MODEL FORM OF INTERNATIONAL PATENT LICENCE CONTRACT INTRODUCTION

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1 MODEL FORM OF INTERNATIONAL PATENT LICENCE CONTRACT INTRODUCTION The Model form of patent licence agreement with a foreign company was first published in 1960 in response to the expressed need for a model which could be used as a reference when negotiating patent licensing Contracts, whether or not these also include provisions concerning know-how. As before, the model refers to Licensed Products, but if the model is to be used for patented processes appropriate changes will have to be made. Licensing Contracts may impose restrictions on the parties to the Contract and may fall within Article 85 (1) of the Treaty of Rome, provided that they affect trade between Member States. This will have the effect of invalidating the Contract unless the parties apply to the E.C. Commission under Article 85 (3) for a declaration to the effect that the provisions of Article 85 (1) are inapplicable to the Contract in question. Following the issue of the Commission Regulation providing block exemption of certain categories of patent licence agreements (*) parties no longer have to apply to the Commission for a declaration that a Contract is valid. The Regulation both identifies restrictions in patent licensing Contracts which would not normally be regarded as restrictive of competition, and identifies restrictions which will cause the benefit of the Regulation to be lost. The Regulation thus provides us with a clearer idea of what restrictions can, and what restrictions cannot, be included in a patent licence Contract-notwithstanding possible changes to the Regulation's requirements as a result of interpretation by the Courts during the coming years. This initiative of the Commission has led the Legal Committee to reexamine the validity of the clauses set out in the Model form of patent licence agreement with a foreign company, now renamed Model form of International patent licence Contract. It has made certain minor editorial amendments and adapted the model's structure, but the content of the clauses remain basically unchanged. Clauses, the validity of which is doubtful under the EEC Competition Rules, contain either variants based on the block Exemption Regulation, or are accompanied by footnotes explaining the problems associated with those clauses. In addition to the E.C. Regulation, national legislation could also affect the Contract. If, therefore, the parties drawing up a patent licensing Contract have any doubts as to the validity of the Contract, detailed legal advice should be obtained. (*) Official Journal L 219 of

2 2 MODEL FORM OF INTERNATIONAL PATENT LICENCE CONTRACT * This Contract is entered into between... hereinafter called the Licensor whose Registered Office is at.... represented by... (official capacity) and... hereinafter called the Licensee whose Registered Office is at..... represented by. (official capacity) WHEREAS: The Licensor is the owner of patents... applied for at on (date) (1) and has the right of disposal of the said patents. * - In this model form variants are shown by the letters A., B., C. One solution only should be chosen and the others deleted. It is accordingly necessary to ensure in each contract that the solution chosen for this clause and for the clauses which follow are mutually consistent. (1) - The state of the patents should be described as closely as possible (whether merely applied for, whether already granted with or without examination, whether or not taken out by virtue of a priority right through a prior application in a foreign country, etc.).

3 3 A. No Licence in respect of these patents has yet been granted by the Licensor. B. Non exclusive Licences have already been granted in respect of these patents. (1) The Licensor further possesses manufacturing secrets and experience (know-how) concerning the manufacture of the Licensed Product. The aforementioned patents and know-how have already been the subject of exploitation by the Licensee. The Licensor having manufactured... (2) & (3) It is now agreed as follows: Clause 1. TECHNICAL FIELD OF APPLICATION 1. The Licence extends to all uses of the invention which are described in the patents identified in the present Contract and to every other use necessarily implied by such uses. Each of the parties undertakes to inform the other in good faith and without reservation of any uses not envisaged by him at the time when the contract was made, which subsequently appear to him practicable, or, which he proposes to put into effect. B. This Licence is limited to the following use(s)... Clause 2. SCOPE OF THE LICENCE The Licence is granted for making, using and selling and/or otherwise disposing of the Licensed Products (1) - In appropriate cases it may be useful to mention previous licences and terms on which they are granted, to the extent that they are relevant to this Contract. (2) - Here insert the nature and essential features of the product manufactured which incorporates the inventions that are the subject of the patent. (3) - Where this is not the case it may be useful to state that the patent has not yet been exploited. Care should however be taken, in the case of a patent of long standing, not to reveal by means of such a statement that the conditions have been fulfilled which would entitle third parties to demand a compulsory licence.

4 4 Clause 3. EXCLUSIVITY OF LICENCE A. Sole Licence The Licence is exclusive though the Licensor retains the right to make, use, sell, or otherwise dispose of the Licensed Products in the territories defined in Clause 6. hereof. B. Exclusive Licence The Licence is exclusive and exclusiveness is valid against the Licensor. (1) & (2) The Licensor shall be entitled to terminate the exclusivity granted to the Licensee and to change it into a non-exclusive licence... years after the coming into force of the Contract, and thereafter every year if the Licensee, without justified cause, does not, or does not sufficiently exploit the licensed invention (2) C. Non-exclusive Licence The Licence is non-exclusive. (3) Clause 4. ASSIGNMENT OF THE LICENCE The Licence is not assignable and the Licensee shall not assign his rights or obligations thereunder to a third party. Without prejudice to the generality of the foregoing, the Licensee shall not without the consent of the Licensor bring the Licence into the assets of a company. Clause 5. GRANT OF SUB-LICENCES A. The Licensee is authorised to grant sub-licences. (4) B. The Licensee shall not grant sublicences without the consent of the Licensor, which shall however not be unreasonably withheld. (4) C. The Licensee shall not grant sublicences. (1) (2) - - This clause means that the Licensor non longer has the right to make, etc., the Licensed Product on the territory covered by the Contract. Under the E.C. Block Exemption Regulation, the Licensor must be given the right to terminate the exclusivity after 5 years at the latest, and to convert it into a non-exclusive licence. After expiration of 5 years, he must also be entitled to terminate the exclusivity every year. In agreements which are not likely to affect trade between Member States of the European Community, the last paragraph of Variant B. can be deleted. (3) - Where this is the case, a most-favoured Licensee clause is sometimes included so as to ensure that the grantee has the same rights as those enjoyed by the other grantees of the non-exclusive licence. Any such clause should be precise both in its substance and its definition of the territory or territories involved. (4) - The Licensor may wish to specify the conditions which must be satisfied before a sub-licence can be granted.

5 5 Clause 6. TERRITORY OF LICENCE (1) 6.1. The Licence is granted for the following territories A. The Licensees shall not manufacture in other territories. (2) 6.3. A. The Licensee is authorised to export only to the following territories... (3) B. The Licensee shall not manufacture the licensed products in territories not covered by this Contract to the extent and for as long as the products are protected by parallel patents in these territories. B. The Licensee shall not export to other territories, including those in which the Licensor does not enjoy any protection.(3) C. During a period of five years from the date when the licensed product is first put on the market within the EEC, the Licensee shall not put this product on the market in the territories granted to other licensees to the extent and for as long as the licensed product is protected by parallel patents in these territories. The Licensor shall inform the Licensee of the date when the licensed product is first put on the market within the EEC. After the expiration of this period the Licensee shall not sell, in an active way, the licensed product in these territories and shall, above all, refrain from seeking customers, from establishing any branch or from maintaining any distribution depot in these territories A. In the event of any breach of the Licensee's obligations mentioned under Clause 6. hereof, he shall pay to the Licensor.. as liquidated damages. B. The Licensee shall ensure that the Licensed Products are not exported to the territories to which export is forbidden as aforesaid. If such Products are so exported, the Licensor shall be entitled by notice in writing to terminate this Contract and, where such export occurs by the fault of the Licensee, to recover damages.

6 6 Clause 7. REGISTRATION OF THE LICENCE Either party shall be entitled to register the Licence if such registration is permissible under the law of the country or countries in respect of which the Licence is granted. The Licensor shall give the Licensee any powers and authorisation necessary for this purpose. The expenses of registration shall be borne by the party desiring to register the Licence. Clause 8. DRAWINGS AND INFORMATION The Licensor shall supply the Licensee with all existing reproduceable drawings and technical information required for the purposes of this Contract. The Licensee shall treat such drawings and information as secret during and after the currency of the Agreement.(4) (1) - The extent of any territorial restrictions are critical in determining whether the Contract is one which will be exempt under the Block Exemption Regulation. In particular, the Regulation allows the following restrictions: * The Licensee is not to engage in advertising specifically aimed at those markets in which a third party is already licensed to market products provided that the product is protected in those territories by parallel patents. * The Licensee is not to put the licensed product on the market in territories licensed to other Licensees for a period not exceeding 5 years from the date when the product is first put on the market within the EEC by the Licensor or one of his Licensees as long as the product is protected in those territories by parallel patents. Although these restrictions will be acceptable, the following are not and will cause the exemption to be lost. * A restriction on one or both of the parties to refuse to meet demand from users or resellers within their own territories who would market the products in other territories within the EEC unless there are objectively justified reasons. * Either or both parties are required to make it difficult for users/resellers to obtain the products from other resellers within the EEC and, in particular, to exercise industrial or commercial property rights or take measures to prevent users/resellers from obtaining outside or from putting on the market in the licensed territory products which have been lawfully put on the market within the Common Market by the Patentee or with his consent. * The Licensee is required for a period exceeding 5 years, not to put the licensed product on the market in territories licensed to other licensees within the EEC or does not do so as a result of a concerted practice between the parties. Consequently, where this Contract is likely to affect trade between Member States of the EEC, the variants to Clause 6. should be carefully considered. (2) - Under the Block Exemption Regulation, Variant A, may not be used in Contracts which may affect trade between Member States. (3) - According to Art. 1.1 (5) and (6) of the Block Exemption Regulation, Variants A. or B. may not be used in Contracts which may affect trade between Member States of the Common Market. In this case, Variant C. should be adopted. (4) - It may be advisable to set out exactly which drawings will be supplied to the Licensee, the language to be used and the dates by which documents are to be delivered and the details which they are to contain. Moreover, where the Licensor is to provide drawings, it may be advisable to define his responsibility in the events of drawings being incorrect or missing. It may also be necessary to consider whether the Licensee shall have the right to transmit such information to any sub-contractors to be appointed by him. In this case the information in question should be carefully specified.

7 7 Clause 9. RESPONSIBILITY FOR CLAIMS BY THIRD PARTIES If the use of the Patent forming the basis of this Contract results in a claim for infringement, the Licensee shall immediately inform the Licensor. The Licensor shall be entitled to take charge of any negotiations or litigation arising out of the claim for infringement. Any costs incurred in pursuing such negotiations and/or litigation, together with any damages awarded against the Licensee shall be borne by... Clause 10. NOVELTY The licensor does not warrant the novelty of his invention, but in the event that any patent is void by reason of its publication, whether wittingly or unwittingly, by the Licensor before a patent was applied for, the Licensee shall be entitled to terminate the Contract wholly or in part by written notice to the Licensor. Clause 11. INDUSTRIAL REALISATION The Licensor does not warrant that the invention is capable of industrial realisation nor shall he be responsible for the consequences of any failure so to realise it. If the Licensee fails to achieve the invention s industrial realisation within a period of... the Licensor is entitled to terminate the contract and recover damages. Clause 12. COMMERCIAL EXPLOITATION The Licensor does not warrant that the invention is capable of commercial exploitation, the risks of such exploitation being assumed solely by the Licensee. Clause 13. QUALITY OF THE LICENSED PRODUCT (1) 13.1 A The Licensee shall manufacture the Licensed Product to the same quality as manufactured by the Licensor. The Licensor shall provide all necessary advice and information concerning his own experience in accordance with the provisions of Clauses 8. and 11.(2). B. The Licensee shall manufacture the Licensed Product to the quality set out in the annexed specification. (1) - For the purpose of this Clause, quality must be determined by reference to technical matters and not, for example, to the quality of presentation. (2) - Under the Block Exemption Regulation. Art a clause such as this is only acceptable if such specifications are necessary for a technically satisfactory exploitation of the Licensed Product.

8 The Licensor shall be entitled to inspect whether Products manufactured under Licence are of the required quality and may by notice in writing prohibit the sale of products of inferior quality If the Licensee fails to attain the required quality within a period of...after receipt of the said notice, the Licensor shall be entitled to terminate the Contract. Clause 14. TECHNICAL ASSISTANCE (1) 14.1 The Licensor shall provide the Licensee with all information and technical advice set out below The Licensor shall at the cost of the Licensee provide the Licensee with the services of skilled personnel on the following terms and conditions:... Clause 15. TRAINING OF THE LlCENSEE'S EMPLOYEES (2) The Licensor at his own works undertakes to instruct employees of the Licensee and to explain to them the manufacture of the Licensed Products on the following terms and conditions: (1) - The following points need to be covered: * The number and qualifications of the personnel to be provided and who is to bear the cost thereof. * The length of time for which the personnel are to be loaned and the dates. * Who is to be responsible for the provision of board and lodging for the personnel and for travelling expenses. * The extent of any responsibility to be borne by the Licensor. * Insurance matters (i.e. accident liability, sickness, etc.) * Provision may also need to be made as to whether the personnel should be fluent in the language of the Licensee or whether interpreters will have to be provided and, if so, at whose expense. * See also document, Conditions for the provision of technical personnel abroad (2) - The essential points which will need to be defined under such a clause are as follows: * The number and qualifications of the employees to be instructed. * The length of any such instruction. * The provision of board and lodging and payment for this. * Liability for accidents or damages by the employees. * Insurance matters (i.e. accident liability, sickness, etc.). * Cost. It may also be appropriate to indicate whether they require interpreters or have sufficent knowledge of the language.

9 9 Clause 16. MODIFICATIONS AND IMPROVEMENTS TO LICENSED PRODUCTS (1) 16.1 A. The Licensor shall disclose and make available to the Licensee any modification or improvement of the Licensed Products devised by the Licensor durring the currency of the Contract, such disclosure shall not entitle the Licensor to any increase in royalties A. The Licensee shall obtain the consent of the Licensor before undertaking modifications or improvements in the Licensed Product A. The Licensor shall be entitled to make use free of charge of any modifications or improvements suggested by the Licensee except in territories in which by virtue of this Contract the Licensor is not entitled to manufacture or use the Licensed Product.(3) B. The Licensor is not obliged to disclose or make available to the Licensee any modification or improvement of the Licensed Products devised by the Licensor during the currency of the Contract, unless it is agreed that he shall receive an increase in royalties. B. No authorisation of the Licensor is required for making modifications or improvements in the Licensed Products, provided that any modifications or improvements made shall be communicated to the Licensor. (2) B. The Licensor shall be entitled to make use of modifications or improvements suggested by the Licensee in consideration of reasonable payment on reasonable terms. Provided that this right shall not extend to territories in which by virtue of this Contract the Licensor is not entitled to use the Licensed Product. In default of agreement on the amount and terms of payment the parties may refer the matter to arbitration in accordance with Clause 38. for the determination of the said amount and terms.(4) (1) - It May be appropriate for the Contract to provide that an increase in royalty would be permissible if the modification or improvement amounted to a patentable invention in its' own right. The parties May also wish to state the extent to which the Licensee is obliged to make use of any such improvement. (2) - Provision May also need to be made entitling the Licensee, without the Licensor s consent, to make modifications and improvements provided that he clearly shows that these were made by him. Clause 22. will have to be consistent with this clause. (3) - It may be advisable in an appropriate clause to state whether the Licensor is entitled with or without payment to make use of improvements after the expiration of this Contract, and if so, for how long a period. It may also be advisable to provide that a Licensor who is entitled to make use of such improvements is empowered to grant a similar right to other licensees. Where this is the case, consideration should also be given as to whether, in exchange, the Licensee should receive a right to make use of improvements made by other licensees. (4) - If variant A. of clause 38, is adopted, the parties should consider whether some person or authority should be appointed for fixing the royalties in case of disagreement.

10 The parties shall furnish to each other all experience gained in the exploitation of the subject matter of the licence and shall grant each other non-exclusive licences for inventions made by them relating to improvements or use of the licensed patents. The Licensee is not under an obligation to assign, in whole or in part, to the Licensor any rights under patents for inventions relating to improvements or use of the licensed patent, or the right to such patents. Clause 17. PAYMENT ON TRANSFER OF INFORMATION Before drawings and information are transferred the Licensee shall pay to account number:...at the...bank, in the sum of (1) These documents will not be transferred to the Licensee unless and until the whole of this sum has been paid to the said Bank. Clause 18. ROYALTIES A. The Licensee shall pay in respect of Licensed Products sold by him a royalty of...per cent of the price invoiced to his purchasers, for unpacked goods delivered ex works, less discounts and sales taxes. Incidental charges such as... are also to be deducted if invoiced to purchasers separately. (2) B. The Licensee shall pay in respect of each Licensed Product sold by him the sum of... C. The Licensee shall pay by way of royalties at the following times:......(3) (1) - Parties should ensure that they have applied for any necessary foreign currency authorisation. (2) - In some cases it may be appropriate to base the amount of royalty on the cost price, the latter being calculated by an agreed method. This may be particularly useful where the Licensee only produces parts which are then supplied to other manufacturers. 3) - If this option is used. Clauses 20., 23. and 24. are not applicable.

11 11 Clause 19. MINIMUM ROYALTIES Irrespective of the sales actually made by the Licensee, the minimum royalties payable to the Licensor shall not be less than:... in the first year... in the second year... in the third and each succeeding year that this Agreement subsists. (1) If the contract is in force for less than 12 months in any calendar year, the minimum royalty shall be reduced pro rata to the period of duration. Clause 20. TIME WHEN RIGHT TO ROYALTY ACCRUES 20.1 The right to royalty accrues on the date of the Licensee's invoice to his customer The right to such part of a minimum royalty which has not accrued as aforesaid shall accrue at the end of each calendar year. Clause 21. TAXES (2) 21.1 A. Direct taxes payable in the Licensee's country by virtue of sums paid to the Licensor in accordance with the terms of the Contract will be for the Licensor's account A. Other taxes payable in the Licensee's country on such sums will be for the account of the Licensee. When the law of the Licensee's country requires that taxes must be paid by the Licensor, the Licensee shall provide such assistance to the Licensor as to enable him to comply with the obligations and formalities involved. B. Taxes payable in the Licensee's country by virtue of sums paid to the Licensor in accordance with the terms of the Contract will be for the Licensee's account. B. When the law of the Licensee's country requires that taxes must be paid by the Licensor, the Licensee shall provide such assistance to the Licensor as to enable him to comply with the obligations and formalities involved (1) - When articles of different values may be manufactured, a specific number of the most usual types may be taken as the basis for calculating minimum royalties. (2) - In certain countries, the formalities for the payment of VAT will involve some costs and it may be advisable for the parties to specify who will bear these costs. - The parties to the Contract will not always have a free choice as to the option to be selected for any particular agreement.

12 12 Clause 22. MARKING The Licensee shall mark all products made by him under licence and supplied to his customer with serial numbers and shall affix to such products a label inscribed Licence (1) Clause 23. ACCOUNTS AND INSPECTION OF ACCOUNTS The Licensee shall keep a special register in which he shall record the exact number of products manufactured by virtue of this Contract, the serial numbers marked on such products and any other information relevant for determining the amount of royalties payable.(2) The Licensor shah have the right by means of an accountant appointed by him and approved by the Licensee (such approval shall not be unreasonably withheld) to inspect these registers and to examine whether they are consistent with the general accounts of the Licensee. The costs of such inspection and examination shall be borne by... Clause 24. SETTLEMENT OF ACCOUNTS AND PAYMENT 24.1 Royalty accounts shall be rendered quarterly. The Licensee shall within one month alter the expiration of each quarter send to the Licensor a complete account and any sum due to the Licensor thereunder (1) The parties may wish to determine whether the Licensor s Trademark is to be used in connection with the Licensed Product, and if so, on that basis. The parties should also note that if the Licensee is obliged to use the Licensor s Trademark, he must be entitled to identify himself as the manufacturer of the licensed product or the exemption granted by the E.C. Regulation is lost. (2) Such information may include the name of the customer, the date and amount of the invoice, any relevant discounts, etc. The Licensee may also be required to supply to the Licensor copies of invoices submitted to his customers.

13 A. The Licensee shall pay the Licensor in the currency or currencies in which payment is due to the Licensee from the Licensee's customers.(1) B. Payment shall be made in The rate of exchange between... and. shall be that prevailing on the last day of the relevant quarter. In the case of late payment the Licensor shall be entitled to choose between the said rate of exchange and the rate prevailing on the date when payment is made. He shall also be entitled to interest on the sum overdue, such interest being calculated on the following basis. (2) Clause 25. OBLIGATION TO EXPLOIT THE LICENCE The Licensee undertakes to exploit the Licence. Clause 26. MANUFACTURE OR SALE OF COMPETING PRODUCTS The Licensee shall not manufacture or sell products which compete with the Licensed Products.(3) Clause 27. OBLIGATION TO BUY FROM THE LICENSOR (4) For the manufacture of the Licensed Products, the Licensee undertakes to buy from the Licensor the following parts: The said parts shall be supplied in accordance with the General Conditions annexed hereto, and the Prices shall be the Licensor's catalogue prices current at the relevant time (1) - The laws of some countries may prevent this. (2) - It may be advisable to state whether the free exchange rate or the official rate is to apply. (3) - If the agreement is likely to affect trade between Member States of the European Community, this clause must be deleted. (4) - It may be necessary to adopt a different solution. For example, the obligation of the Licensee to buy from the Licensor may be limited to a specific period or a specific quantity. If there are no catalogue prices, some other criteria will need to be adopted. If the Contract is likely to affect trade within the European Community, the clause is only valid in so far as such products or services are necessary for a technically satisfactory exploitation of the licensed invention (Block Exemption Regulation. Art ).

14 14 Clause 28. MAINTENANCE IN FORCE OF THE PATENT (1) A. The Licensor shall keep in force the patent on which the Licence is based. B. The Licensor is not obliged to keep in force the patent on which the Licence is based. If he decides to allow the patent to lapse, he shall inform the Licensee to this effect not less than six months before the date on which any steps necessary to keep the patent in force must be taken. Thereupon, the Licensee shall be entitled to acquire the patent free of charge. The contract shall in any event, be deemed to have been terminated on the aforesaid date. Clause 29. PROTECTION OF THE PATENT The Licensee shall take all reasonable steps to prevent the patents mentioned in the Recital being infringed in the territories for which the Licence is granted. The Licensee shall inform the Licensor of any such infringement which come to his notice A. The Licensee may take proceedings against the infringer. If he does so, the Licensor shall assist him and provide him with all powers and authorisations.(2) B. The Licensor may take proceedings against the infringer. If he does so, the Licensee shall give him all necessary assistance. If the applicable law permits the Licensee to take proceedings, he shall not take any such proceedings without the prior consent of the Licensor.(2) Clause 30. COST OF PROCEEDINGS The party who decides to take proceedings shall bear the costs and enjoy the benefits thereof. If the parties agree to commence proceedings jointly they shall decide how the costs and benefits thereof shall be divided (1) - If the contract is based on several patents under licence or only allows some of those to lapse, the contract will only be terminated pro tanto. (2) - Variant A is for the case when the Licence is exclusive, and Variant B. when the Licence is non-exclusive.

15 15 Clause 31. PROCEEDINGS TO INVALIDATE AND PROCEEDINGS BASED ON SUBSERVIENCE TO A PRIOR PATENT The Licensee shall not take proceedings, or cause proceedings to be taken by another person, for invalidating the patents underlying the contract or for attacking them on the grounds of subservience to a prior patent, unless the invalidity is due to publication of the invention by the Licensor.(1) Clause 32. REVOCATION OF THE PATENT RETENTION OF ROYALTIES If the patent underlying the contract is revoked at the instance of a third party, the Licensor shall be entitled to retain any royalties paid to ham and to recover any royalties due but unpaid at the date of revocation. Clause 33 COMING INTO FORCE AND DURATION OF THE CONTRACT (2) The Contract shall not enter into force until signed and until all authorisations required for its' performance have been obtained, including any authorisations required for the transfer of currency. The Contract shall come to an end on. Clause 34. TERMINATION Without prejudice to any express provisions for termination contained in the Contract, the Contract may be terminated for any cause sufficient to justify termination under the law applicable to the Contract (1) - If the Contract is likely to affect trade between Member States of the European Community, the clause should be deleted. (2) - The Contract may be made to run for a limited period, or during the validity of the patent on which it is based or of any additional patents taken out for improvements. It may also be made to run beyond the validity of the patent. The parties may equally well stipulate that the Contract may be terminated on specific notice. Under Article 3(2) of the Regulation, the exemption is not applicable where the duration of the Contract is automatically prolonged beyond the date of expiry of the licensed patents existing at the time the Contract was entered into by including within the Contract a new patent obtained by the Licensor, unless the Contract provides each party with the right to terminate the Contract at least annually after expiry of the licensed patents existing on the date this Contract is entered into.

16 16 Clause 35. CONFIDENTIALITY The Licensee shall not, even after the expiration of the Contract, communicate to third parties, the Licensor's trade or manufacturing secrets or any other confidential information disclosed to the Licensee pursuant to this Contract. After the expiration of the Contract, the Licensee shall cease using these and shall return to the Licensor immediately all documents relating to the manufacture of the products under Licence.(1) Clause 36. TRANSITIONAL PROVISION The Licensee shall be entitled to carry out after the expiration of the Contract, contracts of sale entered into by him before such expiration. Clause 37. APPLICABLE LAW The contract shall be governed by the law of.. Clause 38. ARBITRATION - COMPETENT JURISDICTION A. A dispute arising out of or in connection with this Contract shall be finally settled in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce. B. Any dispute arising out of or in connection with this Contract shall be decided by the competent Courts in the country in which the registered office of the Licensee/Licensor (2) is located. (3) (1) - If models and tools remaining the property of the Licensor have also been furnished to the Licensee, provision should be made for their return (2) - Delete as appropriate. (3) - The parties should establish from the outset whether a judgment of the Courts provided for can be enforced in the other party s country. If not, the party in whose country judgment is given should also be given power to bring an action in the Courts of the other party s country in order to avoid the risk of a judgment being unenforceable.

17 17 SIGNED POSITION ON BEHALF OF THE LICENSOR SIGNED POSITION ON BEHALF OF THE LICENSEE