreement, or suspension of any licenses or other rights
granted under this Agreement, as a temporary, preliminary, or final remedy to be
imposed. If such remedy is imposed, the Non-Defaulting Party shall provide for
reasonable cure opportunities, including notice and other procedures, in
accordance with the relevant order of the court.
(ii) In addition to seeking termination or suspension of
this Agreement as provided in (i), above, Licensor may, through action by its
Board of Directors, suspend the licenses or other rights provided under this
Agreement in the following circumstances: (x) if Licensee has failed to pay the
fees owed pursuant to Section 3.2 of this License Agreement after having
received notice of its failure to pay such fees and having failed to cure such
nonpayment within ninety (90) days following such notice, or (y) Licensor's
Board of Directors determines that the court enforcement process to obtain
suspension of the licenses or rights provided hereunder will delay such
suspension in a manner that will cause serious harm to the integrity or security
of the protection of content provided by CSS or otherwise pursuant to this
Agreement. Any suspension of
-20-
licenses or rights pursuant to (y) shall be permitted only if Licensor has
initiated an enforcement action as provided in paragraph (i) of this Section
6.1(b) or an Eligible Licensee has initiated a Beneficiary Claim as provided in
Section 9 (either Licensor's enforcement action or a Beneficiary Claim hereafter
referred to as "Enforcement Claim" for purposes of this Section 6) and so long
as Licensor or an Eligible Licensee is actively pursuing the imposition of
temporary relief in an Enforcement Claim. Once a ruling issued in such
enforcement action or Beneficiary Claim, the suspension imposed pursuant to this
provision shall be of no further force and effect and the effective date of the
termination if any, of the licenses granted to Licensee hereunder shall be
decided in connection with an enforcement action pursuant to which termination
of the licenses is ordered by the court. If the ruling denies the temporary
relief sought, the suspension imposed pursuant to this provision is void ab
--
initio.
------
(c) Failure to Manufacture or Distribute CSS Compliant
--------------------------------------------------
Products. If neither Licensee nor at least one of its Permitted Sublicensees has
--------
exercised the rights granted under Article 2 to manufacture or commercially
distribute CSS Compliant Products: (i) within the first twelve (12)-month period
commencing on the execution of this Agreement, or (ii) during any consecutive
twelve (12)-month period thereafter during the term of this Agreement, then
Licensee shall, if and when requested to do so by Licensor, elect to (1)
recertify its, or one of its Permitted Sublicensee's, present intention to
manufacture or commercially distribute CSS Compliant Products within a twelve
(12)-month period following such recertification, (2) return all Confidential
Information and Highly Confidential Information provided to it under this
Agreement and request that its license status be put into a dormant state until
such time as it notifies Licensor that it wishes to return to active status
based on a certification of its, or one of its Permitted Sublicensee's,
then-current intention to manufacture or commercially distribute CSS Compliant
Products within twelve (12) months of such certification, or (3) terminate this
Agreement. If Licensee fails to exercise one of these options within sixty (60)
days of Licensor's request that it do so, then Licensor may terminate this
Agreement upon thirty (30) days prior written notice to Licensee. For the
purposes of this provision, Licensee shall be deemed to have failed to exercise
the rights granted under Article 2 to manufacture or commercially distribute CSS
Compliant Products only if neither Licensee nor one of its Permitted
Sublicensees, nor a CSS Licensee for which Licensee has designed or manufactured
a CSS Compliant Product, shall have manufactured or commercially distributed a
CSS Compliant Product during the relevant time period.
(d) Termination by Licensee. Licensee shall have the right
-----------------------
to terminate this Agreement at any time upon ninety (90) days prior written
notice to Licensor.
(e) Termination Upon Termination of the License from MEI and
--------------------------------------------------------
Toshiba. This Agreement shall terminate upon the termination of the license from
-------
MEI and Toshiba to Licensor.
(f) Bankruptcy. Either party shall have the right to
----------
terminate this Agreement in the event (i) a petition in bankruptcy or for
reorganization is filed by or against the other party under any bankruptcy laws;
(ii) the other party makes an assignment for the benefit of creditors; or (iii)
a receiver, trustee, liquidator or custodian is appointed for all or a
substantial part of the other party's property, and the order of appointment is
not vacated within thirty (30) days.
-21-
6.2 Effect of Termination.
---------------------
(a) Termination Due to Licensee's Breach or Failure to
--------------------------------------------------
Manufacture or Distribute CSS Compliant Products. If this Agreement is
------------------------------------------------
terminated pursuant to Section 6.1(a) or (b)(i) as a result of Licensee's breach
or Licensor terminates this Agreement pursuant to Section 6.1(c), all licenses
granted by Licensor to Licensee shall terminate, provided, however, that the
license to distribute, offer to sell, sell, import, and otherwise transfer CSS
Compliant Products, subject to the conditions of Section 2.1(d), shall terminate
ninety (90) days after the effective date of the termination of this Agreement,
or upon such earlier date as may be provided by the remedy imposed pursuant to
an Enforcement Claim. In the event that any of the licenses or other rights
provided under this Agreement are suspended pursuant to Section 6.1(b)(ii) and
such suspension is subsequently converted to a termination, the 90-day period
shall run from the date of the suspension with respect to any products produced
or acquired for which the suspended license or right was necessary for such
production or acquisition. If Licensor terminates this Agreement pursuant to
Section 6.1(a), (b)(i), or (c), the covenant not to xxx granted by Licensee
under Section 5.1 shall terminate, provided, however, with respect to CSS
Compliant Products that have been produced or are in production as of the
effective date of Licensor's termination of this Agreement, then CSS Licensees,
and their Permitted Sublicensees, for one (1) year after the effective date of
Licensor's termination, shall have the right, subject to the conditions of
Section 2.1(d), to distribute such CSS Compliant Products. Notwithstanding any
of the foregoing, the covenant not to xxx granted in Sections 5.1(b) and Section
5.1(c) with respect to Disc IP shall survive any termination of this Agreement.
(b) Termination by Licensee or Due to Licensor's Breach. If this
---------------------------------------------------
Agreement is terminated pursuant to Section 6.1(b)(i) as a result of Licensor's
material breach, the covenant not to xxx granted by Licensee under Section
5.1(a) shall terminate upon the effective date of such termination with respect
to any CSS Compliant Products not already produced or in production as of such
date and, with respect to products already produced or in production as of the
effective date of such termination, such covenant shall terminate ninety (90)
days after the effective date of the termination. If this Agreement is
terminated by Licensee pursuant to Section 6.l(b)(i), (c), or (d), all licenses
granted by Licensor to Licensee shall terminate, provided, however, that the
license to distribute, offer to sell, sell, import and otherwise transfer CSS
Compliant Products shall terminate upon the final date allowed for distribution
of all CSS Compliant Products set forth in this Section 6.2(b), and the covenant
not to xxx granted by Licensee under Section 5.1 shall terminate, provided,
however, that CSS Licensees, and their Permitted Sublicensees, for a period of
one (1) year after such termination, shall have the right, subject to the
conditions of Section 2.1(d), to distribute all CSS Compliant Products that have
been produced or are in production as of the date of such termination.
Notwithstanding the foregoing, the covenant not to xxx in Sections 5.1(b) and
5.1(c) with respect to Disc IP shall survive any termination of this Agreement.
(c) No Refund. If this Agreement is terminated, Licensee shall
---------
have no right to receive a refund of any sums paid as Administration Fees
pursuant to Section 3.2.
6.3 Return of Materials. Within thirty (30) days after termination of
-------------------
this Agreement, or such lesser time as may be provided by the remedy imposed
pursuant to an Enforcement Claim, Licensee shall either: (i) return all
Confidential Information and Highly
-22-
Confidential Information to Licensor; or (ii) destroy all Confidential
Information and Highly Confidential Information in its possession and certify
such destruction in writing to Licensor.
6.4 Survival. The terms of Sections 5.1 (subject to Sections 6.2(a)
--------
and (b)), 5.2, 5.3, 5.4, 6.2, and 6.3, this Section 6.4 and Articles 7, 8, 9 and
10, and so much of Article 1 as may be necessary to define any terms used in
such Sections or Articles, shall survive the termination of this Agreement.
7. OWNERSHIP. All Proprietary Information and media containing Proprietary
Information as provided by Licensor to Licensee shall remain the property of
Licensor or its licensors. Except as provided in Article 2, this Agreement does
not give Licensee any license or other right to the Proprietary Information.
8. DISCLAIMER AND LIMITATION OF LIABILITY.
8.1 Disclaimer. ALL PROPRIETARY INFORMATION IS PROVIDED "AS IS."
----------
LICENSOR MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, AND EXPRESSLY DISCLAIMS IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE, AND ANY EQUIVALENTS UNDER THE LAWS OF ANY
JURISDICTION THAT MIGHT ARISE FROM THE PROPRIETARY INFORMATION OR LICENSEE'S
IMPLEMENTATION, ATTEMPTED IMPLEMENTATION, OR USE OF SUCH INFORMATION OR CSS.
LICENSOR FURTHER DISCLAIMS ANY WARRANTY THAT CSS AND/OR THE CONTENTS OF THE
PROPRIETARY INFORMATION, OR ANY PRODUCT IMPLEMENTING CSS OR SUCH PROPRIETARY
INFORMATION, IN WHOLE OR IN PART, WILL BE FREE FROM INFRINGEMENT OF ANY THIRD
PARTY INTELLECTUAL PROPERTY OR PROPRIETARY RIGHTS.
8.2 Limitation of Liability. NEITHER MEI, TOSHIBA, OR ANY DIRECTOR,
-----------------------
OFFICER, OR EMPLOYEE OF MEI, TOSHIBA, NOR, EXCEPT AS PROVIDED IN SECTION 5.2(k)
OF THIS LICENSE AGREEMENT, LICENSOR OR ANY DIRECTOR, OFFICER, OR EMPLOYEE OF
LICENSOR ACTING IN HIS OR HER CAPACITY AS A DIRECTOR, OFFICER, OR EMPLOYEE OF
LICENSOR (COLLECTIVELY, THE "AFFECTED PARTIES") SHALL BE LIABLE TO LICENSEE FOR
ANY DIRECT, INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES
ARISING OUT OF ANY CAUSE OF ACTION RELATING TO THIS AGREEMENT, OR BASED ON
MAKING, USING, SELLING OR IMPORTING ANY PRODUCTS OF LICENSEE THAT IMPLEMENT
PROPRIETARY INFORMATION OR CSS, WHETHER UNDER THEORY OF CONTRACT, TORT,
INDEMNITY, PRODUCT LIABILITY OR OTHERWISE. TO THE EXTENT THAT ANY COURT OF
COMPETENT JURISDICTION RENDERS JUDGMENT AGAINST THE AFFECTED PARTIES,
NOTWITHSTANDING THE ABOVE LIMITATION, THE AFFECTED PARTIES' TOTAL LIABILITY TO
LICENSEE IN CONNECTION WITH THIS AGREEMENT OR CSS SHALL IN NO EVENT EXCEED THE
AMOUNTS OF MONEY RECEIVED BY THE AFFECTED PARTIES FROM LICENSEE UNDER THIS
AGREEMENT DURING THE MOST RECENT FIVE (5)-YEAR PERIOD IMMEDIATELY PRIOR TO THE
DATE OF SUCH JUDGMENT. THIS LIMITATION OF LIABILITY SHALL APPLY TO MEI AND
TOSHIBA
-23-
SOLELY IN THEIR CAPACITIES AS CO-DEVELOPERS AND LICENSORS OF CSS TO LICENSOR.
9. REMEDIES.
9.1 Indemnification. Licensee shall indemnify and hold Licensor and
---------------
its officers, directors and employees, and, in their roles as developers of CSS
and licensors of CSS to Licensor, MEI and Toshiba and their respective officers,
directors and employees, harmless from and against any and all claims, actions,
suits, proceedings or litigation and any losses, deficiencies, damages,
liabilities, costs and expenses including without limitation, reasonable
attorneys' fees and all related costs and expenses, to be paid or otherwise
incurred in connection with the defense of any claim, action, suit, proceeding
or litigation ("Claims") which result from: (i) any breach of any covenant,
agreement, representation or warranty herein by Licensee, its employees, former
employees who had access to Confidential Information or Highly Confidential
Information pursuant to this Agreement, provided that Licensee's indemnity with
respect to acts of former employees shall be limited to circumstances in which
Licensee has failed to comply with its obligations as to former employees
pursuant to Section 5.2(b)(ii) hereof; (ii) Licensee's manufacture, sale or use
of any DVD Products, provided, that such indemnity shall not extend to: (a) any
Claim that the CSS Specifications infringe the intellectual property rights of
any third parties, or (b) any Claim or any portions thereof that is attributable
to compliance with the CSS Specifications themselves; and/or (iii) Licensee's
activities under Section 5.3.
9.2 Equitable Relief. Licensee and Licensor recognize and agree that
----------------
due to the unique nature of certain provisions hereof and the lasting effect of
and harm from a breach of such provisions, including making available the means
for widespread unauthorized copying of copyrighted content intended to be
protected using CSS, in the event that Licensee breaches its obligations under
Sections 2.1, 2.3, 2.4, 2.5, 4.2, 5, 9.5 or 10 hereof, money damages alone will
not adequately compensate an injured party, including an injured Eligible
Licensee pursuant to Section 9.5, and that injury to such party will be
irreparable. Licensee and Licensor therefore agree that, in addition to all
other remedies available to the injured party at law, in equity, by agreement or
otherwise, the injured party, including an Eligible Licensee pursuant to Section
9.5, upon showing to the relevant court's satisfaction that applicable factors
other than the fact that harm will be irreparable and that monetary damages are
not sufficient to remedy the injury have been fulfilled, will be entitled to
specific performance or other temporary, preliminary, or permanent injunctive
relief including corrective actions appropriate to the circumstances for the
enforcement of any such obligation (whether or not there have been commercial
sales of products subject to the requested relief).
9.3 Specific Remedies. Licensee acknowledges that, due to the critical
-----------------
importance of maintaining the integrity of CSS and the inability to calculate
the damage to CSS users, in the event of any material breach of Section 5.2,
Licensor, in addition to any other remedies in equity, but in lieu of any and
all other claims for monetary damages, may recover liquidated damages for each
material breach from Licensee in the amount of [*] U.S. dollars $[*],
provided that the parties agree that Licensee may request and the court may
grant such request that this amount be reduced to take account of the fact that
Licensee brought the breach to Licensor's attention in a timely and reasonable
manner. For purposes of the preceding sentence, a breach shall
-24-
be "material" only if it has resulted in or would be likely to result in
commercially significant harm to other CSS Licensees or threat to the integrity
or security of CSS. For purposes of this Section 9.3, a series of substantially
related events shall constitute a single material breach. In addition, the
following is a non exclusive list of circumstances in which liquidated damages
pursuant to this Section 9.3 shall not be available for any breach of Section
5.2: (1) if no Confidential Information or Highly Confidential Information was
released to a third party not permitted hereunder to have such information or
could reasonably have been expected to have been released to such third party as
a result of the breach; (2) if Licensee maintains an internal program to assure
compliance with Section 5.2 (including a program to assure maintenance of
confidentiality of information for purposes in addition to compliance with this
Agreement), the breach was inadvertent or otherwise unintentional, and the
breach did not have a material adverse effect on the integrity or security of
CSS; (3) if Licensee brought the breach to Licensor's attention in a timely
manner as required by this Agreement and such breach did not have a material
adverse effect on the integrity or security of CSS; or (4) if Licensor
improperly marked or failed to xxxx information as Confidential Information or
Highly Confidential Information or failed to otherwise disclose that such
information was Confidential Information or Highly Confidential Information and
such information is the subject of the alleged breach.
9.4 Damage Limitation. Notwithstanding any other provision of this
-----------------
Agreement, Licensee's cumulative liability to Licensor (including MEI and
Toshiba) and all other CSS Licensees for any breach, or combination of breaches,
or any of its other obligations under this Agreement shall not exceed [*] U.S.
Dollars $[*], unless the revenue derived from Licensee's products, sold by
Licensee, and developed and manufactured using CSS or Confidential Information
or Highly Confidential Information, is less than [*] U.S. dollars $[*], in which
case Licensee's liability shall not exceed such lesser amount; provided,
however, that if only a portion of one or more of Licensee's products is
developed and manufactured using CSS or Confidential Information or Highly
Confidential Information, then the proportion of such portion relative to the
entirety of such Licensee products shall be used in calculating the revenue
derived from such products for purposes of this Section 9.4 (e.g., 5K circuits
out of 100K circuits equals 5%); and provided further, however, that such amount
shall in no event, except as provided in Section 9.3, be less than $[*].
9.5 Third Party Beneficiary Right. The parties hereto acknowledge and
-----------------------------
agree that the compliance of Licensee, other CSS Licensees, and Associate
Licensees with the terms of the licenses granted by this Agreement or the
Associate License, as applicable, is essential to maintain the integrity and
security of the Content Scramble System and to protect prerecorded motion
pictures contained on DVD Discs. As part of the consideration of the licenses
granted herein, Licensee, for itself and its Permitted Sublicensees, hereby
confers a third-party beneficiary right upon certain CSS Licensees ("Eligible
Licensees") that fall into one of two classes: (i) Motion Picture Companies
("Eligible Content Providers") or (ii) manufacturers of CSS Compliant Products
other than DVD Discs ("Eligible Implementers"), in order to enforce certain of
Licensee's obligations, subject to the following conditions:
(a) Either an Eligible Content Provider who has commercially
released one or more prerecorded motion pictures on DVD Disc that utilizes CSS
or an Eligible Implementer which has commercially released one or more CSS
Compliant Products other than DVD Discs shall
-25-
be entitled to initiate or institute a claim or action ("Beneficiary Claim") to
enforce only those obligations of Licensee specified as follows (collectively,
the "Eligible Obligations"):
(i) for any Beneficiary Claim initiated by Eligible Content
Providers, Licensee's obligations under Section 2.1 [Nonexclusive License], 2.3
[Right to Have Made], 2.4 [Sublicenses], 2.5 [No Sublicense or Implied
Licenses], 4.2 [Compliance with Specifications], 5.1 [Access to Intellectual
Property], 5.2 [Confidentiality], 5.3 [Reverse Engineering], 5.5 [Controls
Against Theft], 9.2 [Equitable Relief], 9.5(d) [Settlement Restrictions] and
Section 10 [Miscellaneous] and including any equivalent provisions contained in
any Associate License; and
(ii) for any Beneficiary Claim initiated by Eligible
Implementers, Licensee's obligations under Section 4.2 [Compliance with
Specifications] solely as such obligations pertain to Section 5.4
[Non-alteration of the Secured Disc Key Set] and Section 6.3 [Motion Picture
Scrambling] of the CSS Procedural Specifications, Section 5.1 [Access to
Intellectual Property], Section 5.5 [Controls Against Theft], and Section 9.5(d)
[Settlement Restrictions].
Each Eligible Licensee which has not initiated the Beneficiary Claim but
which is either an Eligible Content Owner, in the case of Beneficiary Claim
initiated by an Eligible Content Owner, or an Eligible Implementor, in the case
of a Beneficiary Claim initiated by an Eligible Implementor, shall be eligible
to join such Beneficiary Claim.
Subject to Section 9.6, the remedies available for any Beneficiary Claim
shall not include damages, but shall include: (i) equitable relief provided
under Section 9.2, provided that such relief shall be limited to temporary
and/or preliminary relief until such time as the Eligible Licensee bringing the
Beneficiary Claim has completed a process of seeking to reach a reasonable
settlement of such claim using the efforts of the Ombudsman; and (ii)
reimbursement for actual and reasonable costs mitigation of the harm caused by
Licensee's breach, provided that such reimbursement shall be no more than
$[*] for all Eligible Licensees cumulatively joining in any particular
Beneficiary Claim. In addition, the prevailing party in relation to the
contractual claims in any action brought under this Section shall be entitled to
an award of its reasonable attorney's fees and related costs (including expert's
fees and costs) incurred in relation to such contractual claims in an amount to
be fixed either pursuant to stipulation between the parties involved or by the
court, provided that in fixing the amount of such an award, the court may
determine in its discretion to make no award of attorney's fees in given case
and, in any event, shall be limited to an award of no more than $[*], except
that the court may award up to $[*] in any case in which the court determines
that one of the following circumstances exists: (1) the breach was material and
willful or malicious, and resulted in the exposure of an Eligible Content
Provider's content unauthorized copying, in the case of a Beneficiary Claim
brought by such Eligible Content Provider where such Eligible Content Provider
is the prevailing party as described above, (2) the breach was material and
willful or malicious, and resulted in consumers being unable to use CSS
Compliant Products manufactured or distributed by the Eligible Implementor to
view content that would normally be viewable using such CSS Compliant Products,
in the case of a Beneficiary Claim brought by such Eligible Implementor where
such Eligible Implementor is the prevailing party as described above or (3) the
Beneficiary Claim was frivolous or brought in bad faith, in the event the
Defendant Licensee is the prevailing party as
-26-
described above. The amount of any award of attorney's fees and related costs
shall be made part of any judgment or award rendered.
(b) Prior to initiating or instituting any Beneficiary Claim
against a Licensee ("Defendant Licensee"), an Eligible Licensee ("Plaintiff
Licensee") shall provide Licensor notice and consultation reasonable under the
circumstances regarding a proposed Beneficiary Claim; provided that such
consultation with Licensor shall not affect an Eligible Licensee's complete
discretion in initiating such a Beneficiary Claim. Such Eligible Licensee shall
further provide Licensor with notice of actual filing of a Beneficiary Claim and
upon Licensor's request, any copies of material documents to be filed in
Plaintiff Licensee's initiation or pursuit of such Beneficiary Claim. Licensor
shall cooperate reasonably with such Eligible Licensee in providing appropriate
and necessary information in connection with the Beneficiary Claim to the extent
that such cooperation is consistent with the preservation of the integrity and
security of CSS and to the extent such cooperation does not involve release of
information provided to Licensor by another CSS Licensee that such CSS Licensee
has designated to Licensor to be its confidential and proprietary information.
Documents provided to Licensor under this Section 9.5(b) shall not include any
documents filed or to be filed under seal in connection with such Beneficiary
Claim. The failure to provide such documents shall not, however, be a defense
against any Beneficiary Claim or grounds for a request to delay the granting of
any temporary or preliminary relief sought.
(c) Licensor shall provide Eligible Content Providers or Eligible
Implementors, as the case may be, with prompt notice of a Plaintiff Licensee's
Beneficiary Claim against a Defendant Licensee ("Claim Notice") in accordance
with Section 10.6. Within sixty (60) days of the date of mailing of a Claim
Notice, all such Eligible Licensees shall elect whether to join in such
Beneficiary Claim, and the failure of any such Eligible Licensee to join in such
Beneficiary Claim within such sixty (60) day period shall be deemed a waiver of
such Eligible Licensee's third party beneficiary right under this Section 9.5
with respect to all Beneficiary Claims against such Defendant Licensee arising
out of the alleged breach by such Defendant Licensee raised in such Beneficiary
Claims. Plaintiff Licensee shall support, and Defendant Licensee shall not
oppose, any motion to intervene by such Eligible Licensees or Licensor electing
to join such Beneficiary Claim within such sixty (60) day period. Neither an
Eligible Licensee's failure to notify or consult with Licensor or provide copies
to Licensor as required by Section 9.5(b), nor Licensor's failure to give notice
under this Section 9.5(c) shall be a defense against any Beneficiary Claim or
grounds for a request to delay the granting of any preliminary relief requested.
(d) Eligible Licensees shall have no right to, and Licensee
agrees that it will not, enter into any settlement that (i) amends any material
term of this Agreement or of the Associate License; (ii) has a material adverse
effect on the integrity and/or security of CSS; or (iii) impacts any of the
rights in and to CSS held by Licensor, MEI, or Toshiba or to any intellectual
property rights embodied therein unless Licensor, MEI, and/or Toshiba, as the
case may be, shall have provided prior written consent thereto.
(e) NOTWITHSTANDING SECTION 10.4(b), LICENSEE AGREES THAT ALL
BENEFICIARY CLAIMS INSTITUTED UNDER THIS SECTION 9.5 SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, U.S.A.
EXCLUDING THAT BODY OF LAW RELATING TO CONFLICTS
-27-
OF LAW PRINCIPLES, AND SHALL BE CONDUCTED IN FEDERAL AND STATE COURTS LOCATED IN
LOS ANGELES, SANTA XXXXX OR SAN FRANCISCO COUNTIES IN THE STATE OF CALIFORNIA,
U.S.A. WITH RESPECT TO ANY DISPUTE CONCERNING COMPLIANCE WITH THIS AGREEMENT,
LICENSEE HEREBY IRREVOCABLY CONSENTS TO (i) THE EXCLUSIVE JURISDICTION AND VENUE
IN THE FEDERAL AND STATE COURTS LOCATED IN LOS ANGELES, SANTA XXXXX OR SAN
FRANCISCO COUNTIES IN THE STATE OF CALIFORNIA, U.S.A; AND (ii) THE SERVICE OF
PROCESS OF SAID COURTS IN ANY MATTER ARISING OUT OF A DISPUTE OVER COMPLIANCE
WITH THIS AGREEMENT BY PERSONAL DELIVERY OR BY MAILING OF PROCESS BY REGISTERED
OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE ADDRESSES AS SPECIFIED IN THIS
AGREEMENT OR TO THE AGENT REQUIRED BY SECTION 10.4(d). LICENSEE WAIVES ANY
OBJECTION TO THE JURISDICTION, PROCESS, AND VENUE OF ANY SUCH COURT, AND TO THE
EFFECTIVENESS, EXECUTION, AND ENFORCEMENT OF ANY ORDER OR JUDGMENT (INCLUDING,
BUT NOT LIMITED TO, A DEFAULT JUDGMENT) OF SUCH COURT PERTAINING TO THIS
AGREEMENT, TO THE MAXIMUM EXTENT PERMITTED BY THE LAW OF THE PLACE WHERE
ENFORCEMENT OR EXECUTION OF ANY SUCH ORDER OR JUDGMENT MAY BE SOUGHT AND BY THE
LAW OF ANY PLACE WHOSE LAW MIGHT BE CLAIMED TO BE APPLICABLE REGARDING THE
EFFECTIVENESS, ENFORCEMENT, OR EXECUTION OF SUCH ORDER OR JUDGMENT, INCLUDING
PLACES OUTSIDE OF THE STATE OF CALIFORNIA, THE XXXXX XX XXXXXXXX, XXX XX XXX
XXXXXX XXXXXX. HOWEVER, IN THE CASE OF LICENSEES THAT ARE DEFENDANTS THAT ARE
INCORPORATED IN THE UNITED STATES AND HAVE SUBSTANTIAL ASSETS IN THE UNITED
STATES, ENFORCEMENT OR EXECUTION OF ANY SUCH ORDER OR JUDGMENT AGAINST SUCH
DEFENDANTS MAY BE SOUGHT ONLY IN COURTS OF THE UNITED STATES.
9.6 Nothing contained in Section 8.3, Section 9.2 or Section 9.5 is
intended to limit remedies or relief available pursuant to statutory or other
claims that a CSS Licensee may have under separate legal authority not contained
in this Agreement.
10. MISCELLANEOUS.
10.1 Entire Agreement. This Agreement, the exhibits hereto constitute
----------------
the entire agreement between the parties related to the subject matter of this
Agreement hereto and supersede all oral or written agreements on this subject
matter entered prior to this Agreement. Subject to Section 10.7, this Agreement
may not be modified except by written agreement dated subsequent to the date of
this Agreement and signed by both parties.
10.2 Assignment. Licensee shall not assign or otherwise transfer any
----------
of its rights or obligations under this Agreement without the prior written
consent of Licensor, provided, however, that Licensee may assign this Agreement
in connection with a merger, sale or reorganization pursuant to which Licensee
merges into, or transfers all or substantially all of the assets or stock
(including this Agreement) of Licensee or of the business unit or units that are
utilizing CSS in its business activities to the assignee, provided that the
assignee agrees in writing to be bound by the terms and conditions of this
Agreement and provides all information required by the Licensor of CSS Licensees
pursuant to this agreement. Licensor shall have the right to assign this
-28-
License Agreement in connection with a merger into, or transfer of all or
substantially all of Licensor's assets or stock (including this Agreement) to
the assignee, provided that the assignee agrees in writing to assume all of
Licensor's obligations under this Agreement.
10.3 Presumptions. In construing the terms of this Agreement, no
------------
presumption shall operate in either party's favor as a result of its counsel's
role in drafting the terms or provisions hereof.
10.4 Governing Law; Enforcement; Jurisdiction.
----------------------------------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA, U.S.A. EXCLUDING THAT BODY
OF LAW RELATING TO CONFLICTS OF LAW PRINCIPLES.
(b) IN CONNECTION WITH ANY DISPUTES BETWEEN THE PARTIES HERETO
ARISING OUT OF OR RELATING TO THIS AGREEMENT, EACH PARTY HERETO IRREVOCABLY
CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE IN THE FEDERAL AND STATE COURTS
LOCATED IN THE COUNTY OF SANTA CLARA, CALIFORNIA, AND (ii) THE SERVICE OF
PROCESS OF SAID COURTS IN ANY MATTER RELATING TO THIS AGREEMENT BY PERSONAL
DELIVERY OR BY MAILING OF PROCESS BY CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESSES SPECIFIED IN THIS AGREEMENT, OR TO THE AGENT TO BE APPOINTED PURSUANT
TO (c), BELOW,
(c) LICENSEE SHALL APPOINT AN AGENT IN THE STATE OF CALIFORNIA
FOR ACCEPTANCE OF SERVICE OF PROCESS PROVIDED FOR UNDER THIS AGREEMENT AND SHALL
NOTIFY LICENSOR OF THE IDENTITY AND ADDRESS OF SUCH AGENT WITHIN THIRTY (30)
DAYS AFTER THE EFFECTIVE DATE;
(d) LICENSEE WAIVES ANY OBJECTIONS TO THE JURISDICTION, PROCESS,
AND VENUE OF ANY SUCH COURTS, AND TO THE EFFECTIVENESS EXECUTION, AND
ENFORCEMENT OF ANY ORDER OR JUDGMENT (INCLUDING, BUT NOT LIMITED TO, A DEFAULT
JUDGMENT) OF SUCH COURTS PERTAINING TO THIS AGREEMENT, TO THE MAXIMUM EXTENT
PERMITTED BY THE LAW OF THE PLACE WHERE ENFORCEMENT OR EXECUTION OF ANY SUCH
ORDER, JUDGMENT OR DECISION MAY BE SOUGHT AND BY THE LAW OF ANY PLACE WHOSE LAW
MIGHT BE CLAIMED TO BE APPLICABLE REGARDING THE EFFECTIVENESS, ENFORCEMENT, OR
EXECUTION OF SUCH ORDER, JUDGMENT, OR DECISION, INCLUDING PLACES OUTSIDE OF THE
XXXXX XX XXXXXXXXXX, XXXXX XX XXXXXXXX, XXX XXX XXXXXX XXXXXX. HOWEVER, IN THE
CASE OF LICENSEES THAT ARE INCORPORATE IN THE UNITED STATES AND HAVE SUBSTANTIAL
ASSETS IN THE UNITED STATES, ENFORCEMENT OR EXECUTION OF ANY SUCH ORDER OR
JUDGMENT, AGAINST SUCH DEFENDANT, MAY BE SOUGHT ONLY IN THE COURTS OF THE UNITED
STATES.
10.5 Severability; Waiver. Subject to Section 10.7, should any clause,
--------------------
sentence, or paragraph of this Agreement judicially be declared to be invalid,
unenforceable, or void, such
-29-
decision shall not have the effect of invalidating or voiding the remainder of
this Agreement. The parties agree that the part or parts of this Agreement so
held to be invalid, unenforceable, or void shall be reformed without further
action by the parties hereto and only to the extent necessary to make such part
or parts valid and enforceable. Subject to Section 10.7, a waiver by either of
the parties hereto of any of the covenants to be performed by the other party or
any breach thereof shall not be effective unless made in writing and signed by
the waiving party and shall not be construed to be a waiver of any succeeding
breach thereof or of any covenant herein contained.
10.6 Notice. All notices to be provided pursuant to this Agreement
------
shall be given in writing and shall be effective when either served by personal
delivery or upon receipt via certified mail, return receipt requested, postage
prepaid, overnight courier service or sent by facsimile transmission with hard
copy confirmation sent by certified mail, as above, in each case to the party at
the addresses listed below or at such other addresses as may be specificd by
notice given in accordance with this section.
If to Licensor:
DVD Copy Control Association
000 X Xxxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
Attn: Xxxx Xxx
Fax: x0-000-000-0000
If to Licensee:
InterVideo, Inc.
00000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000
Attn: General Counsel
Fax: 000-000-0000
10.7 Amendment. No agreement pertaining to CSS similar to this
---------
Agreement or to either of the form Associate Licenses hereto between Licensor
and any CSS Licensee or Associate Licensee may be entered into on terms other
than those contained in this Agreement or the Associate License, as applicable,
to the extent that any modified terms would have a material adverse effect on
the integrity or security of CSS or the protections provided to Eligible
Licensees pursuant to Section 9.5 hereof (including any of the Sections
referenced therein) or in the Associate License, and no agreement between
Licensor and any CSS Licensee or Associate Licensee having terms contained
herein or the Associate License, as applicable may be modified or its terms
waived if such modification or waiver would have a material adverse effect on
the integrity or security of CSS or the protections provided to Eligible
Licensees pursuant to Section 9.5 hereof (including any of the Sections
referenced therein) or in the Associate License.
10.8 Licensee List. Unless the Licensor's Board of Directors
-------------
determines otherwise, Licensor will provide Licensee, upon Licensee's request, a
list of all other CSS Licensees, Associate Licensees, and Permitted Sublicensees
of which Licensor has received notice pursuant to
-30-
Section 2.4(a), above, except that such list shall not include any CSS Licensee
that (i) has not announced its intention to manufacture or sell, or has not sold
or offered for sale, CSS Compliant Products and (ii) has notified Licensor in
writing that it desires confidentiality until such time as it publicly announces
its intention to manufacture or sell, or has sold or offered for sale, CSS
Compliant Products.
10.9 Headings and Captions. Section headings and captions are used in
---------------------
this Agreement for convenience only, and shall not be deemed to constitute a
part of or to affect the construction of this Agreement.
-31-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
dates written below.
Licensor: Licensee:
/s/ Xxxx Xxx /s/ Xxx Xxxxxxxxxx
----------------------------------- -------------------------------------
Signature Signature
Xxxx Xxx Xxx Xxxxxxxxxx
----------------------------------- -------------------------------------
Printed Name Printed Name
President VP Worldwide Sales/Marketing
----------------------------------- -------------------------------------
Title Title
12/22/00 12/21/00
----------------------------------- -------------------------------------
Date Date
-32-
Exhibit List
A. Permitted Sublicensee Acknowledgment and Agreement
B. Acknowledgment by Authorized Employees
C. CSS Membership Categories and Fee Schedule
D. Contact Person and Alternate Contact Person
EXHIBIT "A"
TO
CSS LICENSE AGREEMENT
PERMITTED SUBLICENSEE ACKNOWLEDGMENT
AND AGREEMENT
______________________________________, a ____________________ corporation
having a place of business at ____________________________________________
("Sublicensee"), hereby acknowledges and agrees that:
(i) it is an Affiliate of ____________ ("Licensee"), as "Affiliate"
is defined in Section 1.2 of the CSS License Agreement (the "License Agreement")
executed on ____________ between Licensee and the CSS Entity ("Licensor");
(ii) it has received a sublicense from Licensee (the "Sublicense")
pursuant to Section 2.4 of the License Agreement;
(iii) it has read and understood the License Agreement and agrees to
abide by its terms with the same rights (but without the right to grant a
sublicense) and the same obligations as Licensee, including, without limitation,
the covenant not to xxx and patent license offer provisions of Section 5.1
thereof;
(iv) the Sublicense coterminates with the License Agreement and also
terminates at such time that Sublicensee ceases to qualify as an "Affiliate";
(v) in the event Sublicensee fails to abide by the terms of the
License Agreement, Licensor and/or Eligible Licensees (as third party
beneficiaries) shall, in their respective sole discretion, be entitled to bring
an action at law or in equity against Sublicensee to enforce the terms of the
License Agreement.
IN WITNESS WHEREOF, Sublicensee has executed this Acknowledgment and
Agreement as of the date written below.
Signed: _____________________________________________
Name: _______________________________________________
Title: ______________________________________________
Date: _______________________________________________
EXHIBIT "B"
TO
CSS LICENSE AGREEMENT
ACKNOWLEDGMENT BY AUTHORIZED EMPLOYEES
I, ______________________, a full-time employee of
_____________________________, a ______________________ ("Licensee"),
acknowledge that I have been designated by Licensee as an "Authorized Employee"
to receive on behalf of Licensee access to Confidential Information and Highly
Confidential Information of the CSS Entity ("Licensor") which Licensee is
obligated to maintain strictly confidential under the terms of the CSS License
Agreement between Licensor and Licensee. With respect to Highly Confidential
Information, I acknowledge that the CSS License Agreement requires Licensee to
employ procedures for safeguarding Highly Confidential Information which
procedures include, at a minimum: (i) Licensee and its Permitted Sublicensees
shall each employ procedures for safeguarding Highly Confidential Information at
least as rigorous as Licensee and its Permitted Sublicensees, respectively,
would employ for its own most highly confidential information, such procedures
to include, at a minimum: (1) maintaining on Licensee's and/or Permitted
Sublicensees' premises a secure location in which any and all Highly
Confidential Information shall be stored, where such a location may include
electronic storage that provides at least as much security as the CSS system
itself provides; (2) that any Highly Confidential Information stored in such a
location shall be accessible only by Authorized Employees (as defined below);
(3) that (x) where Highly Confidential Information is stored in a location that
is physically secure, Authorized Employees visiting such location shall sign in
and out each time that they visit such location; and (y) where Highly
Confidential Information is stored securely in an electronic form, Authorized
Employees having access to such Highly Confidential Information in unsecure form
shall sign in and out each time that they have such access; and (4) when Highly
Confidential Information is not in use, such information shall be stored in a
locked safe at such secure location or shall be stored electronically in a form
that provides at least as much security as the CSS system itself provides. I
further acknowledge that the CSS License Agreement defines Highly Confidential
Information to be (i) the algorithms used for scrambling, descrambling,
authentication and key recovery; (ii) master, disc, title or authentication
keys; or (iii) information developed by or for Licensor for testing product
compliance with CSS where such information makes use of or reveals information
described in (i) or (ii).
I further acknowledge that I have signed a prior written agreement with
Licensee pursuant to which I have agreed to maintain the confidentiality of
third party confidential information received by Licensee. I acknowledge that I
am bound by such agreement to adhere to procedures established by Licensee to
maintain the confidentiality of Confidential Information and Highly Confidential
Information during my employment and after my employment with Licensee.
By signing below, I attest that I have read and understood this
acknowledgment.
Signed: _____________________________________________
Name: _______________________________________________
Date: _______________________________________________
cc: CSS Entity
EXHIBIT"C" TO
CSS LICENSE AGREEMENT
CSS MEMBERSHIP CATEGORIES
AND
FEE SCHEDULE
I. CSS Membership Categories:
The CSS license has annual DVD Copy Control Association administrative fee of
------ [*] US dollars ([*] US dollars for Associate License)/1/ for each
Membership Category of license selected.
---------------------------------------------------------------------------------------------------------------------------
Requested license categories
. "Reseller" [Associate License] [_]
. "Assembler" [Associate License] [_]
. "Content Provider" [_]
. "Authoring Studio" [_]
. DVD Disc Replicator" [_]
. "CSS Disc Formatter Manufacturer" [_]
. "DVD Player Manufacturer" [_]
. "DVD Drive Manufacturer" [X]
. "CSS Decryption Module Manufacturer" [X]
. "Descrambler Manufacturer" [_]
. "Authenticator Module for DVD Drive" [X]
. "Authenticator Module for CSS Decryption Module" [_]
. "Integrated Products Manufacturer" [_]
. "Verification Product Manufacturer"
II. Technical Specifications Titles:
---------------------------------------------------------------------------------------------------------------------------
The cost of each CSS Technical Specification (Confidential Information) is
----
[*]US dollars per copy per Technical Specification Title.
--- ---
NOTE: To obtain a Specification from DVD CCA, licensee (or potential licensee)
must have a fully executed CSS License and provided its DVD Format Book serial
number to DVD CCA.
Specification Number of Copies
Requested
-----------------------------------------------------------------------------------------------------------
Specifications of DVD Content Scramble System for:
209. - "CSS Disc Formatter" [_] [_]
309. - "DVD Player" [_] [_]
409. - "DVD Drive" [_] [_]
509. - "CSS Decryption Module Manufacturer" [_] [_]
609. - "Descrambler" [_] [_]
709. - "Authenticator Module for DVD Drive" [_] [_]
809. - "Authenticator Module for CSS Descryption Module" [_] [_]
----------
/1/ Fee is subject to periodic review and change
EXHIBIT "D"
TO
CSS LICENSE AGREEMENT
________________________________________________________________________________
CONTACT PERSON
Name: ______________________________________________
Title: ______________________________________________
Company: ___________________________________________
Division: __________________________________________
Address: ___________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
Telephone Number: __________________________________
Facsimile Number: __________________________________
Email address: _____________________________________
________________________________________________________________________________
ALTERNATE CONTACT PERSON
Name: ______________________________________________
Title: ______________________________________________
Company: ___________________________________________
Division: __________________________________________
Address: ___________________________________________
_____________________________________________________
_____________________________________________________
_____________________________________________________
Telephone Number: __________________________________
Facsimile Number: __________________________________
Email address: _____________________________________
