PATENT LICENSE AGREEMENT – EXCLUSIVE

 

U.S. Department of Veterans Affairs, Office of Research & Development

 

This Agreement is entered into between the Department of Veterans Affairs (“VA”), having offices at 810 Vermont Street NW, Washington, DC 20420 and (______________________) (LICENSEE), a corporation having a place of business at  ____________________________.

1. BACKGROUND

1.1. WHEREAS, by assignment of rights from VA employees and other inventors, on behalf of the U.S. Government, VA owns intellectual property rights claimed in any United States and/or foreign patent applications or patents corresponding to the assigned inventions.

1.2  WHEREAS, VA, pursuant to 15 United States Code (U.S.C.) §3701 et seq., 35 U.S.C Sections §200-210, and 37 Code of Federal Regulations (CFR), Chapter IV  (together with any amendments and underlying rules and regulations, has custody of inventions described and claimed in, and the right to issue licenses under the “Licensed Patent Rights.”

1.3  WHEREAS, VA desires, in the public interest, that the subject invention be perfected, marketed, and practiced so that the benefits are readily available for widest public utilization in the shortest time possible, and

1.4  WHEREAS, LICENSEE represents that it has the facilities, personnel, and expertise to bring, and is willing to expend reasonable efforts to bring the Licensed Patent Rights to the point of Practical Application as defined in 37 CFR 404.3(d) at an early date;

NOW THEREFORE, in consideration of the premises above, including the above-cited authority, and the mutual promises and obligations hereinafter set forth, VA and LICENSEE, do hereby agree as set forth below:

1. DEFINITIONS

2.1                 “Affiliate” means:  Any corporation, company, partnership, joint venture and/or firm which controls, is controlled by or is under common control with LICENSEE.  As used in this Paragraph, “control” means (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management policies of such non-corporate entities.  Unless otherwise specified, the term LICENSEEincludes Affiliates.

2.2                 “Benchmarks” mean the performance obligations that are set forth in Appendix E.

2.3                 [“Materials” means: The materials, if any, supplied by VA (identified in Appendix ____) together with any progeny, mutants, and/or derivatives thereof supplied by VA or created by LICENSEE and/or anySUBLICENSEE(s) thereof.] [optional language]

2.4                 “Commercial Development Plan” means the written commercialization plan including related exhibits, schedules, and agreements attached as Appendix F.

2.5                 “Confidential Information”  means (a) any proprietary or confidential information or material in tangible form disclosed in accordance with this Agreement this market as “Confidential,” “Proprietary” or the like at the time it is delivered to the receiving party, (b) proprietary or confidential information disclosed orally hereunder which is identified as confidential or proprietary when disclosed and such disclosure of confidential information is confirmed in writing within thirty (30) days by the disclosing party, or (c) Trade Secrets of VA regardless of whether or not so marked or identified.  For the purpose of this Agreement, “Confidential Information” shall not include information that can be established by the receiving party by competent proof that such information:

(i)                  was already known to the receiving party, other than under an obligation of confidentiality, at the time of disclosure;

(ii)                 was generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving party;

(iii)               became generally available or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving party in breach of this Agreement.

(iv)               Was subsequently lawfully disclosed by the receiving party by a person other than a party hereto; or

(v)                 Was lawfully developed independently by the receiving party without misappropriating confidential information from a third party.

2.6                 “First Commercial Sale” means the initial transfer by or on behalf of LICENSEE or its SUBLICENSEEs of Licensed Products or the initial practice of a Licensed Process by or on behalf of LICENSEE or itsSUBLICENSEES in exchange for cash or some equivalent to which value can be assigned.

2.7                 “Government” means the Government of the United States of America.

2.8                 “Licensed Fields of Use” means the fields of use identified in Appendix B.

2.9                 “Licensed Patent Rights” means Patent applications (including provisional patent applications and PCT patent applications) or patents listed in Appendix A, all divisionals and continuations of these applications, all patents issuing from these applications, divisionals, and continuations, all counterpart foreign and U.S. patent applications and patents, and any reissues, reexaminations, and extensions of these patents to the extent that the invention in those applications are claimed in the patent application and  to the extent they are owned or controlled by the VA.

2.10             “Licensed Process(es)” means processes which, in the course of being practiced, would be within the scope of one or more claims of the Licensed Patent Rights that have not been held unpatentable, invalid or unenforceable by an unappealed or unappealable judgment of a court of competent jurisdiction.

2.11             “Licensed Product(s)” means a product, part of a product, an apparatus, or composition encompassed within the scope of a claim in a Licensed Patent which, in the course of manufacture, use, sale, or importation, which absent this license would infringe one or more pending or issued claims of the Licensed Patent Rights that have not been held unpatentable, invalid or unenforceable by an unappealed or unappealable judgment of a court of competent jurisdiction.

2.12             “Licensed Territory” means the geographical area identified in Appendix B.

2.13             “Net Sales” means all gross revenue recognized under Generally Accepted Accounting Practices (GAAP) derived by LICENSEE, Affiliates or SUBLICENSEES from Licensed Product, and/or the performance of services through the use of Licensed Patent Rights and/or the practice of a Licensed Process.  Net Sales excludes the following items, but only to the extent they are included in gross revenue and are separately billed:

(a)                 Import, export, excise and sales taxes, and customs duties;

(b)                 Costs of insurance, freight, packing or transportation from the place of manufacture to the customer’s premises or point of installation;

(c)                 Costs of installation at the place of use and

(d)                 Credit for returns, allowances or trades.

Net Sales also includes the fair market value of any non-cash consideration received by LICENSEE or SUBLICENSEES for the sale, lease or transfer of Licensed Products.  Fair market value will be calculated as of the time of transfer of such non-cash consideration to LICENSEE.  Transfer of a Licensed Product within LICENSEE or between LICENSEE and an Affiliate or SUBLICENSEE for sale by the transferee shall not be considered a part of Net Sales for purposes of ascertaining royalty charges.  In such circumstances, the determination of Net Sales shall be based upon the sale of the Licensed Product by the transferee.

2.14             “Non-Royalty Sublicense Income” means payments received by LICENSEE from SUBLICENSEES on account of sublicenses pursuant to this agreement, but excluding the following payments: (i) the fair market portion of consideration for the issuance of equity or debt securities (ii) that portion of payments for direct or fully burdened expenses (collectively not to exceed one hundred percent (100%) of direct expenses) associated with research or development as calculated in accordance with GAAP, to the extent that such expenses are separately listed and part of the sublicense, (iii) royalties based on Net Sales

2.15             “Practical Application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and in each case, underthese conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.

2.16              “Valid Claim” means a claim of an issued and unexpired patent included within the Licensed Patent Rights which either has not been (a) held unenforceable or invalid by a court or other governmental agency of competent jurisdiction that is unappealable or unappealed within the time allowed for appeal, or (b) admitted to be invalid or unenforceable through reissue, disclaimer or otherwise.

 

1. GRANT OF RIGHTS

3.1                 VA hereby grants and LICENSEE accepts, subject to the terms and conditions of this Agreement, an exclusive license under the Licensed Patent Rights in the Licensed Territory to make and have made, to use and have used, to sell and have sold, to offer to sell, and to import any Licensed Products in the Licensed Fields of Use and to practice and have practiced any Licensed Processes [optional language: and to use Materials] in the Licensed Fields of Use.

3.2                 This Agreement confers no license or rights by implication, estoppel, or otherwise under any patent applications or patents of VA other than the Licensed Patent Rights regardless of whether these patents are dominant or subordinate to the Licensed Patent Rights.

1. SUBLICENSING

4.1                 Upon written approval, which shall include prior review of any sublicense agreement by VA and which shall not be unreasonably withheld, LICENSEE may enter into sublicensing agreements under the Licensed Patent Rights.

4.2                 To the extent applicable, SUBLICENSES must include all of the rights of and obligations due to VA contained in this Agreement, including Paragraphs 5.1‑5.4, 8.1, 10.1, 10.2, 12.5, and Paragraphs 13.8-13.10 of this Agreement,  which shall be binding upon the SUBLICENSEE as if it were a party to this Agreement

4.3                 No third party to whom LICENSEE grants a SUBLICENSE may grant further SUBLICENSES.

4.4                 In the event of termination of this license and/or conversion and/or modification of this agreement, any SUBLICENSEE agreements of record granted pursuant to this Agreement, may, upon mutual agreement of VA and  SUBLICENSEE, be converted to a license directly between SUBLICENSEE and LICENSOR, in accordance with the provisions of Section 4 of this Agreement and subject to Federal statutes.

4.5                 LICENSEE agrees to forward to VA a complete copy of each fully executed sublicense agreement postmarked within thirty (30) days of the execution of the agreement.  To the extent permitted by law, VAagrees to maintain each sublicense agreement in confidence.

1. STATUTORY AND VA REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

5.1                 VA reserves on behalf of the Government an irrevocable, nonexclusive, nontransferable, royalty‑free license to practice Licensed Patent Rights or have Licensed Patent Rights practiced throughout the world by or on behalf of the Government and on behalf of any foreign government or international organization pursuant to any existing or future treaty or agreement to which the Government is a signatory.  In the exercise of this license, the Government shall not publicly disclose trade secrets or commercial or financial information that is privileged or confidential within the meaning of 5 U.S.C. §552(b)(4) or which would be considered as such if it had been obtained from a non‑Federal party.

5.2                 {Prior to the First Commercial Sale, LICENSEE agrees to provide VA with reasonable quantities of Licensed Products or materials made through the Licensed Processes for VA research use} [optional language]

5.3                 LICENSEE agrees that products used or sold in the United States embodying Licensed Products or produced through use of Licensed Processes shall be manufactured substantially in the United States, unless a written waiver is obtained in advance from VA.

5.4                 LICENSEE right in exceptional circumstances, and in the event that Licensed Patent Rights are Subject Inventions made under a CRADA, the Government, pursuant to 15 U.S.C. §3710a(b)(1)(B), retains the right to require the LICENSEE to grant to a responsible applicant a nonexclusive, partially exclusive, or exclusive sublicense to use the Licensed Patent Rights in the Licensed Field of Use on terms that are reasonable under the circumstances, or if LICENSEE fails to grant this license, the Government retains the right to grant the license itself.  The exercise of these rights by the Government shall only be in exceptional circumstances and only if the Government determines:

(i)                  the action is necessary to meet health or safety needs that are not reasonably satisfied by LICENSEE;

(ii)                 the action is necessary to meet requirements for public use specified by Federal regulations, and these requirements are not reasonably satisfied by the LICENSEE; or

(iii)               the LICENSEE has failed to comply with an agreement containing provisions described in 15 U.S.C. §3710a(c)(4)(B); and

(iv)               The determination made by the Government under this Paragraph 5.4 is subject to administrative appeal and judicial review under 35 U.S.C. §203(2).

1. PAYMENTS AND ROYALTIES

6.1                 Payments and royalties payable to VA by LICENSEE shall be fulfilled as further described in Appendix C

6.2                 VA obligations to LICENSEE, if any, are further described in Appendix D

6.3                 A patent or patent application licensed under this Agreement shall cease to fall within the Licensed Patent Rights for the purpose of computing earned royalty payments in any given country on the earliest of the dates that:

(a)                 the application has been abandoned and not continued;

(b)                 the patent expires or irrevocably lapses, or

(c)                 the claim has been held to be invalid or unenforceable by an unappealed or unappealable decision of a court of competent jurisdiction or administrative agency.

6.4                 {If multiple earned (running) royalties are otherwise due under the provisions of this license, LICENSEE shall pay only one, highest royalty.} [OPTIONAL LANGUAGE]

6.5                 On sales of Licensed Products by LICENSEE to SUBLICENSEEs or on sales made in other than an arms‑length transaction, the value of the Net Sales attributed under this Article 6 to this transaction shall be that which would have been received in an arms‑length transaction, based on sales of like quantity and quality products on or about the time of this transaction.

1. PATENT FILING, PROSECUTION, AND MAINTENANCE

7.1                 VA shall own, file, prosecute and maintain all U.S. and foreign patent applications and patents included within the Licensed PATENT RIGHTS. Upon written request, LICENSEE shall be included in all prosecution-related correspondence with outside patent counsel and shall be promptly copied on all documents received from or sent to all patent offices involved in examination, interference proceedings, oppositions and other matters related to the PATENT RIGHTS.   VA shall consult LICENSEE on each step of the prosecution process and VA shall incorporate LICENSEE’s comments where reasonably practicable

7.2                 VA and LICENSEE shall cooperate fully in the preparation, filing, prosecution and maintenance of Licensed PATENT RIGHTS and of all patents and patent applications licensed to LICENSEE hereunder, executing all papers and instruments or requiring members of VAto execute such papers and instruments so as to enable VAto apply for, to prosecute and to maintain patent applications and patents in VA's name in any country.  Each party shall provide to the other prompt notice as to all matters which come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such patent applications or patents.

7.3                 Upon execution of this Agreement, LICENSEE shall reimburse VA for past and presently payable costs and fees incurred before the Effective Date for the preparation, filing, prosecution and maintenance of Licensed Patent Rights.  Such patent costs are at least $_______ as of the Effective Date.  In addition, LICENSEE agrees to pay to VA costs and fees incurred after the Effective Date for the preparation, filing, prosecution and maintenance of Licensed Patent Rights. VA shall provide to LICENSEE an itemized invoice of all such fees and costs.  LICENSEE shall pay to VA all amounts due under each invoice under this paragraph within thirty (30) days of the date of receipt of said invoice.  Late payment of these invoices shall be subject to interest charges of one and one-half percent (1 1/2%) per month. 

7.4                 LICENSEE may elect to surrender its rights in any country of the Licensed Territory under any of the Licensed Patent Rights upon one hundred eighty (180) days written notice to VA and owe no payment obligation under Paragraph 6.10 for patent-related expenses incurred in that country after one hundred eighty (180) days of the effective date of the written notice.

1. RECORD KEEPING

8.1                 LICENSEE agrees to keep accurate and correct records of its activities under this agreement including Licensed Products made, used, sold, or imported, Licensed Processes practiced under this Agreement and services performed through the use of patent rights appropriate and sufficient to determine the amount of royalties due to VA.  These records shall be retained for at least five (5) years following a given reporting period and shall be available during normal business hours for inspection, at the expense of VA, by an accountant or other designated auditor selected by VA for the sole purpose of verifying compliance with the terms of this agreement including reports and royalty payments hereunder.  The accountant or auditor shall only disclose to VA information relating to the accuracy of reports and royalty payments made under this Agreement.  If an inspection shows an underreporting or underpayment in excess of five percent (5%) for any twelve (12) month period, then LICENSEE shall reimburse VA for the cost of the inspection at the time LICENSEE pays the unreported royalties, including any additional royalties as required by Paragraph 9.8.  All royalty payments required under this Paragraph shall be due within thirty (30) days of the date VAprovides LICENSEE notice of the payment due.

1. REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS

9.1                 Prior to signing this Agreement, LICENSEE has provided VA with the Commercial Development Plan in Appendix F, under which LICENSEE intends to bring the subject matter of the Licensed Patent Rights to the point of Practical Application.  This Commercial Development Plan is hereby incorporated by reference into this Agreement.  Based on this plan, performance Benchmarks are determined as specified in Appendix E.

9.2                 LICENSEE shall provide written annual reports on its product development progress or efforts to commercialize under the Commercial Development Plan for each of the Licensed Fields of Use within thirty(30) days after October 1st of each calendar year.  These annual reports shall describe commercialization efforts for the preceding VA fiscal year, which ends on September 30th of each calendar year.  The report shall include, but not be limited to the following items:

(a)                 progress on research and development;

(b)                 status of applications for regulatory approvals, manufacturing, sublicensing, marketing, importing, and sales; ;

(c)                 if applicable, information on LICENSEE's public service activities that relate to the Licensed Patent Rights;

(d)                 product development plans for the upcoming VA fiscal year. 

If reported progress differs from that projected in the Commercial Development Plan and Benchmarks, LICENSEE shall explain the reasons for these differences.  LICENSEE agrees to provide any additional information reasonably required by VA to evaluate LICENSEE'S performance under this Agreement.  LICENSEE shall amend the Commercial Development Plan and Benchmarks at the request of VA to address any Licensed Fields of Use not specifically addressed in the plan originally submitted.

9.3                 LICENSEE shall report to VA the dates for achieving Benchmarks specified in Appendix E and the First Commercial Sale in each country in the Licensed Territory within thirty (30) days of such occurrences.

9.4                 Commencing with the first commercial sale, LICENSEE shall submit to VA, within thirty (30) days after October 1st of each calendar ‑year, a royalty report, as described in the example in Appendix G, setting forth for the preceding VA fiscal year, which ends on September 30th, the amount of the Licensed Products sold or Licensed Processes practiced by or on behalf of LICENSEE in each country within the Licensed Territory, the Net Sales, and the amount of royalty accordingly due.  With each royalty report, LICENSEE shall submit payment of earned royalties due.  If no earned royalties are due to VA for any reporting period, the written report shall so state.  The royalty report shall be traceable to audited financial reports of LICENSEE and certified as correct by an authorized officer of LICENSEE and shall include a detailed listing of all deductions made under Paragraph 2.10 in the calculation of Net Sales. 

9.5                 LICENSEE agrees to forward ‑annually to VA a copy of these reports received by LICENSEE from its SUBLICENSEEs during the preceding one year period as shall be pertinent to a royalty accounting to VA byLICENSEE for activities under the sublicense.

9.6                 Royalties due under Article 6 shall be paid in U.S. dollars and payment options are listed in Appendix H.  For conversion of foreign currency to U.S. dollars, the conversion rate shall be the New York foreign exchange rate quoted in The Wall Street Journal on the day that the payment is due.  Any loss of exchange, value, taxes, or other expenses incurred in the transfer or conversion to U.S. dollars shall be paid entirely by LICENSEE.  The royalty report required by Paragraph 9.4 shall be mailed to VA at its address for Agreement Notices indicated on the Signature Page.

9.7                 LICENSEE shall be solely responsible for determining if any tax on royalty income is owed outside the United States and shall pay the tax and be responsible for all filings with appropriate agencies of foreign governments.

9.8                 Additional royalties may be assessed by VA on any payment that is more than thirty (30) days overdue at the rate of one percent (1%) per month.  This one percent (1%) per month rate may be applied retroactively from the original due date until the date of receipt by VA of the overdue payment and additional royalties.  The payment of any additional royalties shall not prevent VA from exercising any other rights it may have as a consequence of the lateness of any payment.

9.9                 All plans and reports required by this Article 9 and marked “confidential” by LICENSEE shall, to the extent permitted by law, be treated by VA as commercial and financial information obtained from a person and as privileged and confidential, and any proposed disclosure of these records by the VA under the Freedom of Information Act (FOIA), 5 U.S.C. §552 shall be subject to the predisclosure notification requirements of 45 CFR §5.65(d).

1. PERFORMANCE

10.1             LICENSEE shall use its reasonable efforts to bring the Licensed Products and Licensed Processes to Practical Application include\ing adherence to the Commercial Development Plan.  Upon the First Commercial Sale, until the expiration or termination of this Agreement, LICENSEE shall use its reasonable efforts to make Licensed Products and Licensed Processes available to the public. The efforts of aSUBLICENSEE shall be considered the efforts of LICENSEE.

10.2             LICENSEE shall achieve at least the stated performance milestones within the stated time periods following the EFFECTIVE DATE (whether through its own efforts or those of a SUBLICENSEE) as listed in Appendix E:

10.3             If LICENSEE has failed to meet any of the PERFORMANCE MILESTONES set forth in Section 3.2, then VA has at its sole discretion the right and option to terminate or reduce LICENSEE’s exclusive license to a nonexclusive license upon sixty (60) days prior written notice.  This right, if exercised by VA, supersedes the exclusivity of rights granted to LICENSEE under Article 2 of this Agreement, subject to Section 3.4. (optional; for further discussion)

10.4             {Notwithstanding the foregoing, if LICENSEE will fail to meet any of the PERFORMANCE MILESTONES by the corresponding deadline set forth, then LICENSEE may, at its election in its sole discretion, pay to VA an annual penalty payment in the amount of [fifty thousand dollars ($50,000)] to maintain its exclusive license for an additional year for each payment.  Each such penalty payment shall be due on the relevant date or anniversary date of the missed deadline for a PERFORMANCE MILESTONE.}  [OPTIONAL LANGUAGE]

1. PATENT ENFORCEMENT AND PROSECUTION

 

11.1              Licensor and Licensee shall notify each other promptly no later than sixty (60) days in writing of any infringement of the Licensed Patent Technology that becomes known to either of them.  Licensee shall notify Licensor promptly of any action taken in accordance with this section to prevent or eliminate such infringement.

 

              11.2              Licensee is empowered pursuant to this Agreement and the provisions of the United States Code, Title 35, Parts II and III, Chapter 18, Section 207, and Chapter 29, Sections 281 - 297, to (a) bring suit in its own name, at its own expense, and on its own behalf for infringement of presumably Valid Claims in the Licensed Patent Technology hereunder, to enjoin infringement and to collect for its use and distribution as noted in Section 9.4 below, damages, profits and awards of whatever nature recoverable for such infringement; and (b) subject to approval by Licensor, settle any claim or suit for infringement of the Licensed Patent Technology; provided, however, that Licensor and the appropriate Government authorities shall have a continuing right to intervene in such suit.  Licensee shall obtain the prior written consent of Licensor before pursuing any litigation.  Licensee shall take no action to compel the Government either to initiate or to join in any such suit for patent infringement unless such action is ultimately necessary to avoid a dismissal of such suit by Licensee.

 

              11.3              If the Government is be made a party to any such suit by the motion or any other action of Licensee, Licensee shall reimburse the Government for any costs, expenses or fees which the Government incurs as a result of such motion or other action, including any and all costs incurred by the Government in justifiably opposing any such joinder motion.  Upon payment by Licensee of all costs incurred by the Government as a result of Licensee’s joinder motion or other action, any such action taken by Licensee shall not be considered a default in the performance of any material obligation under this Agreement.  In any event, Licensee agrees to keep Licensor completely apprised of the legal strategies, status and progress of any such litigation and to consider the potential effects of the litigation on the public health in deciding whether to pursue litigation of any kind. 

 

11.4              Any and all fees, costs and expenses incurred, including, without limitation, attorney’s fees, court costs and disbursements in connection with any action taken under this Article IX shall be paid by Licensee.  Up to fifty percent (50%) of such expenses may be credited against the royalty on Nets Sales otherwise payable to Licensor in the country in which such a suit is filed under this Agreement.  In the event that fifty percent (50%) of such expenses exceed the amounts withheld by Licensee in any calendar year, the expenses in excess may be carried over as a credit on the same basis into succeeding calendar years.  Any recovery by Licensee, through court, judgment or settlement, first shall be applied to reimburse Licensor for such amounts withheld as a credit against litigation expenses and then to reimburse Licensee for its litigation expense.  Any remaining recoveries by Licensee after expenses shall be shared and distributed equally between the Licensor and Licensee.

 

11.5              Licensor shall cooperate fully with Licensee in connection with any action under this 
Agreement.  Licensor agrees to promptly provide reasonable access to all necessary documents and to render reasonable assistance in response to a request by Licensee.

 

11.6              Licensor shall have the right to sue for infringement of the Licensed Patent Technology in the event that Licensee elects not to do so, after having received notice from Licensee, constructive or otherwise.  In such an event Licensor shall retain the full amount of any and all recoveries and reserves the right to terminate the license granted to Licensee and/or this Agreement.

 

11.7              In the event that a declaratory judgment action alleging invalidity or infringement of any claim of the Licensed Patent Technology shall be brought against Licensee or Licensor or raised by way of counterclaim or affirmative defense in an infringement suit brought by Licensee, Licensee is empowered pursuant to this Agreement and the provisions of the United States Code, Title 35, Parts II and III, Chapter 18, Section 207, and Chapter 29, Sections 281 – 297.  , Licensee shall take no action to compel the Government either to join in any such declaratory judgment action unless such action is ultimately necessary to avoid prejudice to Licensee. If the Government is to be made a party to any such suit by the motion or any other action of Licensee, Licensee shall reimburse the Government subject to 11.3. 

 

1. NEGATION OF WARRANTIES AND INDEMNIFICATION

12.1             VA offers no warranties other than those specified in Article 1.

12.2             VA does not warrant the validity of the Licensed Patent Rights and makes no representations whatsoever with regard to the scope of the Licensed Patent Rights, or that the Licensed Patent Rights may be exploited without infringing other patents or other intellectual property rights of third parties.

12.3             VA MAKES NO WARRANTIES, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY THE CLAIMS OF THE LICENSED PATENT RIGHTS OR TANGIBLE MATERIALS RELATED THERETO.

12.4             VA does not represent that it shall commence legal actions against third parties infringing the Licensed Patent Rights.

12.5             LICENSEE shall indemnify and hold VA, its employees, students, fellows, agents, and consultants harmless from and against all liability, demands, damages, expenses, and losses, including but not limited to death, personal injury, illness, or property damage in connection with or arising out of:

(a)                 the use by or on behalf of LICENSEE, its SUBLICENSEES, directors, employees, or third parties of any Licensed Patent Rights; or

(b)                 the design, manufacture, distribution, or use of any Licensed Products, Licensed Processes or materials by LICENSEE, or other products or processes developed in connection with or arising out of the Licensed Patent Rights.

12.6             LICENSEE agrees to maintain a liability insurance program consistent with sound business practice.

1. TERM, TERMINATION, AND MODIFICATION OF RIGHTS

13.1             This Agreement is effective when signed by all parties, unless the provisions of Paragraph 14.17 are not fulfilled, and shall extend to the expiration of the last to expire of the Licensed Patent Rights unless sooner terminated as provided in this Article 13.

13.2             In the event that LICENSEE is in default in the performance of any material obligations under this Agreement, including but not limited to the obligations listed in Paragraph 13.5, and if the default has not been remedied within 30 after the date of notice in writing of the default, VA may terminate this Agreement by written notice and pursue outstanding royalties owed through procedures provided by the Federal Debt Collection Act, 15 U.S.C. § 1692 et seq.

13.3             In the event that LICENSEE becomes insolvent, files a petition in bankruptcy, has such a petition filed against it, determines to file a petition in bankruptcy, or receives notice of a third party's intention to file an involuntary petition in bankruptcy, LICENSEE shall immediately notify VA in writing.  Furthermore, VA shall have the right to terminate this Agreement immediately upon LICENSEE's receipt of written notice.

13.4             LICENSEE shall have a unilateral right to terminate this Agreement or any licenses in any country or territory by giving 180 days written notice to that effect.

13.5             VA shall specifically have the right to terminate or modify, at its option, this Agreement, if VA determines that the LICENSEE:

(a)                 is not executing the Commercial Development Plan submitted with its request for a license and the LICENSEE cannot otherwise demonstrate to VA’s satisfaction that the LICENSEE has taken, or can be expected to take within a reasonable time, effective steps to achieve Practical Application of the Licensed Products or Licensed Processes;

(b)                 has not achieved the Benchmarks as may be modified under Paragraph 9.2;

(c)                 has willfully made a false statement of, or willfully omitted a material fact in the license application or in any report required by the license Agreement;

(d)                 has committed a material breach of a covenant or agreement contained in this Agreement;

(e)                 is not keeping Licensed Products or Licensed Processes reasonably available to the public after commercial use commences;

(f)                  cannot reasonably satisfy unmet health and safety needs; or

(g)                 cannot reasonably justify a failure to comply with the domestic production requirement of Paragraph 5.2 unless waived.

13.6             When the public health and safety so require, and after written notice to LICENSEE providing LICENSEE a sixty (60) day opportunity to respond, VA shall have the right to require LICENSEE to grant sublicenses to responsible applicants, on reasonable terms, in any Licensed Fields of Use under the Licensed Patent Rights, unless LICENSEE can reasonably demonstrate that the granting of the sublicense would not materially increase the availability to the public of the subject matter of the Licensed Patent Rights.  VA shall not require the granting of a sublicense unless the responsible applicant has first negotiated in good faith with LICENSEE.

13.7             VA reserves the right according to 35 U.S.C. §209(d)(3) to terminate or modify this Agreement if it is determined that this action is necessary to meet the requirements for public use specified by federal regulations issued after the date of the license and these requirements are not reasonably satisfied by LICENSEE.

13.8             Within thirty (30) days of receipt of written notice of VA's unilateral decision to modify or terminate this Agreement, LICENSEE may, consistent with the provisions of 37 CFR §404.11, appeal the decision by written submission to the designated VA official.  The decision of the designated VA official shall be the final agency decision.  LICENSEE may thereafter exercise any and all administrative or judicial remedies that may be available.

13.9             Within ninety (90) days of expiration or termination of this Agreement under this Article 13, a final report shall be submitted by LICENSEE.  Any royalty payments, including those incurred but not yet paid (such as the full minimum annual royalty), and those related to patent expense, due to VA shall become immediately due and payable upon termination or expiration.  If terminated under this Article 13, SUBLICENSEESmay elect to convert their sublicenses to direct licenses with VA pursuant to Paragraph 4.3.  Unless otherwise specifically provided for under this Agreement, upon termination or expiration of this Agreement,LICENSEE shall return all Licensed Products or other materials included within the Licensed Patent Rights to VA or provide VA with certification of the destruction thereof.

1. GENERAL PROVISIONS

14.1             Neither party may waive or release any of its rights or interests in this Agreement except in writing.  The failure of the Government to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right by the Government or excuse a similar subsequent failure to perform any of these terms or conditions by LICENSEE.

14.2             This Agreement constitutes the entire agreement between the parties relating to the subject matter of the Licensed Patent Rights, Licensed Products and Licensed Processes, and all prior negotiations, representations, agreements, and understandings are merged into, extinguished by, and completely expressed by this Agreement.

14.3             The provisions of this Agreement are severable, and in the event that any provision of this Agreement shall be determined to be invalid or unenforceable under any controlling body of law, this determination shall not in any way affect the validity or enforceability of the remaining provisions of this Agreement.

14.4             If either party desires a modification to this Agreement, the parties shall, upon reasonable notice of the proposed modification by the party desiring the change, confer in good faith to determine the desirability ofthe modification.  No modification shall be effective until a written amendment is signed by the signatories to this Agreement or their designees.

14.5             The construction, validity, performance, and effect of this Agreement shall be governed by Federal law as applied by the Federal courts in the District of Columbia, United States of America, without giving effect to principles of conflicts of laws.  Each of the parties hereby irrevocably submits to the jurisdiction of any federal court sitting in the District of Columbia over any action or proceeding arising out of or relating to this Agreement and each hereby waives the defense of an inconvenient forum for the maintenance of such action..

14.6             All Agreement notices required or permitted by this Agreement shall be given by prepaid, first class, registered or certified mail or by an express/overnight delivery service provided by a commercial carrier, properly addressed to the other party at the address designated on the following Signature Page, or to another address as may be designated in writing by the other party. Agreement notices shall be considered timely if the notices are received on or before the established deadline date or sent on or before the deadline. 

14.7             This Agreement shall not be assigned by LICENSEE except:

(a)                 with the prior written consent of VA, this consent shall not to be withheld unreasonably; or

(b)                 as part of a sale or transfer of substantially the entire business of LICENSEE relating to operations which concern this Agreement.

14.8             LICENSEE shall notify VA within ten (10) days of any assignment of this Agreement by LICENSEE, and LICENSEE shall pay VA, as an additional royalty, one percent (1%) of the fair market value of any consideration received for any assignment of this Agreement within thirty (30) days of the assignment.

14.9             LICENSEE agrees in its use of any VA‑supplied materials to comply with all applicable statutes, regulations, and guidelines, including VA and HHS regulations and guidelines.  LICENSEE agrees not to use the materials for research involving human subjects or clinical trials in the United States without complying with 21 CFR Part 50 and 45 CFR Part 46.  LICENSEE agrees not to use the materials for research involving human subjects or clinical trials outside of the United States without notifying VA, in writing, of the research or trials and complying with the applicable regulations of the appropriate national control authorities.  Written notification to VA of research involving human subjects or clinical trials outside of the United States shall be given no later than sixty (60) days prior to commencement of the research or trials.

14.10          LICENSEE acknowledges that it is subject to and agrees to abide by the United States laws and regulations (including the Export Administration Act of 1979 and Arms Export Control Act) controlling the export of technical data, computer software, laboratory prototypes, biological material, and other commodities.  The transfer of these items may require a license from the appropriate agency of the U.S. Government or written assurances by LICENSEE that it shall not export these items to certain foreign countries without prior approval of this agency.  VA neither represents that a license is or is not required or that, if required, it shall be issued.

14.11          LICENSEE agrees to mark the Licensed Products or their packaging sold in the United States with all applicable U.S. patent numbers and similarly to indicate “Patent Pending” status.  All Licensed Productsmanufactured in, shipped to, or sold in other countries shall be marked in a manner to preserve VA patent rights in those countries.

14.12          By entering into this Agreement, VA does not directly or indirectly endorse any product or service provided, or to be provided, by LICENSEE whether directly or indirectly related to this Agreement.  LICENSEEshall not state or imply that this Agreement is an endorsement by the Government, VA, any other Government organizational unit, or any Government employee.  Additionally, LICENSEE shall not use the names ofVA or the Government or their employees in any advertising, promotional, or sales literature without the prior written approval of VA.

14.13          The parties agree to attempt to settle amicably any controversy or claim arising under this Agreement or a breach of this Agreement, except for appeals of modifications or termination decisions provided for in Article 13.  LICENSEE agrees first to appeal any unsettled claims or controversies to the designated VA official, or designee, whose decision shall be considered the final agency decision.  Thereafter, LICENSEEmay exercise any administrative or judicial remedies that may be available.

14.14          Nothing relating to the grant of a license, nor the grant itself, shall be construed to confer upon any person any immunity from or defenses under the antitrust laws or from a charge of patent misuse, and the acquisition and use of rights pursuant to 37 CFR Part 404 shall not be immunized from the operation of state or Federal law by reason of the source of the grant.

14.15          Any formal recordation of this Agreement required by the laws of any Licensed Territory as a prerequisite to enforceability of the Agreement in the courts of any foreign jurisdiction or for other reasons will be carried out by LICENSEE at its expense, and appropriately verified proof of recordation will be promptly furnished to VA.

14.16          Paragraph 4.3, 8.1, 9.5-9.7, 12.1-12.5, 13.9, 13.10, and 14.13 of this Agreement shall survive termination of this Agreement.

14.17          The terms and conditions of this Agreement shall, at VA’s sole option, be considered by VA to be withdrawn from LICENSEE’s consideration and the terms and conditions of this Agreement, and the Agreement itself to be null and void, unless this Agreement is executed by the LICENSEE and a fully executed original is received by VA within sixty (60) days from the date of VA signature found at the Signature Page.

SIGNATURES BEGIN ON NEXT PAGE

VA PATENT LICENSE AGREEMENT – EXCLUSIVE

SIGNATURE PAGE

For VA:

____________________________________                            _______________

              Date

Holly Birdsall

Acting Director, Technology Transfer

 

 

____________________________________                            _______________

              Date

Will A. Gunn

General Counsel

 

Mailing Address for Agreement notices:

Director, Technology Transfer

Department of Veterans Affairs (10P9TT)

810 Vermont Ave, NW

Washington, DC 20420 U.S.A. 

 

For LICENSEE (Upon, information and belief, the undersigned expressly certifies or affirms that the contents of any statements of LICENSEE made or referred to in this document are truthful and accurate.):

by:

____________ DRAFT ________________________                            _______________

Signature of Authorized Official              Date

             

Printed Name

             

Title

1. Official and Mailing Address for Agreement notices:

             

             

             

             

1. Official and Mailing Address for Financial notices (LICENSEE’s contact person for royalty payments)

             

Name

             

Title

Mailing Address:

             

             

             

             

Email Address:                           

Phone:                           

Fax:                           

Any false or misleading statements made, presented, or submitted to the Government, including any relevant omissions, under this Agreement and during the course of negotiation of this Agreement are subject to all applicable civil and criminal statutes including Federal statutes 31 U.S.C. §§3801-3812 (civil liability) and 18 U.S.C. §1001 (criminal liability including fine(s) or imprisonment).

APPENDIX A – PATENT(S) OR PATENT APPLICATION(S)

Patent(s) or Patent Application(s):

1.  
2.  
3.  
4.  
5.  

APPENDIX B – LICENSED FIELDS OF USE AND TERRITORY

1. Licensed Fields of Use:

(a)      

 

1. Licensed Territory:

(a)                  

 

APPENDIX C – PAYMENTS AND ROYALTIES

 

1. Payments

(a)     LICENSEE agrees to pay to VA a noncreditable, nonrefundable license issue fee in the amount of ________ dollars ($X) within thirty (30) days from the effective date of this Agreement.

(b)     LICENSEE agrees to pay VA Benchmark fees within thirty (30) days of achieving each Benchmark:

(1)                  

(2)                  

(3)                  

(4)                  

 

1. Royalties:

(a)     LICENSEE agrees to pay to VA a nonrefundable minimum annual royalty in the amount of ________ dollars ($X) as follows:

(1)                 The first minimum annual royalty is due within thirty (30) days of the October 1st 20XX

(2)                 Subsequent minimum annual royalty payments are due and payable on within thirty (30) days of October 1st of each calendar year and may be credited against any earned royalties due for sales made in that year.

 

(b)                 LICENSEE agrees to pay VA earned royalties of _____ percent (X%) on Net Sales by or on behalf of LICENSEE and its subLICENSEEs.

(c)                 LICENSEE agrees to pay VA additional sublicensing royalties of fifty percent (50%) of Non-royalty Sublicense Income within sixty (60) days of the receipt of such income.

APPENDIX D – VA OBLIGATIONS

 

1. VA agrees to provide LICENSEE a total of ___ hours of professional consultation with the VA inventor(s) to facilitate the transfer of know-how required to initiate the development of Licensed Products and/or Licensed Processes.
2. VA agrees to provide to LICENSEE any data, code, materials or equipment, as described below, within thirty (30) days of the effective date of this Agreement.  The information identified here is governed by the confidentiality provisions of this agreement.

(a.)

(b.)

(c.)

(d.)

(e.)

APPENDIX E– BENCHMARKS AND PERFORMANCE

LICENSEE agrees to the following Benchmarks for its performance under this Agreement and, within thirty (30) days of achieving a Benchmark, shall notify VA that the Benchmark has been achieved.

1.  
2.  
3.  
4.  
5.  
6.  
7.  

APPENDIX F – COMMERCIAL DEVELOPMENT PLAN

 

APPENDIX G – EXAMPLE ROYALTY REPORT