Provision Language
Definitions
“Net Sales” means the total gross receipts for sales of Licensed Products or practice of Licensed Processes by or on behalf of Licensee or its sublicensees, and from leasing, renting, or otherwise making Licensed Products available to others without sale or other dispositions, whether invoiced or not, less returns and allowances, packing costs, insurance costs, freight out, taxes or excise duties imposed on the transaction (if separately invoiced), and wholesaler and cash discounts in amounts customary in the trade to the extent actually granted. No deductions shall be made for commissions paid to individuals, whether they be with independent sales agencies or regularly employed by Licensee , or sublicensees, and on its payroll, or for the cost of collections.
In the event PHS, on a country-by-country basis, is receiving earned royalties under this Agreement from any Licensed Product sold in a form containing Licensed Product(s) and at least one other ingredient, product or component having a specific pharmalogical effect (i.e., an antiinfective or anti-inflammatory, but not a diluent, carrier, perfume etc.) (a “Combination Product”) which is sold separate and apart from the Licensed Product(s) in the Combination Product, Net Sales for such Combination Product will be calculated by multiplying the actual Net Sales of the Combination Product by the fraction A/(A+B), where A is the Net Sales price per dose of the Licensed Product(s) if sold separately and B is the Net Sales price per dose of the other ingredient(s), product(s) or component(s) in the Combination Product, if sold separately. If the other ingredient(s), product(s) or component(s) is not sold separately in a country, Net Sales for such CombinationProduct will be calculated by multiplying the actual Net Sales of the Combination Product by the fraction A/C, where A is the Net Sales price per dose of the Licensed Product(s), if sold separately in said country, and C is the Net Sales price per dose of the Combination Product. If neither the Licensed Product(s) nor the other ingredient(s), product(s) or component(s) is sold separately in a country, then Net Sales for the Combination Product shall be determined by multiplying the Net Sales of the Combination Product by X/(X+Y), where X is the number of Licensed Products and Y the number of other ingredients, products or components in the Combination Product.
Notwithstanding the above determination of Net Sales of Combination Product, in no event shall the Net Sales used to calculate earned royalty due on a Combination Product be reduced by more than fifty (50%) percent of the actual Net Sales of the Combination Product .
6. ROYALTIES AND REIMBURSEMENT
6.01 Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue royalty as set forth in Appendix C within thirty (30) days from the date that this Agreement becomes effective.
6.02 Licensee agrees to pay to PHS a nonrefundable minimum annual royalty as set forth in Appendix C.
6.03 Licensee agrees to pay PHS earned royalties on Net Sales as set forth in Appendix C.
6.04 Licensee agrees to pay PHS benchmark royalties as set forth in Appendix C.
6.05 Licensee agrees to pay PHS sublicensing royalties as set forth in Appendix C.
6.06 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.
6.07 No multiple royalties shall be payable because any Licensed Products or Licensed Processes are covered by more than one of the Licensed Patent Rights.
6.08 On sales of Licensed Products by Licensee to sublicensees or on sales made in other than an arm’s-length transaction, the value of the Net Sales attributed under this Article 6 to such a transaction shall be that which would have been received in an arm’s-length transaction, based on sales of like quantity and quality products on or about the time of such transaction.
6.09 With regard to expenses associated with the preparation, filing, prosecution, and maintenance of all patent applications and patents included within the Licensed Patent Rights incurred by PHS prior to the effective date of this Agreement , Licensee shall pay to PHS [*] (which is [*] of total patent cost in Appendix A), as an additional royalty, within thirty (30) days from the date that this Agreement becomes effective. In addition, Licensee shall pay to PHS another [*] within thirty (30) days from the date that an NDA has been filed.
6.10 With regard to expenses associated with the preparation, filing, prosecution, and maintenance of all patent applications and patents included within the Licensed Patent Rights incurred by PHS on or after the effective date of this Agreement, PHS, at its sole option, may require Licensee:
(a) To pay PHS on an annual basis, within sixty (60) days of PHS ’s submission of a statement and request for payment, a royalty amount equivalent to all such patent expenses incurred during the previous calendar year(s) for the Licensed Patent Rights corresponding to those listed in Appendix A, divided equally among all commercialization licensees of the Licensed Patent Rights corresponding to those listed in Appendix A, as applicable, that are on record as of the date on which the statement and request for payment are sent by PHS to Licensee, and limited specifically to those commercialization license(s) under which licensee(s) are responsible for paying a share of patent expenses, and specifically excluding any license(s) which are for internal research use and/or for research reagent sales; or
(b) To pay such expenses directly to the law firm employed by PHS to handle such functions. However, in such event, PHS and not Licensee shall be the client of such law firm.
In no instance shall the amount due from Licensee be more than [*] as patent cost payment per year.
Under exceptional circumstances, Licensee may be given the right to assume responsibility for the preparation, filing, prosecution, or maintenance of any patent application or patent included with the Licensed Patent Rights. In that event, Licensee shall directly pay the attorneys or agents engaged to prepare, file, prosecute, or maintain such patent applications or patents and shall provide to PHS copies of each invoice associated with such services as well as documentation that such invoices have been paid.
6.11 In the event that PHS provides exclusive or nonexclusive commercialization licenses to more than two (2) licensees under the Licensed Patent Rights corresponding to any specific patents and/or patent applications to any additional licensee(s), limited specifically to those commercialization license(s) under which licensee(s) are responsible for paying a share of patent expenses, and specifically excluding any license(s) which are for internal research use and/or for research reagent sales, Licensee shall receive as a credit a proportional share of any and all patent expenses previously paid or due by Licensee under Paragraphs 6.09 and 6.10 of this Agreement for those specific patents and/or patent applications, based upon a proportional reallocation of patent expenses among all exclusive or nonexclusive commercialization licensees as specified in this Paragraph 6.10. PHS will notify Licensee within ninety (90) of grant of any additional licenses under the Licensed Patent Rights , and the credit described in this Paragraph 6.11 shall be applied against Licensee’s next invoice for its share of any current and/or future patent expenses payable under Paragraphs 6.09 and 6.10, minimum annual royalties, and/or earned royalties.
6.12 Licensee may elect to surrender its rights in any country of the Licensed Territory under any Licensed Patent Rights upon ninety (90) days written notice to PHS and owe no payment obligation under Article 6.10 for patent-related expenses incurred in that country after ninety (90) days of the effective date of such written notice.