Exhibit 10.1
SETTLEMENT AND LICENSE
AGREEMENT
This Settlement and License
Agreement (“ Agreement ”) is entered into and
made effective as of December 21, 2006 (the “
Effective Date ”), by and between Silicon Image, Inc.
(“ Silicon Image ”), a Delaware corporation
having its principal place of business at 1060 E. Arques Ave.,
Sunnyvale, CA 94085, for itself and its majority owned or
controlled subsidiaries (collectively, “ SIMG
”), and Genesis Microchip Inc. (“ Genesis
”) a Delaware corporation with its principal place of
business at 2150 Gold Street, Alviso, CA 95002, for itself and its
majority owned or controlled subsidiaries (collectively, “
GNSS ”).
RECITALS
WHEREAS, Silicon Image filed suit
against Genesis in the U.S. District Court for the Eastern District
of Virginia (the “ District Court ”) in 2001 for
alleged infringement of Silicon Image’s U.S. patent number
5,905,769, and subsequently added a claim for alleged infringement
of Silicon Image’s U.S. patent number 5,974,464;
WHEREAS, Silicon Image and Genesis
entered into a memorandum of understanding dated as of
December 18, 2002 (the “ MOU ”);
WHEREAS, the parties have been
involved in litigation regarding the MOU before the District Court
and the U.S. Court of Appeals for the Federal Circuit;
WHEREAS, GNSS is currently selling,
and wishes to continue to sell Royalty-Bearing Products (as defined
below), for incorporation by its customers into personal computers,
televisions and other products that use the DVI 1.0 and/or HDMI 1.x
standards (as defined below);
WHEREAS, Silicon Image is one of the
founders of the DVI 1.0 and HDMI 1.x standards, and wishes to
promote the adoption of such standards;
WHEREAS, GNSS wishes to obtain, and
SIMG is willing to grant to GNSS, the rights set forth in this
Agreement subject to the terms and conditions of this
Agreement;
NOW, THEREFORE
, the parties agree as
follows:
1. Definitions .
1.1 “ HDMI 1.x standard
” means the HDMI Version 1.0 standard and/or its Minor
Updates.
1.2 “ Minor Update
” has the same definition herein as the definition of
“Minor Update” set forth in the High-Definition
Multimedia Interface Specification Revision 1.1 Adopter Agreement
signed by Genesis in July 2005.
1.3 “ Royalty-Bearing
Products ” means all products designed by GNSS or sold or
offered for sale by GNSS under a GNSS brand which implement the DVI
Version 1.0 standard or the HDMI 1.x standard. For purposes of this
Agreement, Royalty-Bearing
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Products are either “Rx products” or
“Tx products”. “Rx product” means a
Royalty-Bearing Product that is an IC device capable of being used
to receive and decode DVI or HDMI signals. “Tx product”
means a Royalty-Bearing Product that is an IC device capable of
being used to encode and transmit DVI or HDMI signals. Further, an
Rx product is either “discrete” or
“integrated”. An Rx product is “discrete”
if the sole capability of that product is to receive pixel data
over a DVI / HDMI signal link and output the same pixel data
without alteration on a parallel signal link with separate signals
for each bit of pixel data and each control signal. An Rx product
is “integrated” if it is not a discrete Rx product as
defined in the preceding sentence.
1.4 “ SIMG Licensed
Patents ” means all patent claims owned by SIMG claiming
entitlement to a priority date on or before September 1, 2006,
and all reissues, reexaminations and foreign counterparts
thereof.
1.5 (i) As used in this Agreement, a
patent claim is “owned” by a party if the party either
owns or otherwise has the right to assert the patent
claim.
(ii) Notwithstanding anything to the
contrary in this Agreement, HDMI Licensing, LLC, a subsidiary of
Silicon Image that is the agent responsible for administering the
licensing of the HDMI specifications, promoting and enforcing the
HDMI standard, and providing education on the benefits of HDMI to
retailers and consumers, shall not be considered to be a
“majority owned or controlled subsidiary” of Silicon
Image for the purposes of this Agreement. No licenses are granted
hereunder by HDMI Licensing, LLC. Silicon Image represents and
warrants that HDMI Licensing, LLC does not own any patents or
patent applications, or have the right to assert any patents, and
that HDMI Licensing, LLC will not own any patents or patent
applications or have the right to assert any patents during the
term of this Agreement. Without limiting the foregoing sentence,
Silicon Image covenants for a period of three (3) years after
the Effective Date that it shall not allow HDMI Licensing, LLC to
assert patents in a manner that would be a breach of the covenant
in Section 6.1 if such assertion were made directly by Silicon
Image.
(iii) For avoidance of doubt, and
without limiting the scope of any rights granted to GNSS in this
Agreement, in the event SIMG offers to license a content
protection, storage, or networking scheme, protocol or standard
pursuant to a standard adopters agreement available to adopters on
reasonable and nondiscriminatory terms, this Agreement shall not be
deemed to make GNSS an “adopter” under any such
adopters agreement unless GNSS executes such adopters
agreement.
2. License Grants
.
2.1 Subject to the terms and
conditions of this Agreement, SIMG hereby grants GNSS a worldwide,
nonexclusive license under the SIMG Licensed Patents to make, have
made, use, offer for sale, sell and import Royalty-Bearing
Products.
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2.2 The license granted in
Section 2.1 is non-sublicensable and non-assignable (except to
an entity that gains majority ownership or control of GNSS to the
extent set forth in Section 8).
2.3 SIMG represents and warrants
that it owns the SIMG Licensed Patents and has the right to grant
the license in Section 2.1, that fewer than ten (10) of
the SIMG Licensed Patents are jointly owned, and that it has not
assigned any patents or patent applications between
December 18, 2002 and the Effective Date. Each party reserves
all rights not expressly granted herein.
3. Payments .
GNSS previously has paid certain
amounts in connection with the parties’ litigation and the
MOU, including a transfer from the District Court escrow to Silicon
Image in the amount set forth in Exhibit A, Section A.1 in or
around May, 2006, and a direct payment by Genesis to Silicon Image
in the amount set forth in Exhibit A, Section A.2 in or around
July, 2006.
In addition, Genesis will pay
Silicon Image, within seven (7) working days (i.e. excluding
weekends and holidays) after the Effective Date, the following
amounts:
(i) the amount set forth in Exhibit
A, Section A.3; and
(ii) the amount set forth in Exhibit
A, Section A.4.
In addition, within seven
(7) working days after the Effective Date, Genesis will
provide to SIMG a written statement in the form attached as Exhibit
B, setting forth sales information, by quarter, for Royalty-Bearing
Products sold by GNSS to third parties (“Sold,” and
each such sale, “Sale”) from December 18, 2002
through September 30, 2006 (including without limitation the
number of DVI integrated Rx products Sold since December 18,
2002, and including the number of units set forth in Exhibit A,
Section A.5 of DVI integrated Rx products Sold after
December 18, 2002, but excluding Royalty-Bearing Products
excluded pursuant to Section 4.5).
4. Royalty Payments
.
4.1 For all Royalty-Bearing Products
Sold beginning on October 1, 2006 until the earlier of the
expiration of this Agreement or the termination of this Agreement
in accordance with its terms (other than (a) the number of
units set forth in Exhibit A, Section A.5 of DVI integrated Rx
products Sold after December 18, 2002 and
(b) Royalty-Bearing Products excluded pursuant to
Section 4.5), Genesis shall pay Silicon Image the per IC
royalties set forth in Exhibit C.
4.2 The foregoing royalties are in
addition to royalties payable by GNSS, if any, under its HDMI
adopter agreement or any adopter agreement GNSS may execute for any
other standard.
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4.3 Units with DVI or HDMI circuitry
that is not functional and cannot be made functional (i.e. as a
result of not being bonded-out or as a result of other permanent
and irreversible disablement, the IC is not capable of being used
to receive and decode DVI or HDMI signals in the case of receiver
circuitry, and the IC is not capable of being used to encode and
transmit DVI or HDMI signals in the case of transmitter circuitry),
will not be subject to payment of royalties under this Agreement.
On a quarterly basis, GNSS shall provide Silicon Image with a
written list identifying by part number any such GNSS products Sold
containing DVI or HDMI circuitry that is not functional and cannot
be made functional.
4.4 SIMG and GNSS acknowledge, in
connection with the products described in this settlement proposal,
the unusual technical difficulties in determining the use or
non-use of particular patent claims, and the mutual convenience of
computing royalties on defined classes of products without regard
to actual use of patent claims. Accordingly, and in furtherance of
their desire to resolve their present disputes and to avoid future
disputes, the parties acknowledge that computing royalties on the
products described herein, regardless of actual use of particular
patent claims, provides a mutually convenient means for measuring
the value of the licenses granted.
4.5 For avoidance of doubt and
notwithstanding anything to the contrary, only a single royalty
will be payable by GNSS directly to SIMG under this Agreement on a
single unit of Royalty-Bearing Product. If multiple royalties would
otherwise apply to a single unit of Royalty-Bearing Product under
this Section 4, only the highest of the applicable royalties
will apply. Royalties will not be due on Royalty-Bearing Products
sold to third parties that have a royalty-bearing or fully paid up
patent license with SIMG that covers the third party’s sale
of products containing components from such third party’s
suppliers that implement the DVI Version 1.0 standard or the HDMI
1.x standard, including without limitation (as of the Effective
Date) Sony, Toshiba and Pace Micro Technology. In the event SIMG
enters into additional such licenses in the future, Silicon Image
shall promptly notify Genesis of the identity of the third party so
that GNSS may adjust its calculations accordingly. (A license or
non-assert relating to a specification or standard that is granted
to a founder or adopter of the specification or standard pursuant
to a form agreement available to founders or adopters on
nondiscriminatory terms to implement the specification or standard
(such as, for example and without limitation, the HDMI
Specification Adopter Agreement or the Digital Visual Interface
Specification Revision 1.0 Adopter’s Agreement) will not be
deemed a “royalty-bearing or fully paid up patent license
with SIMG” for purposes of the preceding sentences). In the
event GNSS becomes licensed to SIMG Licensed Patents under a
separate agreement with SIMG, whether by merger or acquisition or
otherwise, and a Royalty-Bearing Product under this Agreement would
also bear a royalty under that separate agreement absent this
Section 4.5, then GNSS may pay only the higher of the two
royalties under either this Agreement or that separate agreement
for such Royalty-Bearing Product. For avoidance of doubt, and
notwithstanding anything to the contrary, if GNSS acquires or
develops a product line that incorporates a licensed core provided
by SIMG or anyone authorized by SIMG to provide such licensed core
pursuant to a royalty-bearing or fully paid-up core license
agreement, then those products will continue to be governed solely
by the core license agreement and not be covered by this
Agreement.
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4.6 Within forty-five (45) days
after the end of each calendar quarter during the term of this
Agreement, commencing with the quarter ending December 31,
2006, Genesis shall provide Silicon Image with a written statement
in the form of Exhibit D setting forth the basis for the
calculation of the amount payable by GNSS to SIMG under
Section 4.1 of this Agreement for GNSS’s sales to third
parties of Royalty-Bearing Products during the just-ended quarter,
together with payment of such amount. GNSS shall pay interest on
all overdue, undisputed amounts at the WSJ prime rate.
4.7 For purposes of computing and
reporting royalties hereunder, royalties shall accrue only for
Sales, which may be reduced to account for returns, exchanges,
credits, and other similar adjustments or allowances.
5. Mutual Release
.
5.1 Upon receipt by Silicon Image of
the payments in Sections 3(i) and 3(ii) and the written report in
Section 3, SIMG and GNSS hereby irrevocably release each other
and their suppliers, manufacturers, licensees, distributors,
resellers, customers, successors and assigns from all claims,
causes of action and liability arising prior to the Effective Date:
(i) relating to the MOU, (ii) which the releasing party
had against the other party that relate to the litigation settled
by the MOU and subsequent litigation over the interpretation of the
MOU, (iii) arising out of or related to all claims and
counterclaims that were asserted, or could have been asserted by
the releasing party, in such litigations, or (iv) arising out
of or related to infringement of any SIMG Lice
