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INTELLECTUAL PROPERTY LICENSE AGREEMENT

IP Intellectual Property License Assignment Agreement

INTELLECTUAL PROPERTY LICENSE AGREEMENT | Document Parties: WEIGHT WATCHERS INTERNATIONAL INC | Weight Watchers Asia Holdings Ltd | Weight Watchers Danone China Limited You are currently viewing:
This IP Intellectual Property License Assignment Agreement involves

WEIGHT WATCHERS INTERNATIONAL INC | Weight Watchers Asia Holdings Ltd | Weight Watchers Danone China Limited

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Title: INTELLECTUAL PROPERTY LICENSE AGREEMENT
Governing Law: New York     Date: 11/6/2008
Industry: Personal Services     Law Firm: Paul Weiss;Baker McKenzie     Sector: Services

INTELLECTUAL PROPERTY LICENSE AGREEMENT, Parties: weight watchers international inc , weight watchers asia holdings ltd , weight watchers danone china limited
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EXHIBIT 10.1

Execution Copy

July 7, 2008

Weight Watchers International, Inc.

and

Weight Watchers Danone China Limited

 

 

INTELLECTUAL PROPERTY LICENSE AGREEMENT

 

 


TABLE OF CONTENTS

 

 

 

 

 

  

Page

ARTICLE I DEFINITIONS

  

2

 

 

ARTICLE II RIGHT TO USE THE LICENSED IP

  

7

 

 

ARTICLE III INTELLECTUAL PROPERTY RIGHTS

  

10

 

 

ARTICLE IV KNOWLEDGE TRANSFER; ADDITIONAL SERVICES

  

12

 

 

ARTICLE V ROYALTIES, ACCOUNTING AND AUDIT RIGHTS

  

15

 

 

ARTICLE VI QUALITY CONTROL

  

17

 

 

ARTICLE VII REPRESENTATIONS, WARRANTIES AND COVENANTS

  

22

 

 

ARTICLE VIII ASSIGNMENT

  

24

 

 

ARTICLE IX CONFIDENTIALITY

  

24

 

 

ARTICLE X TERM AND TERMINATION

  

25

 

 

ARTICLE XI MISCELLANEOUS

  

27

SCHEDULE A LLC MARKS

ANNEX 1 F & B LICENSE AGREEMENT

 

i


INTELLECTUAL PROPERTY LICENSE

THIS INTELLECTUAL PROPERTY LICENSE AGREEMENT (this “ Agreement” ), dated this 7th day of July, 2008, is entered into by and between Weight Watchers International, Inc., a company duly organized under the laws of Virginia, (“ Licensor ”), and Weight Watchers Danone China Limited, a company duly organized and existing under the laws of Hong Kong (the “ Company ”, and together with Licensor, each a “ Party ” and collectively, the “ Parties ”).

RECITALS

WHEREAS, Licensor has expended considerable time, effort and resources developing an international network of businesses throughout the world devoted to weight management (the “ Weight Watchers Business ”);

WHEREAS, Licensor owns valuable intellectual property and know-how used in connection with the marketing and operation of the Weight Watchers Business;

WHEREAS, Weight Watchers Asia Holdings Ltd. (“ WTW ”) and DAP (as defined herein) have entered into a Joint Venture Agreement on February 5, 2008 (and, together with any and all amendments thereto, the “ Joint Venture Agreement ”) setting forth the terms and conditions of their investment in the Company;

WHEREAS, the Company has been formed by WTW and DAP as of March 7, 2008 for the purpose of developing and operating the Approved Lines (as defined herein) in the Territory (as defined herein);

WHEREAS, in connection with the Joint Venture Agreement, Licensor has agreed to license the Licensed IP (as defined herein) to the Company and to provide certain know-how to the Company for use in connection with the Approved Lines in accordance with the terms and conditions set forth herein; and

WHEREAS, the Company wishes to exploit the Licensed IP and certain know-how pursuant to the terms and conditions set forth herein.


NOW THEREFORE, in consideration of the mutual agreements and covenants set forth herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions . In addition to the terms defined elsewhere herein, as used in this Agreement, the following terms have the meanings specified below when used in this Agreement:

Affiliate ” of a Person (the “ Subject Person ”) means any other Person directly or indirectly Controlling, Controlled by, or under common Control with, the Subject Person; provided , however , (i) the Company and its Subsidiaries shall not be deemed Affiliates of Licensor or DAP (ii) Licensor and DAP shall not be deemed Affiliates of each other, and (iii) Artal and Artal’s Affiliates, other than Licensor or subsidiaries of Licensor, shall not be deemed Affiliates of Licensor.

Approved Lines ” means (i) the operation of Classes; (ii) the manufacture and in-Class sale of products, including the Food and Beverage Products (the “ Class Products ”) branded with one or more of the trademarks, trade names, logos, symbols, insignia, trade dress or other source identifiers owned by or licensed to Licensor (collectively, the “ Marks ”); (iii) the production, publication and distribution of a print magazine branded with one or more of the Marks; (iv) the offering to individuals via the Electronic Medium of (a) the Class Products or (b) electronic weight reduction or weight maintenance subscription products similar to those offered by Licensor outside the Territory (the items referred to in clauses (ii) through (iv) of this definition shall be referred to together as the “ Licensed Products ”); and (v) any extensions, alterations, modifications or expansions of the foregoing approved pursuant to Section 2.3(b) .

Business Day ” means any day other than a Saturday, Sunday or other day on which commercial banks in the PRC, Hong Kong or the U.S. are required or authorized by law or executive order to be closed.

Classes ” means the presentations of the Licensed Techniques, through a structured program defined by Licensor, in live, in-person classes held at physical locations.

Commercial Launch Date ” means the date that is six (6) months from the Soft Launch Date.

Confidential Information ” means (i) the User Data, Standards, Licensed IP and all Modifications and Company Improvements; (ii) all information disclosed by a Party (the “ Disclosing Party ”) or its Representatives to the other Party (the “ Receiving Party ”) or any of Representatives, including all information concerning the Disclosing Party’s, or any of its Affiliates’, businesses, finances, designs, advertising, marketing, sales, plans for future developments and internal processes or systems whether furnished before or after the date hereof and whether furnished in oral, written, visual, machine readable or any other form, and regardless of the manner in which it is furnished (including by fax and any other form of electronic delivery); and (iii) any document or material prepared by the Receiving Party or its Representatives based on any confidential

 

2


information described in sub-paragraphs (i) and (ii) of this definition and all copies, extracts, reproductions, summaries or analyses of any such information (whether created by the Receiving Party, its Representatives or any other Person), including all digital and electronic copies. Confidential Information shall not include information that: (a) is already known to the Receiving Party without restriction on use or disclosure prior to receipt of such information from the Disclosing Party or its Representatives; (b) is or becomes part of the public domain other than by breach of this Agreement, or other wrongful act, by the Receiving Party or its Representatives (and in the case of the Company, its Subsidiaries); (c) is developed by the Receiving Party (and in the case of the Company, a Subsidiary) independently of and without reference to any Confidential Information; or (d) is received by the Receiving Party (and in the case of the Company, its Subsidiary) from a third party who is not under any obligation to maintain the confidentiality of such information. The Receiving Party shall have the obligation of demonstrating that such an exception to the definition of Confidential Information exists.

Control ” with respect to any Person, means (i) holding, whether individually or in concert with one or more other Persons, directly or indirectly, any fraction of the capital of such Person giving the holder the majority of the voting rights of such Person; (ii) holding alone the majority of the voting rights of such Person (including pursuant to the provisions of a shareholders’, investors’ or other equity holders’ agreement, undertaking or arrangement); (iii) being able, whether individually or in concert with one or more other Persons, to effectively determine decisions taken at any such Person’s shareholders’ or other equity holders’ meetings (or pursuant to any written consent or other action in lieu thereof); or (iv) being a shareholder or other equity holder of such Person and having, whether individually or in concert with one or more other Persons, the power to appoint a majority of the members of the board of directors, management, supervisory or administrative body of such Person. The terms “ Controls ”, “ Controlled ” and “ Controlling ” shall have corresponding meanings.

Customer ” means a Member, Subscriber or other purchaser of Company products or services.

Effective Date ” means March 7, 2008.

Electronic Medium ” means the Internet and any other related or similar form of interactive and connected electronic delivery or digital transmission that now exist or may hereafter be developed.

Food and Beverage Products ” means food and beverage products using the LLC Marks manufactured by the Company or by a third party manufacturer on behalf of the Company.

DAP ” means Danone Dairy Asia, a company incorporated under the laws of France.

 

3


Licensed Business ” means the business of operating the Approved Lines in the Territory, including the advertising and promotion of the Approved Lines in the Territory.

Licensed IP ” means the Licensed Marks, Licensed Materials and Licensed Techniques.

Licensed Marks ” means (i) the trademark and service mark “ Weight Watchers ” and (ii) such other trademarks, service marks, names, logos, symbols, insignia, trade dress and other source identifiers owned by or licensed to Licensor in the Territory and used in the Approved Lines, including all brands and trade names used by the Company in connection with the Licensed Business pursuant to Section 3.1 , which are reasonably requested in writing by the Company to be licensed hereunder.

Licensed Materials ” means those textual, visual or audiovisual materials or other works and materials, whether or not subject to copyright protection, owned by Licensor and used in connection with the Approved Lines, as designated from time to time by Licensor. For the avoidance of doubt, the Licensed Materials shall not include any software, source code or other technology.

Licensed Techniques ” means those methods, techniques, programs, procedures, trade secrets, know-how, patents and unpatented inventions owned by Licensor as may be used by Licensor or its other franchisees in connection with the Approved Lines, including Licensor’s weight loss or weight control plans, which are reasonably requested in writing by the Company to be licensed hereunder. For the avoidance of doubt, the Licensed Techniques shall not include any software or source code.

LLC Classes ” means International Trademark Classes 1, 5, 29, 30, 31, 32 and 33 (or comparable classes).

LLC Marks ” means those trademarks within the LLC Classes owned by WW Foods, LLC identified on Schedule A.

Member ” means an individual who has registered for, joined or otherwise attend Classes offered by the Company or its Affiliates.

Modifications ” means any and all modifications, developments or improvements made by Licensor or one of its Affiliates to the Licensed IP.

Person ” means any individual, firm, corporation, joint venture, enterprise, partnership, trust, unincorporated association, limited liability company, government (or agency or political subdivision thereof), or other entity of any kind.

PRC ” or “ China ” means the People’s Republic of China.

 

4


Soft Launch Date ” means the date that is twelve months from the date of the Joint Venture Agreement.

Subscriber ” means an individual who has signed up to use products or tools on the Web Site.

Subsidiary ” means any Person wholly owned by the Company.

Territory ” means the PRC. For the purposes of this Agreement, Taiwan and the special administrative regions of Hong Kong and Macau shall not be considered part of the Territory.

Transfer ” means, whether voluntarily or involuntarily, to give, sell, issue, assign, pledge, encumber, hypothecate, grant a security interest in or otherwise dispose or convey, whether in one transaction or a series of related transactions. The terms “Transferee,” “Transferor,” “Transferred” and other forms of the word “Transfer” shall have the correlative meanings.

U.S .” or “ United States ” means the United States of America.

Web Site and Technology Services ” means any and all services related to (i) the development and maintenance of a web site or other successor technology that may exist in the future for delivering information, products, tools or services via the Electronic Medium (each such site, a “ Web Site ”), (ii) providing any technology services related to the Electronic Medium (such as eCRM, database maintenance and web hosting services), or (iii) developing or providing any other consumer-facing or retail point-of-sale systems, technologies or applications (such as the CHAMP networked software application or any similar application that may be used by the Company or its Subsidiaries to store Customer transaction data and provide receipts).

1.2 The following terms have the meanings specified in the indicated Sections:

 

 

 

 

Term

  

Section

Additional Services

  

4.3(a)

Alternative Means

  

6.1

Alternative Means of Modification

  

6.3

Approved Lines

  

2.3(b)

Approved Use

  

3.6

Agreement

  

Preamble

Arbitrators

  

11.6(b)

Class Products

  

1.1

Company

  

Preamble

Company’s Local Counsel

  

6.1

Company Materials

  

6.4(a)

Company Improvements

  

2.6

Counsel Modified Standards

  

6.3

 

5


 

 

 

Disclosing Party

  

1.1

F&B License Agreement

  

6.7

Force Majeure Event

  

11.4

Joint Venture Agreement

  

Recitals

Licensed Products

  

1.1

Licensor

  

Preamble

Licensor Termination Trigger

  

10.2(c)

Marks

  

1.1

Milestones

  

3.4

MPT

  

3.4

Operating Manual

  

6.2

Parties

  

Preamble

Party

  

Preamble

PRC Withholding Rate

  

5.1

Receiving Party

  

1.1

Representatives

  

9.1

Resolution Representative

  

11.6(a)

Revenues

  

5.1

Royalty

  

5.1

Rules

  

11.6(b)

Standards

  

6.1

Subject Person

  

1.1

Sublicense Royalties

  

5.1

Term

  

10.1

User Data

  

3.6

Web Site

  

1.1

WTW

  

Recitals

Weight Watchers Business

  

Recitals

1.3 Interpretation . All headings herein are inserted only for convenience and ease of reference and are not to be considered in the construction or interpretation of any provision of this Agreement.

(a) Unless a clear contrary intention appears: (i) the singular number includes the plural number and vice versa; (ii) reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are not prohibited by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually; (iii) reference to any gender includes each other gender; (iv) reference to any agreement, document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof; (v) reference to any law, rule or regulation means such law, rule or regulation as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including all rules and regulations promulgated thereunder, and reference to any section or other provision of any law, rule or regulation means that provision of such law, rule or regulation from time to time in effect and constituting the substantive

 

6


amendment, modification, codification, replacement or reenactment of such section or other provision; (vi) “hereunder,” “hereof,” “hereto,” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular article, section or other provision hereof; (vii) numbered or lettered articles, sections and subsections herein contained refer to articles, sections and subsections of this Agreement; (viii) “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term; (ix) references to documents, instruments or agreements shall be deemed to refer as well to all addenda, exhibits, schedules or amendments thereto; (x) any term in any Schedule or Exhibit hereto shall have the meaning ascribed to such term in this Agreement, unless otherwise defined therein; (xi) reference to dollars or $ shall be deemed to refer to U.S. Dollars; and (xii) reference to a year or to a quarter means the fiscal year or fiscal quarter of the Company, respectively, and reference to a month means a calendar month.

(b) It is the intention of the Parties that every covenant, term, and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any party (notwithstanding any rule of law requiring an agreement to be strictly construed against the drafting party), it being understood that the Parties to this Agreement are sophisticated and have had adequate opportunity and means to retain counsel to represent their interests and to otherwise negotiate the provisions of this Agreement.

ARTICLE II

RIGHT TO USE THE LICENSED IP

2.1 License . Subject to the terms and conditions set forth herein, Licensor hereby grants to the Company, and the Company hereby accepts, a non-transferable, limited right and license for the duration of the Term to (a) use the Licensed IP (including any Modifications) solely for the operation of the Licensed Business in the Territory and (b) use the Licensed Marks in connection with the trade name of the Company or any Subsidiary.

2.2 Sublicense . The Company may not sublicense any of the rights granted herein or authorize any person to act as its agent in connection with its obligations herein without the prior written consent of Licensor, which consent shall not be unreasonably withheld; provided , however , the Company may, without Licensor’s consent, sublicense its rights hereunder to its Subsidiaries or independent contractors engaged by the Company or its Subsidiaries in lieu of employees solely to present the Company’s or its Subsidiaries’ Classes and in such case, the right to sublicense shall be limited to the extent required for such independent contractors to present the Company’s or its Subsidiaries’ Classes (provided that the form of any agreement to be used with such independent contractors shall be subject to Licensor’s approval, which approval shall be obtained consistent with the terms and conditions set forth in Section 6.5(b)) . The Company shall be liable for any breach of the terms

 

7


hereof by any Subsidiary or independent contractor to whom a sublicense is granted pursuant to this Section 2.2 , and such Subsidiary shall in addition be directly liable to Licensor. No sublicensee hereunder, other than a Subsidiary with the prior written consent of Licensor, which consent shall not be unreasonably withheld, shall have the right to further sublicense any rights granted herein.

2.3 Exclusivity .

(a) For the duration of the Term, Licensor (i) shall not, and shall not authorize any other Person to, engage in the Approved Lines within the Territory, including licensing the Licensed IP to any Person, other than the Company, for use in the Approved Lines in the Territory, (ii) shall not, and shall not authorize any other person to, conduct any of the Approved Lines outside of the Territory so as to target residents of the Territory, and (iii) shall use reasonable efforts not to, and ensure that its licensees and franchisees conducting the Approved Lines outside of the Territory do not, target residents of the Territory.

(b) For the duration of the Term, the Company and its Subsidiaries shall not conduct any business other than that of the Approved Lines and shall ensure that only the Licensed Techniques, and no other technique or method, are presented in Classes or otherwise utilized by the Company in the operation of the Licensed Business. Any alteration, modification or expansion of a pre-existing Approved Line or business extension by the Company beyond the Approved Lines shall require Licensor’s prior written approval, which approval shall be obtained consistent with the terms and conditions set forth in Section 6.5(b) , and in the case of a proposed alteration, modification or expansion of a pre-existing Approved Line, such approval shall not be unreasonably withheld; provided , however , Licensor may, in its sole discretion, grant or withhold its approval of any business extension or the offering of an Approved Line through a new medium. Upon approval by Licensor in accordance with the terms hereof, such business extension, alteration, modification or expansion shall constitute part of the “ Approved Lines ” for purposes of this Agreement.

2.4 Territory . The Company and its Subsidiaries shall operate the Licensed Business solely in the Territory and shall not conduct the Approved Lines in a manner that would target Persons resident outside the Territory.

2.5 Licensor Modifications . Licensor and its Affiliates shall have the right to add to and otherwise modify the Licensed Techniques or the Licensed Marks, from time to time, including changes deemed necessary by Licensor or its Affiliates to reflect changes in the content of or manner of presenting Classes, Licensed Products, standards of quality, or the manner of operation of the Approved Lines. Licensor shall disclose all Modifications to the Company and such Modifications shall constitute “Licensed IP” for all purposes of this Agreement.

 

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2.6 Company Improvements . The Company, its Subsidiaries, or third parties operating on the Company’s or its Subsidiaries’ behalf, may, subject to Licensor’s approval, which approval shall be obtained consistent with the terms and conditions set forth in Section 6.5(b) , make modifications or translations to adapt the Licensed IP for use in the Licensed Business, create intellectual property derived from the Licensed IP, or develop ideas, concepts, methods, techniques, products and services relating to the development and operation of the Licensed Business (collectively, “ Company Improvements ”). All Company Improvements shall constitute “Licensed IP” for purposes of this Agreement and shall be exclusively owned by Licensor. The Company and its Subsidiaries shall, and hereby do irrevocably, assign all rights in and to the Company Improvements to Licensor.

2.7 Assignments . In furtherance of the obligations of the Company and its Subsidiaries to assign Company Improvements to Licensor in accordance with Section 2.6 , the Company and its Subsidiaries shall each obtain, with all of their respective employees, subcontractors, consultants and other parties making modifications or translations to adapt the Licensed IP for use in the Licensed Business, enforceable contracts, in form and substance reasonably acceptable to Licensor containing provisions whereby all intellectual property, including any and all inventions and improvements conceived and developed by such employees, subcontractors, consultants or other parties shall be transferred and assigned to, and owned in full by the Company and its Subsidiaries.

2.8 Reservation of Rights . Licensor hereby retains, and reserves all rights not expressly licensed to the Company herein, including the rights to use the Licensed IP for any purpose within the Territory other than to engage in the Approved Lines. Notwithstanding the above, Licensor shall not use the Licensed IP in the Territory in a manner that fundamentally damages the image of Licensor and the Company, it being understood and agreed that in no event shall any use of the Licensed IP in the Territory be deemed to fundamentally damage the image of Licensor or the Company if Licensor uses the Licensed IP in a manner substantially similar to any use Licensor has previously made or is currently making of the Licensed IP anywhere in the world or in connection with any substantially similar business in which Licensor has been previously or is currently engaged anywhere in the world. For illustrative purposes only, the following uses of the Licensed IP would be considered fundamentally damaging to the image of Licensor and the Company, and Licensor will not engage in the following uses of the Licensed IP: in connection with firearms, tobacco products or pornography.

 

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ARTICLE III

INTELLECTUAL PROPERTY RIGHTS

3.1 Trade Names . Licensor and the Company shall mutually agree upon the trade name(s) to be used by the Company (and any Affiliates and Subsidiaries) and the brands under which the Licensed Business shall be conducted in the Territory. Such trade names and brands shall be owned by Licensor and included in the Licensed Marks licensed under this Agreement.

3.2 Ownership of Licensed IP . All uses of the Licensed IP, including all goodwill associated with any use of any of the Licensed Marks or other trademarks or trade names included in the Licensed IP, shall inure exclusively to Licensor. The Company and its Subsidiaries shall, and hereby do, irrevocably assign to Licensor any and all rights that they may acquire in the Licensed IP including any goodwill associated therewith by virtue of the Company’s or its Subsidiaries’ use thereof pursuant to this Agreement. The Company hereby acknowledges and agrees that Licensor or its Affiliates own and control all worldwide rights, title and interest in and to the Licensed IP and all Modifications and Company Improvements, which shall remain the sole property of Licensor or its Affiliates throughout the Term and thereafter, subject only to the Company’s limited right to use the Licensed IP (including Modifications and Company Improvements) as set forth herein and, except for the exclusive rights granted in Section 2.3(a) , nothing contained herein shall limit the right and ability of Licensor, its Affiliates, licensees and franchisees to exploit, license, distribute, sell or otherwise use the Licensed IP.

3.3 No Challenge . The Company and its Subsidiaries shall not, during the Term or thereafter, directly or indirectly, challenge or assist any Person in challenging the validity of the Licensed IP as it may exist anywhere in the world or Licensor’s or its Affiliates’ right, title and interest in and to any of the Licensed IP as it may exist anywhere in the world.

3.4 Protection of Licensed IP . Licensor shall exercise its reasonable efforts to protect the Licensed IP by, whenever practicable, taking the necessary steps to register and maintain the registration of, at its own expense, the Licensed IP with the proper governmental authorities in the Territory. The Company shall cooperate with Licensor in good faith and shall, where practicable or as reasonably requested by Licensor, take all reasonable actions in connection with the filing, prosecution and maintenance of any registered rights or any other type of protective measures, for the Licensed IP in the Territory. Notwithstanding the foregoing, to the extent that local ownership of any Licensed IP is required pursuant to applicable law in the Territory, the Parties shall cooperate to effect, prosecute and maintain such filings in a manner that satisfies such legal requirements while maintaining Licensor’s ultimate ownership and control over the Licensed IP and any applications or registrations therefor in the Territory; provided that Licensor shall reimburse the Company for all reasonable third-party costs incurred by the Company in connection with such cooperation, filings, prosecution and maintenance.

 

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3.5 Enforcement of Licensed IP . The Company shall promptly notify Licensor in writing if and when the Company or any of its Subsidiaries becomes aware that any Person is infringing, misappropriating, has access to, or is otherwise using the intellectual property of Licensor or any of its Affiliates anywhere in the world without authorization from Licensor or such Affiliate. Licensor shall, when reasonable, institute administrative or legal proceedings to enjoin any action which it regards as an infringement of the Licensed IP, or take such other steps with respect to such infringement as it deems necessary. For purposes of determining whether it is reasonable to institute administrative or legal proceedings in accordance with the provisions of this Section 3.5 , Licensor shall, in its sole good faith discretion, consider the impact of any such allegedly infringing action on the Licensed Business in the Territory, including the impact on the ability of the Company to reach any of the MPTs or Milestones (each as defined in the Joint Venture Agreement). The Company shall, at its sole cost and expense, cooperate with Licensor and provide Licensor with such assistance and information as may be reasonably requested by Licensor in respect of any such action; provided , however , that all reasonable third-party costs shall be borne by Licensor. Any monetary recovery or settlement payable as a result of any such action shall be the exclusive property of Licensor; provided , however , that where the Company has suffered losses as a result of such infringement, the Company shall be entitled to a share of such recovery or settlement calculated as follows: the portion of such recovery or settlement, following deduction of all of Licensor’s reasonable third party costs and expenses relating to such proceedings or settlement, corresponding to the proportion of the Company’s losses to the total losses experienced by the Company, Licensor and any of Licensor’s Affiliates, licensees or franchisees. In the event Licensor elects not to institute administrative or legal proceedings to enjoin an alleged infringement in accordance with this Section 3.5 , and the Company reasonably believes such alleged infringement has a significant negative impact on the Licensed Business in the Territory, the Company shall, upon reasonable advance notice to Licensor, be entitled to institute administrative or legal proceedings to enjoin such alleged infringement and may, subject to Licensor’s approval, which approval shall be obtained consistent with the terms and conditions set forth in Section 6.5(b) , enter into settlements with such infringing parties. The Company shall bear all costs and expenses of such administrative or legal proceedings and shall be entitled to retain all monetary recoveries or settlements obtained as a result; provided , however , that all such recoveries or settlements, after the deduction of all of the Company’s actual third party costs associated with any such proceeding and excluding any monetary recoveries or settlements solely representing harm to the reputation of the Company or that take into account the Royalty cost in the calculation of lost profits, shall be treated as Revenues hereunder for purposes of Section 5.1 .

3.6 User Data . Any personal information and user data submitted by Customers or Web Site users or otherwise collected by the Company or its Subsidiaries (collectively, “ User Data ”) shall be jointly owned by Licensor and the Company. For the duration of the Term, Licensor shall have access to the User Data and the right to use such User Data solely for its internal purposes (such as market research) provided that it will not use the User Data to contact Customers or Web

 

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Site users directly) and the Company and its Subsidiaries shall have the right to use such User Data in connection with the Licensed Business conducted in accordance with this Agreement, subject to Licensor’s approval, which approval shall be obtained consistent with the terms and conditions set forth in Section 6.5(b) ; provided , however , that upon the termination or expiration of this Agreement, the Company and its Subsidiaries shall immediately transfer and assign all such User Data to Licensor and Licensor shall become the sole owner of all User Data, and the foregoing restrictions shall cease to apply to Licensor’s use thereof. Once Licensor has approved a particular type of use of the User Data by the Company and its Subsidiaries in connection with the Licensed Business (an “ Approved Use ”), the Company shall be entitled to use User Data for all uses substantially similar to any Approved Use without obtaining further approval from Licensor.

3.7 Assignment of Licensed IP. Licensor shall reasonably notify the Company of any assignment of the Licensed IP and any such assignment shall be subject to the licenses set forth herein.

ARTICLE IV

KNOWLEDGE TRANSFER; ADDITIONAL SERVICES

4.1 Knowledge Transfer .

(a) In accordance with the terms of the license granted herein, Licensor shall provide the Company with representative information concerning the Licensed Techniques as used in the U.S. and any other relevant jurisdictions agreed by the Parties for the purposes of explaining to the Company the operation of the Licensed Business, including: (i) copies of representative program materials and related items used in Classes in the U.S. and such other jurisdictions agreed to by the Parties, as well as samples of manuals, instructional material and other literature published by Licensor in the U.S. and any other relevant jurisdictions agreed by the Parties, including, e.g., the Meeting Procedures Manual and Program & Service Reference Manual, and (ii) representative copies of recipes, meal plans and exercise techniques developed or approved by Licensor for introduction in Classes in the U.S. and such other jurisdictions agreed by the Parties. Licensor shall continue to supply such materials to the Company as and when they are revised by Licensor.

(b) Upon the reasonable request of the Company and at the Company’s sole cost and expense, Licensor shall arrange for the Company’s staff to participate in Licensor’s or its Affiliates’ regularly-scheduled training sessions and for visits by the Company’s staff to Classes outside the Territory.

(c) Upon the reasonable request of the Company, Licensor shall advise the Company of all products and services being offered for sale by Licensor in connection with the Approved Lines in the U.S. and such other jurisdictions agreed by the Parties, and provide any available printed marketing material describing such products and services.

 

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(d) Upon the reasonable request of the Company, Licensor shall provide the Company with samples of select advertising and promotional materials used by Licensor in connection with the Approved Lines in the U.S. and such other jurisdictions agreed by the Parties.

4.2 Consultations . Upon the reasonable request of the Company, Licensor shall make reasonable good faith efforts to consult and cooperate regularly (but not more than once per month) with the Company for the purpose of sharing information about market trends, advertising, marketing and promotional activities and plans, the Company’s use of the Licensed Techniques and Licensed Materials, and program innovation plans in the U.S. or such other jurisdictions agreed by the Parties; provided , however , that after three (3) years from the Effective Date, Licensor’s obligation to consult with the Company under this paragraph shall be limited to not more than one consultation per quarter.

4.3 Additional Services .

(a) Throughout the Term, and subject to the terms and conditions of this Agreement, Licensor may, in its discretion, provide such additional services as the Company may, from time to time request pursuant to the procedures set forth herein (“ Additional Services ”). Additional Services may include the development or modification of the Licensed Techniques, market research, marketing advice and consulting, training, as well as any other services Licensor and the Company may mutually agree upon. All modifications to the Licensed IP and all materials provided by Licensor as a result of the Additional Services or the Web Site and Technology Services shall be considered “Licensed IP” and shall be exclusively owned by Licensor and licensed to the Company solely to engage in the Approved Lines pursuant to the terms of this Agreement. Notwithstanding the foregoing, subject to Sections 2.2 and 4.5 , the Company shall be free to obtain such services from a third-party vendor or perform such services itself.

(b) Notwithstanding the provisions of Section 4.3(a) above, all work performed by Licensor in con


 
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