Part 5 (1/2)
THIS AGREEMENT made this 18th day of August 1927, by and between HERMANN DORNER, of Hanover, Germany, hereinafter referred to as ”Licensor”, and PACKARD MOTOR CAR COMPANY, a Corporation of the State of Michigan, United States of America, of Detroit, Michigan, hereinafter referred to as ”Licensee”;
WITNESSETH, that
WHEREAS, Licensor owns certain Letters Patent of the United States and other countries relating to oil burning engines under which he desires to license the Licensee;
WHEREAS, Licensee desires rights under said Letters Patent;
NOW, THEREFORE, for the mutual considerations hereinafter set forth, the parties have agreed as follows:
1. Licensor warrants that he is the inventor of an oil burning engine, is the sole owner of United States patent Number 1,628,657, dated May 17, 1927, and United States patent applications, Serial Numbers 46,383 filed July 27, 1925, and 88,409 and 88,411, filed February 15, 1926, relating to such engines and is joint or sole owner of patents or patent rights relating to said engines in England, Germany and Sweden.
2. Licensor agrees to furnish the Licensee at cost price but not exceeding Thirty Dollars ($30.00) cash, as many pump and nozzle units as are needed for use in building one or more experimental engines.
3. Licensor hereby gives and grants unto Licensee an exclusive license for the manufacture, within the United States and its dependencies, and a non-exclusive license for the use and sale, of engines for aircraft, and a non-exclusive license for the manufacture, use, and sale of engines for motor vehicles and motor boats, under said United States patent Number 1,628,657, under all after-acquired patents and under all patents that may result from said patent applications, and from all other patent applications pertaining to his present oil burning engine or reasonable variations thereof, such licenses to extend for the full life and term of all such patents, provided however, that there is specially excepted from this grant--stationary engines, tractor engines, and engines for agricultural purposes.
4. Licensor further hereby permits said Licensee to export to all other countries and sell and use there, without further royalty, all engines made by Licensee in the United States under this license.
5. Licensor acknowledges receipt of One Thousand Dollars ($1,000.00) in payment of a portion of the expenses heretofore incurred by him and as one of the considerations for this agreement.
6. Licensor agrees to devote all time necessary from this date to November 1, 1928 to supervision of the design of an engine and construction thereof at the plant of the Licensee and will in his absence furnish the services of a competent a.s.sistant, the expenses of Licensor and a.s.sistant to be paid for by Licensee at the rate of One Thousand Dollars ($1,000.00) per month for the first three (3) months, and Five Hundred Dollars ($500.00) per month thereafter until the decision in paragraph eight has been made by Licensee.
7. Licensee agrees to build and test at least one experimental aircraft engine with special Dorner features, and to take all reasonable measures to reach the stage of final test. All Dorner feature engines made by Licensee will be marked ”Licensed Under Dorner Patents.”
8. Within one year after the completion of tests of the aircraft engine built by Licensee hereunder, or in any event not later than November 1, 1928, Licensee will decide whether it will proceed with the manufacture of engines hereunder, or not. If Licensee decides in the affirmative then it will pay Licensor forthwith the sum of Five Thousand Dollars ($5,000.00) as advance on royalties and as minimum royalty for the first production year. If Licensee decides in the negative for reasons which are under the influence of Licensor, then Licensee will give Licensor notice and sufficient time to try to correct possible imperfections, and the time for final decision will be correspondingly extended. If the reasons for the negative decision are under the influence of Licensee, then Licensee will grant to Licensor an oral conference at Detroit and explain the reasons in detail. In event a negative decision is finally rendered by Licensee this agreement may be terminated at any time thereafter upon sixty (60) days' notice in writing to Licensee and both parties released from all further obligations hereunder.
9. Licensee agrees that if after three (3) years from the date hereof Licensee is not manufacturing and does not contemplate the manufacture of, a certain size and type of aircraft engine which Licensor would like to grant another manufacturer the right to build and which would not reasonably compete with anything manufactured by Licensee, Licensee will release such size and type aircraft engine from the exclusiveness of this license and thereby permit Licensor to grant a license to such other manufacturer to make, use and sell such engine and such engine only.
10. Licensee agrees to pay royalty on all engines manufactured and sold or used under this agreement, based on effective brake horsepower under normal load, as follows:
On each of the first Five Thousand (5,000) such engines produced and sold in any one calendar year, the royalty shall be at the rate of Twenty-five Cents ($.25) per horsepower; and on all over Five Thousand (5,000) in such calendar year, at the rate of Ten Cents ($.10) per horsepower;
provided that, after a total of Fifty Thousand Dollars ($50,000.00) has been paid in royalties the royalties shall be reduced one-half (1/2).
11. After the beginning of the second year of production, Licensee agrees that if the royalties under the above schedule amount to less than Ten Thousand Dollars ($10,000.00) per year then the royalty shall be Ten Thousand Dollars ($10,000.00) per year payable in quarterly instalments of Two Thousand Five Hundred Dollars ($2,500.00) each, or in other words, the minimum royalty payable shall be Ten Thousand Dollars ($10,000.00) per year.
12. Royalties shall continue only during the life of said patent Number 1,628,657, and when a total of Two Hundred Fifty Thousand Dollars ($250,000.00) has been paid by Licensee to Licensor, all royalties shall cease and the license hereunder shall be free thereafter.
13. Licensor agrees that Licensee shall have the benefit of any more favorable royalty rates that may be hereafter granted to or enjoyed by any other manufacturer of engines other than aircraft engines.
14. Licensee agrees to keep proper books of account showing the number of engines manufactured and sold or used under this agreement and to report quarterly to Licensor.
15. In case of suit against the Licensee for infringement of patents by any of the Dorner features built under this license Licensor agrees to a.s.sist in the defense of any such suit and pay the expenses thereof up to an amount equal to Ten Percent (10%) of all royalties paid by Licensee to Licensor hereunder.
16. In event of default of the Licensee in the payment of any of the sums herein provided for, Licensor may terminate this license agreement by serving upon the Licensee Sixty (60) days' notice in writing of its desire and determination so to do and stating the default upon which the notice is based, and at the expiration of such Sixty (60) days this license shall thereupon be terminated, provided however that such termination shall not release the Licensee from obligations already accrued hereunder and not performed, and provided further that if, during said Sixty (60) days' notice period, the default named in said notice shall have been made good then this license to continue as if no default and notice had been made or given.
17. At the expiration of any one year from November 1, 1929, Licensee may terminate this agreement upon Sixty (60) days' notice in writing to Licensor of its desire and determination so to do, provided however, that such termination shall not release the Licensee from obligations already accrued hereunder and not performed.
18. In case of differences of opinion regarding any of the terms of this agreement, the dispute shall be submitted to arbitration. Each party shall select one arbitrator and if they, after five days, fail to agree upon a third, the United States Court for the Detroit District shall be asked to appoint such a third arbitrator, and the decision of a majority of the arbitrators shall be binding upon both parties.