TABLE OF CONTENTS

 

1.       DEFINITIONS		1
1.1.	CERTAIN DEFINITIONS	1
1.2.	OTHER DEFINED TERMS	7
2.       LICENSES		8
2.1.	LICENSE GRANTS TO ISRG	8
2.2.	NON-EXCLUSIVE LICENSE TO USE TECHNICAL INFORMATION	9
2.3.	SUBLICENSES	9
2.4.	THIRD PARTY MANUFACTURERS	10
2.5.	DISTRIBUTORS	10
2.6.	TRADEMARK LICENSE	10
3.       DEVELOPMENT ACTIVITIES		10
3.1.	GENERAL	10
3.2.	FURTHER DEVELOPMENT PROPOSALS	11
4.       REGULATORY MATTERS		11
4.1.	REGULATORY APPROVALS	11
4.2.	REGULATORY INFORMATION AND NOTIFICATION WITH RESPECT TO THE DEVICE	11
4.3.	RECALLS	12
5.       RELOAD SUPPLY		12
6.       ISRG REQUIREMENTS		12
6.1.	PRELIMINARY DESIGN REVIEW	12
6.2.	CRITICAL DESIGN REVIEW	12
6.3.	FIRST COMMERCIAL SALE	12
7.       LICENSE PAYMENTS		12
7.1.	LICENSE ISSUANCE FEE	12
7.2.	MILESTONE PAYMENTS	12
7.3.	PAYMENT TERMS	13
8.       INTELLECTUAL PROPERTY		13
8.1.	OWNERSHIP OF IP	13
8.2.	OWNERSHIP OF PMII PROPERTY	13
8.3.	OWNERSHIP OF DEVICE	13
8.4.	OWNERSHIP OF NEW PMII IP	13
8.5.	OWNERSHIP OF NEW ISRG IP	14
8.6.	ASSIGNMENT OF INTELLECTUAL PROPERTY	14
9.       PROSECUTION OF PATENT RIGHTS		14
9.1.	PROSECUTION AND MAINTENANCE OF PATENT RIGHTS	14
9.2.	COOPERATION WITH RESPECT TO LICENSED PATENT RIGHTS	14
9.3.	ELECTION NOT TO PROSECUTE; LICENSED PATENT RIGHTS; RIGHT TO STEP IN	15

 

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9.4.	NEW ISRG IP	15
10.       ENFORCEMENT OF LICENSED IP		16
10.1.	RIGHTS TO ENFORCE	16
10.2.	ENFORCEMENT BY PRIMARY ENFORCEMENT PARTY	16
10.3.	ENFORCEMENT ACTION BY THIRD PARTY	17
10.4.	AMOUNTS RECOVERED	18
10.5.	LIMITATION ON SETTLEMENTS	18
11.       CONFIDENTIALITY		18
11.1.	LIMITED DISCLOSURE AND USE	18
11.2.	EXCEPTIONS	18
11.3.	USE OF NAME; DISCLOSURE OF TERMS OF THE AGREEMENT	19
11.4.	TERMINATION	19
11.5.	PERMITTED DISCLOSURE TO RELATED PERSONS	19
12.       REPRESENTATIONS AND WARRANTIES		20
12.1.	MUTUAL REPRESENTATIONS AND WARRANTIES	20
12.2.	REPRESENTATIONS AND WARRANTIES OF PMII	20
12.3.	DISCLAIMER	21
13.       INDEMNIFICATION; LIMITATION OF LIABILITY		21
13.1.	PMII’S INDEMNIFICATION OBLIGATIONS	21
13.2.	ISRG’S INDEMNIFICATION OBLIGATIONS	22
13.3.	NOTICE OF CLAIMS	23
13.4.	THIRD PARTY BENEFICIARIES	23
13.5.	LIMITATION OF LIABILITY	24
13.6.	INSURANCE	24
14.       DISPUTE RESOLUTION; ARBITRATION		24
14.1.	ARBITRATION AS EXCLUSIVE REMEDY	24
14.2.	INTERIM RELIEF; INJUNCTIONS	24
14.3.	APPLICABLE LAW	24
15.       TERM AND TERMINATION		25
15.1.	LICENSE TERM	25
15.2.	TERMINATION BY ISRG	25
15.3.	MATERIAL BREACH BY PMII	25
15.4.	MATERIAL BREACH BY ISRG	25
15.5.	AFTER TERMINATION	25
15.6.	SECTION 365(N)	26
16.       GENERAL		26
16.1.	WAIVERS AND AMENDMENTS	26
16.2.	ENTIRE AGREEMENT	26
16.3.	SEVERABILITY	27
16.4.	RELATIONSHIP OF THE PARTIES	27

 

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16.5.	NO ELECTION OF REMEDIES	27
16.6.	COSTS AND EXPENSES	27
16.7.	FORCE MAJEURE	27
16.8.	NOTICES	27
16.9.	WAIVER OF JURY TRIAL	28
16.10.	COUNTERPARTS AND FACSIMILE SIGNATURES	28
16.11.	BENEFITS AND BURDENS; ASSIGNMENTS	29
16.12.	INTERPRETATION	29
16.13.	LICENSE REGISTRATION AND RECORDAL	29
16.14.	NON-SOLICITATION	30

 

List of Exhibits

 

Exhibit 1.1(v)	Licensed Patent Rights
Exhibit 1.1(ii)	Reload Specifications
Exhibit 1.1(kk)	Statement of Work
Exhibit 14	Arbitration Procedures
Exhibit 16.13	Registration of License

 

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LICENSE AND DEVELOPMENT AGREEMENT

 

This License and Development Agreement (this “ Agreement ”) is made as of September 9, 2008 (“ Agreement Date ”), by and between Power Medical Interventions, Inc., a Delaware corporation having its principal place of business at 2021 Cabot Boulevard, Langhorne, Pennsylvania 19047 (“ PMII ”), and Intuitive Surgical, Inc., a Delaware corporation having its principal place of business at 1266 Kifer Road, Sunnyvale, California 94086 (“ ISRG ”).  Capitalized terms that are used, but not defined, on this page of this Agreement shall have the meanings set forth in Section 1.

 

BACKGROUND

 

A.                                 PMII is in the business of, among other things, developing and manufacturing automated surgical devices;

 

B.                                   ISRG is in the business of, among other things, developing, marketing, and selling robotic surgical systems;

 

C.                                   ISRG desires to co-develop with PMII, market, and sell a new cutting and stapling Device to be installed on ISRG’s Robotic Systems and desires to license from PMII certain rights that may relate to the Device;

 

D.                                     PMII desires license such rights to ISRG, subject to the terms and conditions set forth herein;

 

E.                                    In connection with such license, and contemporaneously with execution of this Agreement, PMII and ISRG are entering into a Reload Supply Agreement (“ Supply Agreement ”) pursuant to which PMII will supply to ISRG disposable Reloads for the Device, and ISRG will purchase such Reloads from PMII.

 

In view of the foregoing and for other good and valuable consideration, receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1.                                        Definitions.

 

1.1.                               Certain Definitions .  For purposes of this Agreement, in addition to the terms that are defined on first use in this Agreement, the following terms shall have the following meanings:

 

(a)                                   “ Affiliate ” shall mean a person that directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.  For purposes of this definition, the terms “control”, “controlled by”, and “under common control with” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person and, in the case of an entity, shall require (a) in the case of a corporate entity, direct or indirect ownership of more than 50 percent of the securities having the right to vote for the election of directors, and (b) in the

 

 

case of a non-corporate entity, direct or indirect ownership of more than 50 percent of the equity interests with the power to direct the management and policies of such non-corporate entity.

 

(b)                                  “ Change of Control ” shall mean, with respect to either Party, the sale of all or substantially all of assets or issued and outstanding capital stock of such Party, or merger or consolidation involving such Party in which stockholders of such Party immediately before such merger or consolidation do not own immediately after such merger or consolidation capital stock or other equity interests of the surviving corporation or entity representing more than fifty percent in voting power of capital stock or other equity interests of such surviving corporation or entity outstanding immediately after such merger or consolidation.

 

(c)                                   “ Commercialize ” shall mean to sell, offer for sale, import, export, transport, register, distribute, promote, and market, together with other activities typically associated with commercialization of a medical product.

 

(d)                                  “ Commercially Reasonable Efforts ” means timely application of efforts and resources, consistent with the exercise of prudent business judgment by a company with similar financial resources which intends to exploit a medical product of similar market potential with a view to making a profit, taking into account such matters as product efficacy and safety, size of market, anticipated labeling, competitiveness of alternative products, strength of patent or trade secret protection, likelihood of obtaining Regulatory Approval, and commercially appropriate prioritization with respect to other company projects and products.

 

(e)                                   “ Complaint ” shall mean any written, electronic, or oral communication that alleges deficiencies related to the identity, quality, durability, reliability, safety, effectiveness, or performance of a product or device after it is released for distribution in the marketplace.

 

(f)                                     The term “ conceived and reduced to practice ” (or any other form thereof, e.g., “ conception and reduction to practice ”) shall mean either conception and actual reduction to practice of the relevant invention or, in the case of conception coupled with constructive reduction to practice, that the constructive reduction to practice of the invention must be such as would enable a person skilled in the relevant art to actually reduce the conceived invention to practice without undue experimentation, or research, or exercise of inventive skill.

 

(g)                                  “ Confidential Information ” shall mean all ideas and information of any kind that are held in confidence by one person and transferred, disclosed, or made available by such person to a receiving person and are identified at the time of disclosure as being proprietary or confidential, or would reasonably be regarded as proprietary or confidential by a reasonable business person in like circumstances. The obligations in this Agreement with respect to Confidential Information shall not apply to any portion of the Confidential Information that the receiving person can demonstrate by legally sufficient evidence (i) now or hereafter, through no act or failure to act on the part of the receiving person, is or becomes public; (ii) is known to the receiving person or one of its Affiliates at the time such person receives such Confidential Information from the disclosing person; (iii) is hereafter furnished to the receiving person by an unrelated third person without violating any agreement with the disclosing person; or (iv) is

 

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independently developed by the receiving person or one of its Affiliates without use of any Confidential Information received from the other person.

 

(h)                                  “ Control ” or “ Controlled ” shall mean the ability of a person to grant a license or sublicense under Intellectual Property, other than as a result of this Agreement and without violating the terms of any agreement or other arrangement with any third party.

 

(i)                                      “ Critical Design Review ” shall mean the specific stage of development of the Device that is described in the Statement of Work as the “Critical Design Review”.  ISRG shall interpret this defined term in the context of the development of the Device in the same manner that it interprets this term in the context of its development of other products.

 

(j)                                      The terms “ Developed ” and “ Develops ” shall mean (i) with respect to patentable subject matter, conceived and reduced to practice; (ii) with respect to copyrightable subject matter, reduced to a tangible medium of expression; and (iii) with respect to Know-How, created or discovered.

 

(k)                                   “ Device ” shall mean the cutting and stapling device developed under this Agreement to be installed on ISRG’s Robotic System.

 

(l)                                      “ FDA ” shall mean the United States Food and Drug Administration.

 

(m)                                “ Field of Use ” shall mean the use of a Robotic System for any medical or surgical diagnosis, treatment, or procedure on any part of a human or animal body.

 

(n)                                  “ First Commercial Sale ” shall mean the first sale by ISRG or an Affiliate of ISRG to an end user for use in the United States, Canada, Japan, or a country of the European Union, other than in connection with any investigational research, clinical study, or design or process validation.

 

(o)                                  “ Governmental Authority ” shall mean any nation, territory, or government (or union thereof), foreign, domestic, or multinational, any state, local, or other political subdivision thereof, and any bureau, court, tribunal, board, commission, department, agency, or other entity exercising executive, legislative, judicial, regulatory, or administrative functions of government, including all taxing authorities and all European notified bodies, including notified bodies within the sense of Article 16 of the European Union Medical Device Directive 93/42/EEC, and all other entities exercising regulatory authority over medical products or devices.

 

(p)                                  The phrase “ has application in the Field of Use ” or “ have application in the Field of Use ” shall mean that a reasonable person, skilled in the Field of Use and the technology related to the relevant Licensed IP, could reasonably conclude that the technology, enhancement, or other item in question might well have commercial value if utilized (with or without further enhancement or development) in the Field of Use.

 

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(q)                                  “ Improvement Period ” shall mean the period of time beginning on the Agreement Date and expiring on the first to occur of (i) the third anniversary of the Agreement Date and (ii) a Change of Control of PMII.

 

(r)                                     “ Improvement Period Patent Rights ” shall mean any Patent Rights conceived or applied for by PMII during the Improvement Period.

 

(s)                                   “ Intellectual Property ” or “ IP ” shall mean: (i) Patent Rights; (ii) trademarks, service marks, trade names, brand names, certification marks, designs, logos and slogans, commercial symbols, business name registrations, domain names, trade dress and other indications of origin and general intangibles of like nature, the goodwill associated with the foregoing, and registrations in any domestic or foreign jurisdiction of, and applications in any such jurisdiction to register, the foregoing, including any extension, modification, or renewal of any such registration or application; (iii) research and development data, formulae, ideas, know-how, research, analysis, experiments, proprietary processes and procedures, algorithms, models and methodologies, technical information, technologies, techniques, innovations, creations, concepts, designs, industrial designs, procedures, trade secrets and confidential information, and rights in any domestic or foreign jurisdiction to limit the use or disclosure thereof by any person; (iv) writings and other works of authorship of any type (including patterns, drawings, data, the content contained on any web site), whether copyrightable or not, in any such jurisdiction, and any copyrights and moral rights therein (“ Copyrights ”); (v) computer software (whether in source code or object code form), databases, compilations, and data; and (vi) registrations or applications for registration of copyrights in any domestic or foreign jurisdiction, and any renewals or extensions thereof; and (vii) any similar intellectual property or proprietary rights.

 

(t)                                     “ Irrevocable License Fee ” means the total amount of Twenty Million Dollars (US$20,000,000; i.e. , the sum of the License Fee and the three Milestone Payments), paid to PMII pursuant to Section 7 hereof.

 

(u)                                  “ Know-How ” shall mean all data and information owned by, used by, or held for use by or on behalf of or licensed to (or otherwise Controlled by) PMII or a PMII Affiliate and maintained in confidence by PMII or a PMII Affiliate, including all processes, plans, designs, research, operating manuals, methods, compounds, formulae, discoveries, developments, designs, drawings, technology, techniques, procedures, specifications, inventions, computer programs, and any other scientific or technical data or information conceived, memorialized, developed, and/or reduced to practice, in each case whether or not patentable in any jurisdiction.  Until such time as any particular patent has been published in accordance with the terms of a patent application or such patent application has been published, the term “Know-How” shall be deemed to include all inventions disclosed in such patent application.

 

(v)                                  “ Licensed IP ” shall mean, only to the extent that the IP in Sections 1.1(v)(i)-(iv) below applies to linear staplers, or linear cutters, or their associated drive or control components, or any combination thereof:

 

(i)                                      (a) Patent Rights owned or Controlled by PMII or any PMII Affiliate on the Agreement Date, including without limitation those set forth on Exhibit 1.1(v) attached hereto; (b) Improvement Period Patent Rights owned or Controlled by PMII or any

 

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PMII Affiliate; and (c) Patent Rights to New PMII IP (subject to the limitation set forth in clause (v) above, such rights are hereinafter collectively referred to as “ Licensed Patent Rights ”);

 

(ii)                                   PMII Field Know-How;

 

(iii)                                New PMII IP (as defined in Section 8.4); and

 

(iv)                               Intellectual Property as defined in Subsections (iii)—(vii) of Section 1.1(s), that is owned or Controlled by PMII or any PMII Affiliate on the Agreement Date or during the Improvement Period.

 

(w)                                “ Licensed Marks ” shall mean the trade name and mark “Power Medical Interventions, Inc.”

 

(x)                                    “ Lien ” shall mean all liens, pledges, charges, mortgages, encumbrances, restrictions, licenses, adverse rights or claims, and security interests of any kind or nature whatsoever.

 

(y)                                  “ Litigation Matter ” shall mean any claim, investigation, arbitration, grievance, litigation, action, suit, or proceeding, administrative or judicial, to which a Party is (or, to such Party’s knowledge, is threatened in writing to be made) a party, or relating to the Licensed IP, the Reload, the Device, or this Agreement (whether such Party is a plaintiff, defendant, or otherwise), at law or in equity or otherwise, or before any Governmental Authority.

 

(z)                                    “ Party ” shall mean each of ISRG and PMII (but not their respective Affiliates), who together are sometimes referred to as the “ Parties ”.  As used in this Agreement, references to “ third parties ” do not include either Party or the Affiliates of either Party.

 

(aa)                             “ Patent Costs ” shall mean the costs and expenses paid to outside legal counsel, Governmental Authorities, and other third parties incurred in connection with preparing, filing, prosecuting, obtaining, and maintaining Licensed IP, or taking any Patent Prosecution Action, including costs and expenses of patent interference, re-examination, reissue, protest, opposition, nullification, and similar proceedings (and any appeal thereof in any court or administrative agency).

 

(bb)                           “ Patent Prosecution Action ” shall mean any and all actions that may be taken in connection with preparing, filing, prosecuting, obtaining, and maintaining throughout the world patent protection for Licensed IP, including patent applications and other related material submissions and correspondence with any patent authorities, and including with regard to any patent interference, re-examination, reissue, protest, opposition, nullification, and similar proceedings (and any appeal thereof in any court or administrative agency).

 

(cc)                             “ Patent Rights ” means (i) any and all written, oral, and visual ideas, concepts, and inventions, whether or not any such idea, concept, or invention has been filed as a patent application or submitted by the inventor(s) to any attorney or other person for evaluation as to patentability, (ii) any patents, patent applications, any patents issuing therefrom worldwide, and all provisional rights with respect to patent applications, (iii) any improvements,

 

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substitutions, divisionals, patents of addition, continuations, continuations-in-part, reissues, renewals, registrations, confirmations, re-examinations, extensions, supplementary protection certificates, term extensions (under applicable patent law or regulation or other law or regulation), and certificates of invention of any patents or patent applications, and (iv) all rights to exploit any of the foregoing.

 

(dd)                           The term “ person ” shall mean an individual, corporation, partnership, limited partnership, limited liability company, unincorporated association, trust, joint venture, union or other organization or entity, including a Governmental Authority.

 

(ee)                             “ PMII Field Know-How ” shall mean any Know-How owned or Controlled by PMII or any PMII Affiliate that has application in the Field of Use.

 

(ff)                                 “ PMII Property ” shall mean: (i) Licensed IP; and (ii) Licensed Marks.

 

(gg)                           “ Preliminary Design Review ” shall mean the specific stage of development of the Device that is described in the Statement of Work as the “Preliminary Design Review”.  ISRG shall interpret this defined term in the context of the development of the Device in the same manner that it interprets this term in the context of its development of other products.  For the avoidance of doubt, the Parties agree that successful completion of a Preliminary Design Review for the Device is a necessary condition precedent for a Critical Design Review of the Device.

 

(hh)                           “ Regulatory Approval ” shall mean any and all approvals (including any necessary governmental price or reimbursement approvals), licenses, registrations, or authorizations of the applicable Governmental Authority necessary for the use, storage, import, promotion, marketing, and Commercialization of the Device or Reload.

 

(ii)                                   “ Reload ” shall mean a disposable cartridge containing staples that can be attached to the Device.  Initial specifications for the Reload are set forth in Exhibit 1.1(ii) and in the Statement of Work.  Such initial specifications will be refined as mutually agreed by the Parties to include detailed manufacturing specifications for the Reloads to be supplied by PMII to ISRG under the Supply Agreement.

 

(jj)                                   “ Robotic System ” shall mean a system of one or more computer-controlled manipulators and mechanical arms that operates autonomously or is operated remotely (e.g., teleoperated) by a human, including attachable components or assemblies that operate as part of (and not separately from) such a system during any medical or surgical diagnosis, treatment, or procedure.

 

(i)                                      For the avoidance of doubt, Robotic Systems shall include: (A) ISRG’s da Vinci® surgical systems, (B) detachable surgical instruments that operate as part of (and not separately from) such da Vinci® surgical systems during any medical or surgical diagnosis, treatment, or procedure, (C) components and assemblies that make up such da Vinci® surgical systems; and (D) improvements to the foregoing that are not inconsistent with the first sentence of this Section 1.1.

 

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(ii)                                  For the avoidance of doubt, Robotic Systems do not include: (A) powered or unpowered instruments that are hand positioned for tissue manipulation during open or endoscopic surgical procedures, such as PMII’s powered endoscopic linear cutter instruments ( e.g. , i60 Articulating Endoscopic Linear Cutter and other powered stapling instruments Commercialized prior to the Agreement Date), (B) conventional manual laparoscopic instruments; and (C) improvements to the foregoing that are consistent with clause 1.1(jj)(ii)(A) above.

 

(kk)                             “ Statement of Work ” shall mean the Statement of Work attached hereto as Exhibit 1.1(kk).

 

(ll)                                   “ Sublicensee ” shall mean any person to whom ISRG sublicenses its rights under this Agreement in the manner provided in Section 2.3, but the term “Sublicensee” shall not include any person who manufactures a Reload for ISRG or an Affiliate of ISRG but does not sell such Reloads other than to ISRG or an Affiliate of ISRG.

 

(mm)                       “ Technology ” shall mean any idea, data, writing, invention, discovery, improvement, trade secret, development, know-how, method, technique, formula, process, or other technology, whether or not patentable, copyrightable, or protectable as a trade secret, confidential information, or know-how, or any other form of intellectual property.

 

1.2.                               Other Defined Terms .  Definitions of the defined terms listed below are contained in the Section set forth opposite the defined term in the table below:

 

Defined Term		Section of Agreement
Agreement		Preamble
Agreement Date		Preamble
Bankruptcy Code		Section 15.6
Copyrights		Section 1.1(s)
Designated Jurisdictions		Section 9.1
Development Proposal		Section 3.2
Force Majeure		Section 16.7
Indemnified Party		Section 13.3
Indemnifying Party		Section 13.3
Infringement		Section 10.1
IP Transfer		Section 2.1(d)
ISRG		Preamble
ISRG Indemnified Parties		Section 13.1(a)
License Fee		Section 7.1
License Term		Section 15.1
Licensed Patent Rights		Section 1.1(v)(i)
Milestone Payment		Section 7.2
New ISRG IP		Section  8.5
New PMII IP		Section 8.4
Non-Prosecution Notice		Section 9.3
PMII Product		Section 13.1
PMII		Preamble

 

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PMII Indemnified Parties		Section 13.2(a)
Primary Enforcement Party		Section 10.1
Regulatory Applications		Section 4.1
Technical Information		Section 2.2
Requested Prosecution Action		Section 9.3
Requesting Party		Section 13.6
Supply Agreement		Recitals
Third Party Claim		Section 13.1

 

2.                                        Licenses .

 

2.1.                               License Grants to ISRG .

 

(a)                                   Subject to the terms and conditions of this Agreement, PMII hereby grants to ISRG a worldwide, perpetual, non-transferable (except as set forth in Section 16.11), royalty-free, exclusive license under any and all Licensed IP in the Field of Use, such exclusive license including but not limited to the right to make, have made, use, offer for sale, sell, market, import, export, distribute, Commercialize in any manner whatsoever, and enforce (even against PMII and its Affiliates) the Licensed IP in the Field of Use, as set forth in Section 10 of this Agreement.

 

(b)                                  The license granted under Section 2.1(a) shall not be sublicensable by ISRG except as set forth in Section 2.3.

 

(c)                                   Upon receipt by PMII of the Irrevocable License Fee, the license granted under Section 2.1(a) shall become irrevocable.

 

(d)                                  PMII agrees that it will not, and will ensure that its Affiliates do not, during the License Term assign, transfer, convey, or otherwise dispose of any Licensed IP that has application in the Field of Use (an “ IP Transfer ”) unless such IP Transfer shall have been made subject to the license grant and exclusivity requirements set forth in this Section 2.1 and to the other express terms of this Agreement, including, in particular, Section 16.11.

 

(e)                                   PMII agrees that it shall not, and will ensure that its Affiliates do not, utilize or practice, or grant any rights to any third party with respect to, the Licensed IP in the Field of Use that are in any way inconsistent with the rights granted to ISRG under this Agreement.

 

(f)                                     The license granted under Section 2.1(a) shall not prevent PMII or its Affiliates or third-party licensees from Commercializing and selling powered or unpowered hand positioned instruments, and components thereof, for cutting and stapling (excluding Reloads manufactured for the Device) to customers in hospitals where ISRG’s Robotic Systems are deployed.

 

(g)                                  ISRG will, where reasonably practical, mark all stapling, cutting, or combined stapling and cutting instruments (including the Device), or packaging thereof, with a notice of the applicable Licensed Patent Rights, as reasonably determined by PMII, and PMII’s ownership thereof, in the form reasonably notified by PMII to ISRG from time to time.

 

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(h)                                  For any Licensed IP Controlled by PMII or its Affiliates that is sublicensed to ISRG under Section 2.1(a), ISRG agrees to pay, if applicable and necessary for ISRG to benefit from such sublicensed Patent Rights, a pass-through royalty obligation for any royalty obligation in the original license grant to PMII of such sublicensed Patent Rights.

 

(i)                                      PMII shall disclose to ISRG a listing of all worldwide patent applications and patents owned, Controlled by, or otherwise licensed by PMII or its Affiliates on the Agreement Date.  For any such patent applications or patents licensed by PMII or its Affiliates, PMII shall disclose to ISRG the associated license grant so that ISRG may determine the extent of Control of such patent applications or patents by PMII or its Affiliates.  This listing of patent applications and patents, and associated license terms if applicable, shall include at least those referred to in PMII’s most recent Form 10-K filing with the United States Securities and Exchange Commission.

 

2.2.                              Non-Exclusive License to Use Technical Information .  PMII hereby grants to ISRG and its Affiliates a non-exclusive worldwide, transferable, royalty-free right and license to utilize PMII’s (or an Affiliate of PMII’s) test data and any other technical data and information relating to the development or manufacture of staplers, cutters, drive or control components associated with staplers or cutters, or Reloads (“ Technical Information ”) as may be reasonably required by ISRG or a ISRG Affiliate to support regulatory submissions dealing with the Device or any purposes related to the Commercialization of the Device.  The license granted under this Section 2.2 shall not be sublicensable by ISRG except as set forth in Section 2.3.  PMII shall disclose and provide such Technical Information (including any updated Technical Information) to ISRG at any time on request.

 

2.3.                              Sublicenses .  ISRG shall not sublicense, in whole or in part, the rights granted herein to the Licensed IP and Technical Information without PMII’s prior written consent, which shall not be unreasonably withheld, except that, without PMII’s prior consent, ISRG may sublicense its rights to the Licensed IP, within the Field of Use, (i) to any wholly owned subsidiary, or (ii) as part of the settlement of any patent infringement suit, action, or proceeding between ISRG or any ISRG Affiliate and any third party, subject to the following:

 

(a)                                   Sublicense Agreement .  ISRG shall execute a written sublicense with each Sublicensee which shall be subject to ISRG’s rights and obligations under the terms of this Agreement.  ISRG shall report the granting of all such sublicenses to PMII within thirty (30) days of the granting of the same, and along with such notification shall provide a copy of the sublicense agreement.  ISRG shall cause any such sublicense agreement contains terms that are at least as protective of the Licensed IP and Confidential Information as the terms set forth in this Agreement, and that also include no provisions that would be in violation of the license grant set forth in this Agreement.  ISRG shall be obligated to use Commercially Reasonable Efforts in monitoring the performance of its Sublicensees and shall indemnify PMII for any material violation by a Sublicensee of its obligations related to the Licensed IP under a sublicense agreement.  For avoidance of doubt, ISRG does not have any obligation to report any sublicense under Section 2.3(i).

 

(b)                                  Performance of Other Obligations by Sublicensees .  ISRG shall, and by this Agreement hereby does, agree to cause any Sublicensee to assume and agree to

 

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perform all of the covenants and obligations of ISRG to PMII contained in this Agreement as fully and to the same extent as if such person were ISRG under this Agreement but with such modifications as may be appropriate to reflect the extent, if any, to which the sublicense is narrower in scope than the license grant contained this Agreement.

 

(c)                                   Termination .  Unless the Irrevocable License Fee has been previously paid to PMII, upon termination of this Agreement as provided in this Agreement, any sublicense agreement shall thereupon automatically terminate (subject to the sublicensee’s right to sell any inventory in stock, and to complete and sell any products in process at the time of termination), and ISRG shall cause all sublicense agreements to provide for the same.

 

2.4.                               Third Party Manufacturers .  Except for Reloads, which are addressed in Section 2.9 of the Supply Agreement, ISRG may have any component or assembly associated with the Licensed IP within the Field of Use made by a contract manufacturer of its selection, provided that such contract manufacturer enters into a written agreement that complies with Sections 2.3(a), (b), and (c).

 

2.5.                               Distributors .  ISRG may exercise its rights and obligations under this Agreement through its distributors and sub-distributors through multiple tiers.  Such exercise shall not constitute a sublicense.

 

2.6.                               Trademark License .  PMII hereby grants to ISRG an non-exclusive, non-transferable, worldwide, royalty-free license to use the Licensed Mark in connection with ISRG’s marketing and sale of Reloads for use with the Device.  All goodwill associated with the foregoing license shall inure to the benefit of PMII, and PMII shall have sole control of, and responsibility for, any applications and registrations for the Licensed Mark.  ISRG shall use the Licensed Mark in accordance with PMII’s reasonable guidelines with respect to trademark usage of the Licensed Mark, as provided to ISRG upon reasonable prior notice.  PMII acknowledges that ISRG shall be under no obligation to Commercialize the Reload under the Licensed Mark.  ISRG shall provide reasonable attribution of PMII’s role as the developer and/or manufacturer of the Reload (as applicable) in any Device that includes the Reload.  The Parties agree that the Licensed Mark may appear as practical on any packaging for a Reload, but the Licensed Mark will not appear on the Reload itself or on the Device.

 

3.                                        Development Activities .

 

3.1.                               General .  ISRG shall be responsible for, and control, the development of the Device.  The Parties recognize that in order for ISRG successfully to develop the Device and integrate the Device with a Robotic System, ISRG will require the assistance from PMII as expressly specified in the Statement of Work attached to this Agreement.  Each Party shall timely perform the obligations allocated to it in the Statement of Work.  PMII shall provide such assistance to ISRG at no additional cost, provided that the maximum number of man-hours in assistance to be provided at no additional cost shall not exceed 3,900 hours.  PMII shall be under no obligation to provide any additional assistance, information, or Technology to ISRG except as expressly set forth herein.  If ISRG requires any additional assistance beyond such limit, then PMII shall provide such additional assistance and ISRG shall pay PMII for its time and materials

 

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at reasonable rates to be agreed upon in good faith by the Parties prior to the provision of such additional assistance.

 

3.2.                              Further Development Proposals .  In addition to the Statement of Work, ISRG may propose to PMII a series of additional development projects relating to the Device (each, a “ Development Proposal ”) from time to time. ISRG shall submit each Development Proposal to PMII in writing and shall include a description of the proposed development specifications in detail sufficient to permit PMII to evaluate and make recommendations as to the feasibility of developing the features or enhancements described in such proposed development specifications.  PMII shall consider each such Development Proposal in good faith and inform ISRG of the feasibility of such Development Proposal and the likely cost and timetable for providing the requested support and assistance for such Development Proposal.  If ISRG notifies PMII in writing that it is prepared to proceed with a particular Development Proposal, then the Parties shall negotiate in good faith to (i) agree upon the applicable specifications and (ii) develop a budget for the relevant Development, setting forth the man hours and corresponding costs, but only to the extent that such costs are actually and reasonably incurred by PMII.  PMII shall perform additional Development Proposals only as agreed in writing by the Parties.

 

4.                                        Regulatory Matters .

 

4.1.                              Regulatory Approvals .  ISRG shall be responsible for preparing, submitting, and obtaining all applications necessary for Regulatory Approvals for the Device (“ Regulatory Applications ”), and will undertake all clinical studies necessary to obtain Regulatory Approval for the Device.  ISRG shall keep PMII fully informed with respect to the progress of its Regulatory Applications.  PMII shall cooperate with ISRG relating to all material issues, amendments, supplements, and other matters respecting all Regulatory Applications and Regulatory Approvals for the Device.  ISRG shall provide to PMII, upon request, copies of all Regulatory Applications, Regulatory Approvals, and other regulatory filings, submissions, and communications for the Device.  Regulatory Approvals for the Reloads will be done by PMII in accordance with the Supply Agreement.

 

4.2.                              Regulatory Information and Notification with respect to the Device .  Each Party agrees to share and provide to the other Party all information related to Regulatory Approvals for the Device (or any Technology of PMII incorporated into the Device), and without limitation agrees to:

 

(a)                                   prior to the First Commercial Sale of the Device or such Technology, report to the other Party within ten (10) days of the initial receipt of a report of any unexpected or serious experience with the Device or the Technology used in the Device that could adversely impact obtaining all necessary Regulatory Approvals; and

 

(b)                                  after the First Commercial Sale of the Device or such Technology, report to the other Party within ten (10) days of the initial receipt of a report, or sooner if required for the other Party to comply with any and all legal and regulatory requirements, of (i) any adverse experience with the Device or any such Technology that is serious and unexpected, or (ii) malfunctions of the Device that did not cause a serious adverse

 

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experience, but would likely cause a serious adverse experience if the malfunction were to recur.  Serious adverse experiences mean any experience that suggests a significant hazard, contraindication, side effect, or precaution, or any experience that is fatal or life threatening, is permanently disabling, or requires or prolongs inpatient hospitalization.  An unexpected adverse experience is one not identified in nature, specificity, severity, or frequency in the then-current U.S. labeling for the applicable product.

 

(c)                                   Each Party shall maintain a reasonable record of all material Complaints it receives with respect to the Device or PMII Technology incorporated therein.  Each Party shall notify the other of any material Complaint received by it in sufficient detail and within thirty (30) days after the end of the calendar quarter in which the event occurred, and in any event in sufficient time to allow the responsible Party to comply with any and all legal and regulatory requirements.

 

4.3.                              Recalls .  ISRG shall have the exclusive right (subject to applicable law) to initiate voluntary Device recalls, and shall manage and be responsible (including bearing all costs and expense) for all Device Recalls.  Each of the Parties hereto agrees to notify within seventy two (72) hours the other in writing in the event either sees a need for a Device recall.

 

5.                                        Reload Supply .  PMII shall supply ISRG with ISRG’s requirements for Reloads pursuant to, and subject to the terms and conditions of, the Supply Agreement.

 

6.                                        ISRG Requirements .

 

6.1.                              Preliminary Design Review .  ISRG shall complete its Preliminary Design Review on or before February 28, 2009, provided , however, that this deadline shall be extended for a reasonable period of time if PMII fails to perform its obligations in the Statement of Work in a timely fashion.

 

6.2.                              Critical Design Review .  ISRG shall complete its Critical Design Review on or before December 31, 2009, provided , however, that this deadline shall be extended for a reasonable period of time if PMII fails to perform its obligations in the Statement of Work in a timely fashion.

 

6.3.                              First Commercial Sale .  ISRG shall make Commercially Reasonable Efforts to make a First Commercial Sale of the Device by the third anniversary of the Agreement Date.

 

7.                                        License Payments .

 

7.1.                              License Issuance Fee .  ISRG shall pay to PMII an initial, one-time, license fee of Twelve Million Five Hundred Thousand Dollars (US$12,500,000) (“ License Fee ”) not later than five (5) business days after the execution of this Agreement by both Parties.  The payment of the License Fee shall be a condition precedent to the effectiveness of this Agreement.  If the License Fee is not paid within five (5) business days after execution of this Agreement, this Agreement shall lapse and be deemed null, void, and of no effect.

 

7.2.                              Milestone Payments .  ISRG will make the following one-time payments to PMII (each a “ Milestone Payment ”):

 

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(a)                                   Completion of Preliminary Design Review .  ISRG will pay Two Million Five Hundred Thousand Dollars (US$2,500,000) to PMII not later than ten (10) days following successful completion of the Preliminary Design Review for the Device in accordance with the Statement of Work;

 

(b)                                  Completion of Critical Design Review .  ISRG will pay Two Million Dollars (US$2,000,000) to PMII not later than ten (10) days following successful completion of the Critical Design Review in accordance with the Statement of Work; and

 

(c)                                   First Commercial Sale .  ISRG will pay Three Million Dollars (US$3,000,000) to PMII not later than ten (10) days following the First Commercial Sale of the Device.

 

(d)                                  Acceleration of Milestone Payments .  For the avoidance of doubt, ISRG has the right to accelerate payment of each Milestone Payment, and thereby pay the Irrevocable License Fee, for any reason, and under any circumstances, at any time prior to earlier of (i) the due date of such Milestone Payment, and (ii) the effective date of the termination of this Agreement.

 

7.3.                              Payment Terms .  ISRG shall notify PMII in writing on the occurrence of any of the milestones described in Section 7.2.  All payments due from ISRG to PMII shall be made by wire transfer of immediately available funds to an account designed by PMII.  All payments shall be made in U.S. dollars.  If ISRG is required by law to withhold any tax to the tax or revenue authorities in any country regarding any payments or royalties, such amount shall be deducted from the amounts to be paid by ISRG, and ISRG shall notify PMII and promptly furnish PMII with copies of any tax certificate or other documentation evidencing such withholding.

 

8.                                        Intellectual Property .

 

8.1.                              Ownership of IP .  The Parties agree that each Party owns and retains all right, title, and interest in all Technology and Intellectual Property owned, Developed, or in-licensed by such Party (i) prior to the Agreement Date or (ii) that is unrelated to this Agreement.

 

8.2.                              Ownership of PMII Property .  Without limitation of Section 8.1, and except as otherwise provided for in this Agreement, PMII shall own and retain all right, title, and interest, including all Technology and Intellectual Property, in the PMII Property.

 

8.3.                              Ownership of Device .  Subject to PMII’s ownership of the PMII Property, ISRG shall own all right, title, and interest, including all Technology and Intellectual Property, in the Device.  To the extent that PMII Develops any contribution to the Device, whether alone or jointly with ISRG, and such contribution does not constitute PMII Property, such Technology and Intellectual Property shall be owned by ISRG.

 

8.4.                              Ownership of New PMII IP .  PMII shall own all Technology, and all Intellectual Property therein, that is Developed by either Party, whether alone or jointly with the other Party, in performance of the developmentactivities described in Section 3 of this

 

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Agreement, in the field of power stapling and cutting mechanisms, including their associated drive or control components (the “ New PMII IP ”).

 

8.5.                              Ownership of New ISRG IP .  ISRG shall own all Technology, and all Intellectual Property therein, that is Developed by either Party, whether alone or jointly with the other Party, in performance of the development activities described in Section 3 of this Agreement, outside the field of power stapling and cutting mechanisms, including their associated drive or control components (the “ New ISRG IP ”).

 

8.6.                              Assignment of Intellectual Property .

 

(a)                                   Each Party represents and covenants that all its employees, consultants, and agents, and all third parties acting on behalf of such Party in performing its obligations under this Agreement, shall be obligated under a binding written agreement to assign to such Party all Technology and Intellectual Property Developed by such employees, consultants, agents, and third parties in connection with this Agreement.

 

(b)                                  Subject to the licenses and other rights specifically provided in this Agreement, to the extent either Party obtains any title or similar interest in any Technology, or any Intellectual Property therein, that is to be owned by the other Party in accordance with Section 8 of this Agreement, such first Party hereby assigns and, to the extent such assignment cannot be made at present, agrees promptly to assign, to such second Party all of the first Party’s title and other interest in and to such Technology and Intellectual Property throughout the world.  The first Party shall execute and procure such documents, including short-form assignments and assignments of patent applications and patents, and take such other actions as may be reasonably requested from time to time by the second Party to obtain for its own benefit appropriate protections for Intellectual Property in any and all countries with respect to such Technology, or otherwise to transfer or confirm the transfer of such Technology and the related Intellectual Property for the benefit of the second Party.

 

9.                                        Prosecution of Patent Rights .

 

9.1.                              Prosecution and Maintenance of Patent Rights .  For countries or regions that grant Patent Rights (“ Designated Jurisdictions ”), PMII shall use Commercially Reasonable Efforts to prepare, file, prosecute, obtain, and maintain:

 

(a)                                   all Licensed Patent Rights existing as of the Agreement Date; and

 

(b)                                  all Licensed Patent Rights that come into existence after the Agreement Date in any Designated Jurisdiction selected at PMII’s discretion.

 

(c)                                   With reference to Sections 9.1(a) and (b), PMII shall otherwise take all Patent Prosecution Actions as it shall deem to be commercially reasonable, in its discretion, in order to protect and enhance the value of such Licensed Patent Rights, and shall pay all Patent Costs incurred by PMII in connection with the foregoing activities.

 

9.2.                              Cooperation with Respect to Licensed Patent Rights .  PMII shall regularly provide ISRG with copies of all patent applications that, upon filing, would be included in the

 

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definition of Licensed Patent Rights that are proposed to be filed by PMII or any Affiliate, and PMII shall also provide ISRG with copies of all other related material submissions and correspondence with any patent authorities dealing with actual or potential Licensed Patent Rights, in sufficient time to allow for review and comment by ISRG.  In addition, PMII shall provide ISRG and its counsel with an opportunity to consult with PMII and its counsel regarding Patent Prosecution Actions relating to the Licensed Patent Rights and any decisions by PMII not to take any Patent Prosecution Actions, and PMII shall take into consideration the reasonable requests of ISRG regarding the same.  ISRG shall cooperate fully with PMII, at PMII’s reasonable request and ISRG’s sole expense for its own actions, in connection with the preparation, filing, prosecution, obtaining and maintenance of, all Patent Prosecution Actions concerning the applicable Licensed Patent Rights by PMII under this Section 9.2 (and in any other proceedings before a patent official or office with respect thereto).

 

9.3.                              Election Not to Prosecute; Licensed Patent Rights; Right to Step In .  If PMII elects not to:

 

(a)                                   take any Patent Prosecution Action for any applicable Licensed Patent Rights necessary to establish (e.g., prepare and file a patent application) or maintain such Licensed Patent Rights in a particular Designated Jurisdiction;

 

(b)                                  take any other action to prevent the forfeiture of commercially valuable rights with respect to any applicable Licensed Patent Rights in a Designated Jurisdiction that is reasonably necessary to establish or preserve such commercially valuable rights in such Designated Jurisdiction; or

 

(c)                                   pay the Patent Costs associated with any such Patent Prosecution Action or such other action in any particular Designated Jurisdiction (in each case relating to Licensed Patent Rights), (each of the foregoing a “ Requested Prosecution Action ”), then in each such case PMII shall so notify (“ Non-Prosecution Notice ”) ISRG promptly in writing that it has made such an election. PMII shall provide such Non-Prosecution Notice to ISRG on or before a date that it reasonably believes would provide ISRG with sufficient time to enable ISRG to meet any deadlines known to PMII by which the Requested Prosecution Action must be taken to establish or preserve commercially valuable rights in the Designated Jurisdiction to which such Requested Prosecution Action relates.  On receipt of any Non-Prosecution Notice, ISRG shall have the right but not the obligation to take the Requested Prosecution Action at its own expense, and to take over Prosecution of the Patent Rights that were subject to the Non-Prosecution Notice, and PMII shall cooperate fully with ISRG with respect to any such action.  ISRG shall be deemed to have received a Non-Prosecution Notice with respect to any Requested Prosecution Action if PMII shall not have taken the Requested Prosecution Action within ten (10) days of a written request by ISRG that PMII take such action.

 

9.4.                              New ISRG IP .  ISRG shall control the patent prosecution of the New ISRG IP, and shall take all Patent Prosecution Actions therewith, at its expense.

 

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10.                                  Enforcement of Licensed IP .

 

10.1.                        Rights to Enforce .

 

(a)                                   With respect to the enforcement and defense of the Licensed IP, PMII and ISRG shall inform each other promptly in writing of any knowledge of any alleged infringement, misuse, or misappropriation by any person of the Licensed IP that has application in the Field of Use (such infringement, misuse, or misappropriation, the “ Infringement ”) and shall provide a summary of any evidence indicating such Infringement.  PMII and ISRG shall meet to discuss and agree upon a strategy to resolve the alleged Infringement.

 

(b)                                  ISRG shall have the sole right but not the obligation to prosecute or seek to end at its own expense any Infringement of the Licensed IP, to the extent that such Infringement occurs in the Field of Use.

 

(c)                                   PMII shall have the sole right but not the obligation to prosecute or seek to end at its own expense any Infringement of IP that is owned or Controlled by PMII or a PMII Affiliate and that is not licensed to ISRG in the Field of Use.

 

(d)                                  The Party exercising its sole right of enforcement with respect to a particular Infringement is defined as “ Primary Enforcement Party ”.

 

10.2.                        Enforcement by Primary Enforcement Party .

 

(a)                                   When the Primary Enforcement Party takes action to prosecute any Infringement, it shall:

 

(i)                                      be responsible for all costs of prosecuting such Infringement, except as provided in Section 10.2(d);

 

(ii)                                   provide the other Party with copies of all pleadings and other documents proposed to be initially filed or served by the Primary Enforcement Party in sufficient time to allow for review and comment by the other Party

 

(iii)                                as reasonably requested by the other Party, regularly provide the other Party with copies of all pleadings and other documents proposed to be filed or served by the Primary Enforcement Party and other material submissions and correspondence in any way related to such prosecution of such Infringement, as applicable, in sufficient time to allow for review and comment by the other Party; and

 

(iv)                               provide the other Party and its counsel with a reasonable opportunity to consult with the Primary Enforcement Party and its counsel regarding the filing, service of process, and contents of any documents proposed to be filed or served by the Primary Enforcement Party and other material submissions and correspondence in any way related to such prosecution of such Infringement or in connection therewith, and the Primary Enforcement Party shall give consideration to the reasonable requests of the other Party regarding the same.

 

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(b)                                  To the extent that the other Party is deemed an indispensable party in the Primary Enforcement Party’s litigation involving the Licensed IP, the other Party agrees to join the Primary Enforcement Party in such action.  The Primary Enforcement Party shall reimburse all of the other Party’s reasonable expenses, including attorney fees, and pay a reasonable hourly consulting fee for use of the other Party’s personnel, in connection with litigation involving the Licensed IP that the other Party is required to join as an indispensable party.

 

(c)                                   The other Party agrees to cooperate with the Primary Enforcement Party in any lawsuit that the Primary Enforcement Party brings against a third party to enforce the Primary Enforcement Party’s rights in the Licensed IP and to join the Primary Enforcement Party as a party to such lawsuit if (i) requested by the Primary Enforcement Party and (ii) if the Primary Enforcement Party agrees to (A) reimburse all of the other Party’s reasonable litigation expenses, including attorney fees, in such lawsuit, and (B) pay a reasonable hourly consulting fee for use of the other Party’s personnel in connection with such lawsuit.

 

(d)                                  To the extent permissible under the Federal Rules of Civil Procedure, each Party shall have the right, with counsel of its own choosing and at its own expense, to join in any of the other Party’s litigation involving the Licensed IP.

 

10.3.                        Enforcement Action by Third Party .

 

(a)                                   In the event that a declaratory judgment or other court or administrative action is brought by a third party alleging invalidity, unenforceability, non-infringement, misuse, or misappropriation of any Licensed IP, PMII shall have the obligation to take over the sole defense of the action at its own expense. The provisions of this Section 10.3 shall be in addition to, and not in lieu of, the Parties’ indemnification obligations contained in Section 13, and in the event of any conflict between the provisions of this Section 10.3 and the indemnification obligations contained in Section 13, the indemnification obligations contained in Section 13 shall be controlling.

 

(b)                                  All actions taken by PMII pursuant to this Section 10.3 shall be subject to the following conditions:

(i)                                      PMII shall be responsible for all costs of prosecuting and defending against such action;

 

(ii)                                   as reasonably requested by ISRG, PMII shall regularly provide ISRG with copies of all pleadings and other documents proposed to be filed or served by PMII and other material submissions and correspondence in any way related to such defense, as applicable, in sufficient time to allow review and comment by ISRG; and

 

(iii)                                PMII shall provide ISRG and its counsel with a reasonable opportunity to consult with PMII and its counsel regarding the filing, service of process, and contents of any documents proposed to be filed or served by PMII and other material submissions and correspondence in any way related to such defense or in connection therewith, and PMII shall give consideration to ISRG’s reasonable requests regarding the same.

 

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10.4.                        Amounts Recovered .  Any amounts recovered by either Party for past Infringement in connection with a suit pursuant to this Section 10, whether by settlement or judgment, shall be used to reimburse the Parties for their reasonable out-of-pocket costs and expenses in making such recovery (which amounts shall be allocated first to the party acting as Primary Enforcement Party if such amounts are insufficient to cover such costs and expenses in full).  Any remainder that relates to an Infringement of Licensed IP occurring in the Field of Use shall belong in full to ISRG and/or an Affiliate of ISRG (as applicable), and any remainder that relates to an Infringement occurring outside the Field of Use of IP that is owned or Controlled by PMII or a PMII Affiliate and that is not licensed to ISRG shall belong to PMII.

 

10.5.                        Limitation on Settlements .  The Parties agree that the primary goal in litigating validity and enforceability issues associated with the Licensed IP shall be the preservation of maximum claim breadth and enforcement rights, and the Parties shall cooperate with each other in good faith to achieve this mutual goal.  Except with the prior written consent of the other Party, neither Party shall consent to entry of any judgment or enter into any settlement with respect to any infringement or other action identified in this Section 10 that (i) would result in monetary, injunctive, or other relief being imposed against the other Party, (ii) would constitute or require any admission of liability or wrongdoing on the part of the other Party that does not provide a full release of liability for the other Party, or (iii) would otherwise materially diminish the claim scope of the applicable Licensed IP or affect its validity or enforceability.

 

11.                                  Confidentiality .

 

11.1.                         Limited Disclosure and Use .  Each of ISRG and PMII shall hold in confidence any Confidential Information (including trade secrets) disclosed by the other or otherwise obtained by such Party from the other Party as a result of this Agreement or the Supply Agreement, and each of ISRG and PMII shall protect the confidentiality thereof with the same degree of care that it exercises with respect to its own information of a like nature, but in no event less than reasonable care. ISRG shall have the right to provide Confidential Information to its Affiliates and Sublicensees, subject to the confidentiality obligations imposed by this Section 11.1.  Without the prior written consent of the disclosing Party, a receiving Party shall not use, disclose, or distribute any Confidential Information, in whole or in part, except as required to perform such Party’s obligations under this Agreement or the Supply Agreement or in exercise or furtherance of its rights under this Agreement or the Supply Agreement.  Access to the disclosing Party’s Confidential Information shall be restricted to the receiving Party’s employees, agents, and consultants, who, in each case, need to have access to carry out a permitted use and are bound in writing to maintain the use and confidentiality restrictions of such Confidential Information.  The obligations set forth in this Section 11.1 shall survive any termination or expiration of this Agreement in perpetuity (with respect to trade secrets and confidential financial information) and for a period of five (5) years (with respect to all other Confidential Information).

 

11.2.                         Exceptions .  Each receiving Party may disclose Confidential Information, without prior approval from the other Party, to the extent such disclosure is reasonably necessary to protect intellectual property rights to which such Party has a right or license under this Agreement, to prosecute or defend litigation, to comply with applicable law or regulations (e.g.,

 

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Unites States Securities and Exchange Commission filings), to obtain necessary or desirable Regulatory Approvals or concurrences, or to respond to a valid order of a Governmental Authority, provided that , other than with respect to disclosure for protecting intellectual property rights in connection with a Patent Prosecution Action in which such disclosure is required by applicable law, the receiving Party shall (a) use reasonable efforts to secure confidential treatment of such Confidential Information required to be disclosed, (b) use reasonable efforts to protect the financial terms of this Agreement, and (c) unless precluded by applicable law from doing so, give advance written notice to the disclosing Party sufficiently in advance of the proposed disclosure so as to permit the disclosing Party to have the opportunity to object to such disclosure or otherwise protect its Confidential Information.

 

11.3.                         Use of Name; Disclosure of Terms of the Agreement .  Except as required by applicable law or regulation, neither Party shall use the name of the other Party or any Affiliate of the other Party in any advertising without the prior written approval of the other Party. Except as may be required by applicable law or regulation, neither Party shall disclose any terms or conditions of this Agreement without the prior written consent of the other, provided that (a) either Party may disclose such terms and conditions in order to comply with law or the rules of any stock exchange on which its securities are listed; and (b) either Party may disclose such terms and conditions to existing and potential lenders, material investors, and buyers who have agreed in writing to keep such information confidential in accordance with provisions at least as protective as those contained herein.

 

11.4.                         Termination .  Each receiving Party shall, upon termination of this Agreement, immediately discontinue use of the other’s Confidential Information (except to the extent that such receiving Party retains a right or license to use such Confidential Information, or requires such Confidential Information in order to complete the transactions and purposes of this Agreement).  Within thirty (30) days after termination of this Agreement, or upon receipt of written request by the disclosing Party, if earlier, all materials containing such Confidential Information shall be returned by the receiving Party or (with the disclosing Party’s prior written consent) destroyed, provided, however, that each Party may retain copies of Confidential Information in which such Party has a proprietary or licensed interest that survives termination, and the receiving Party shall be entitled to retain a file copy of the Confidential Information under the control of its general counsel or its outside counsel for archival purposes and for monitoring its obligations under this Agreement or the Supply Agreement, and in connection with any related obligations under law, Device Regulation, or Regulatory Approvals.

 

11.5.                         Permitted Disclosure to Related Persons .  Notwithstanding the preceding provisions of this Section 11, this Section 11 allows, without prior approval of the other Party, disclosure of Confidential Information or the terms and conditions of this Agreement: (i) by ISRG, to any ISRG Affiliate, or to the respective auditors and business, financial, and legal advisers of ISRG or any ISRG Affiliate who need to understand the proposed or existing business relationship between PMII and ISRG, and (ii) by PMII, to any PMII Affiliate, and to the respective auditors and business, financial, and legal advisers who need to understand the proposed or existing business relationship between PMII and ISRG.

 

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12.                                  Representations and Warranties .

 

12.1.                        Mutual Representations and Warranties .  Each Party hereby represents and warrants to the other Party as follows:

 

(a)                                   It is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction in which it is incorporated.  It has corporate power to own its properties and to conduct its business as currently owned and conducted.

 

(b)                                  It has the full legal right and power to enter into and perform the transactions contemplated by this Agreement, without need for any consent, approval, authorization, license or order of, or notice to or filing with, any Governmental Authority or other person.  The execution, delivery, and performance by such Party of this Agreement and the consummation by it of the transactions contemplated hereby have been duly and validly authorized and approved by all necessary corporate action of such Party.  This Agreement evidences the legal, valid, and binding obligations of such Party, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, or similar laws relating to or affecting the rights and remedies of creditors generally.  This Agreement has been duly executed and delivered by such Party.

 

(c)                                   The execution, delivery, and performance by it of this Agreement does not and will not violate any applicable law or regulation, nor any agreement to which it is a party or by which it is bound.

 

(d)                                  The execution, delivery, and performance by it of this Agreement does not require the approval of any Governmental Authority nor the application for or filing of or for any license, permit, approval, waiver, no-action, or similar permission from any Governmental Authority (excluding the Regulatory Approvals expressly described in this Agreement).

 

12.2.                        Representations and Warranties of PMII .  PMII hereby represents and warrants, as at the Agreement Date, as follows:

 

(a)                                   Issued Patents and Patent Applications .  Exhibit 1.1(v) provides a true, complete, and correct list as of the Agreement Date of (i) all issued patents included within the Licensed Patent Rights, and the filing date, issue date, and patent numbers of each such patent; and (ii) all applications for patents included within the Licensed Patent Rights, including the title, filing date, and application number of each such application.

 

(b)                                  Title and Transfer .  PMII (i) owns and holds, free and clear of all Liens, all right, title, and interest in the Licensed IP; (ii) has the exclusive right to use and license the Licensed IP in the Field of Use on a worldwide basis; and (iii) has the exclusive right to bring actions for the infringement of the Licensed IP in the Field of Use.  Pursuant to this Agreement, PMII will license to ISRG all of its right, title, and interest in and to all Licensed IP in the Field of Use to the extent set forth in Section 2.1 of this Agreement, free and clear of all Liens.  PMII has not granted (and is not obligated to grant) to any other person any license, option, or other rights with respect to the Licensed IP in the Field of Use.

 

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(c)                                   Confidentiality .  PMII has taken reasonable efforts to protect the confidentiality of any Know-How or confidential or proprietary information relating to any Licensed IP.

 

(d)                                  No Contest of Validity or Patentability .  Except as set forth in Exhibit 12.2(d) , there is no pending or, to the knowledge of PMII, threatened Litigation Matter (and PMII has received no notice) (i) contesting the patentability, validity, enforceability, ownership, or right to use, assign, license, sublicense, or dispose of any Intellectual Property included in the Licensed IP that has application in the Field of Use, or (ii) asserting that any Licensed IP that has application in the Field of Use (or the design, manufacture, use, importation, marketing, offer for sale, or sale of any PMII Product or Reload) conflicts or will conflict with the Intellectual Property of any other person.

 

(e)                                   Misappropriation; Notice of Infringement .  PMII has not misappropriated from any person any Technical Information, nor any of the Technology covered by any Licensed IP that has application in the Field of Use or that relates in any way to the Reload or the Device.  PMII has received no notice of any infringement or alleged infringement by any third party of the Licensed IP that has application in the Field of Use.

 

(f)                                     No In-Licensed IP .  As at the Agreement Date, all of the Licensed IP is owned by PMII.

 

(g)                                  Know-How .  PMII is the sole owner of all PMII Field Know-How, free and clear of all Liens.  PMII has taken reasonable steps to protect the confidentiality of all PMII Field Know-How.

 

(h)                                  Licensed Marks .  PMII is the sole and exclusive owner of the Licensed Marks, free and clear of all Liens.  To PMII’s knowledge, (i) use by PMII of the Licensed Marks has not infringed and does not infringe any trademarks, service marks or trade names belonging to any other person, (ii) no person has infringed any of the Licensed Marks, and (iii) use by ISRG and its Affiliates of the Licensed Marks will not infringe any trademarks, service marks or trade names belonging to any other person.

 

12.3.                        Disclaimer .  EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NO PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT.  NO PARTY WARRANTS THAT THE OTHER PARTY WILL RECEIVE ANY PARTICULAR AMOUNT, OR ANY, REVENUES OR PROFITS AS A RESULT OF ENTERING INTO THE BUSINESS ARRANGEMENTS DESCRIBED IN THIS AGREEMENT.

 

13.                                  Indemnification; Limitation of Liability .

 

13.1.                        PMII’s Indemnification Obligations .

 

(a)                                   PMII hereby agrees to indemnify, defend, and hold harmless ISRG, each of its Affiliates, and their respective Sublicensees, directors, representatives, officers,

 

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employees, agents, attorneys, successors, and assignees (collectively, the “ ISRG Indemnified Parties ”), fro