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from the effective date of the agreement3, in exchange for
certain royalty payments. The agreement further provided that
petitioner "shall specifically have the right to grant
sublicenses and Agents for the right to use and to market the use
of any and all marketing rights granted to [petitioner] under the
terms" of the agreement. The agreement was valid for an
indefinite period and could be unilaterally terminated by either
party on 3 months' written notice.
The Bermuda license agreement contained no express reference
to the United States.
With respect to royalties, the Bermuda license agreement
provided:
8.1 The royalties payable to [SDI Bermuda] by [petitioner]
under this Agreement are fixed at 93% of the net amount
of all of the royalties due to [petitioner] by all
persons, entities and institutions which [petitioner]
sublicensed any of the rights licensed to [petitioner]
under this Agreement ("Sublicensees"). The
aforementioned net amount is the amount that remains
after the deduction of the withholding tax on royalties
to be withheld when the Sublicensees of [petitioner] or
Agents of [petitioner] pay the royalties due to the
[petitioner].
8.2 The aforementioned percentage of 93% will be increased
if the net amount of royalties received by [petitioner]
exceeds * * * in a specific accounting period [the
following amounts in Dutch florins]:
3 The record does not explain how or from whom SDI Ltd., known
in l986 as Castle Investments Ltd., acquired its existing rights,
but it is clear that at least some of them had been previously
owned by petitioner's predecessor.
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Last modified: May 25, 2011