Common use of Third Party Royalty Offset Clause in Contracts

Third Party Royalty Offset. Notwithstanding Section 5.5.4(a) above, if a Third Party alleges that the manufacture, use or sale of an Agreement Product infringes its patents, based solely on the practice of the Pharmacopeia Technology, Pharmacopeia and SPL shall consult regarding whether a license should be taken from such Third Party. If Pharmacopeia and SPL agree that such a license is required, SPL, its Affiliates or Sublicensees may, with respect to sales of such Agreement Product, pay royalties directly (or indirectly through Pharmacopeia) to the Third Party whose patents may be infringed by such sales. SPL may reduce any royalty due Pharmacopeia under Section 5.5.1 to reimburse SPL for any such royalties actually paid to Third Parties; provided that the amount of the reduction shall be equal to * of the royalty actually paid to such Third Parties with respect to sales of the Agreement Product in such country; provided, however, that in no event shall the royalty due Pharmacopeia for any calendar quarter, with respect to any such Agreement Product, be thereby reduced to * of the royalty due Pharmacopeia under Section 5.5.1 with respect to Net Sales in such country. If the Parties cannot promptly reach agreement they shall appoint an independent patent counsel reasonably acceptable to each of them to give an opinion, which will be binding as between the Parties, and the parties shall have no further recourse to dispute such opinion (including, without limitation, the provisions of Section 11.3, which shall not apply). If it is the independent patent counsel’s opinion that the patent is valid and infringed by the sale of such Agreement Product due to use of the Pharmacopeia Technology, SPL may settle the matter in its sole discretion on such terms as it deems appropriate, provided that such settlement does not contain an admission or acknowledgment of infringement or invalidity.

Third Party Royalty Offset. Notwithstanding Section 5.5.4(a) above, if a Third Party alleges that the manufacture, use or sale of an Agreement Product infringes its patents, based solely on the practice of the Pharmacopeia Technology, Pharmacopeia and SPL Schering shall consult regarding whether a license should be taken from such Third Party. If Pharmacopeia and SPL Schering agree that such a license is required, SPLSchering, its Affiliates or Sublicensees may, with respect to sales of such Agreement Product, pay royalties directly (or indirectly through Pharmacopeia) to the Third Party whose patents may be infringed by such sales. SPL Schering may reduce any royalty due Pharmacopeia under Section 5.5.1 to reimburse SPL Schering for any such royalties actually paid to Third Parties; provided that the amount of the reduction shall be equal to * of the royalty actually paid to such Third Parties with respect to sales of the Agreement Product in such country; provided, however, that in no event shall the royalty due Pharmacopeia for any calendar quarter, with respect to any such Agreement Product, be thereby reduced to * of the royalty due Pharmacopeia under Section 5.5.1 with respect to Net Sales in such country. If the Parties cannot promptly reach agreement they shall appoint an independent patent counsel reasonably acceptable to each of them to give an opinion, which will be binding as between the Parties, and the parties shall have no further recourse to dispute such opinion (including, without limitation, the provisions of Section 11.3, which shall not apply). If it is the independent patent counsel’s opinion that the patent is valid and infringed by the sale of such Agreement Product due to use of the Pharmacopeia Technology, SPL Schering may settle the matter in its sole discretion on such terms as it deems appropriate, provided that such settlement does not contain an admission or acknowledgment of infringement or invalidity.