S
Spartacus
Guest
I have a contract (Intellectual Property licensing agreement) with another company (the "licensee") that states: "(Licensee) agrees to maintain accurate records of all transactions relating to sale and transfer of (IP) licenses under the terms and conditions of this agreement throughout the Term of this agreement and for two (2) years thereafter."
The term of the agreement is still in effect (i.e. it has not expired). I have recently learned that licensee has distributed the IP without proper authorization or payment of fees due under the agreement. (I have copies of the letter of invoice to licensee's customer and the check paid by the customer). I demanded records of license sales so that I could reconcile this and any other differences with my records and determine the extent of damages. The licensee claims that the violation was simply an accounting mistake (they "forgot" to submit the required documents and payment), and they cannot produce any records of sales to their customers because they are lost or cannot be located. In addition, we now have reason to suspect that this has occurred previously on at least one and possibly other occasions.
My question is, is this (i.e. failure to maintain records) a "material breach" of the agreement? If so, am I justified in terminating the agreement and the license to distribute my IP? (The agreement has provisions for termination in the event of "material breach" with proper notices, provisions for time to cure, etc., all of which have been served per the terms of the agreement).
My attorney says it is a "material breach". The licensee has said verbally that in their opinion it is not a material breach and they refuse to acknowledge termination, and demand that I continue authorizing distribution or they will sue me (even though contract provides for arbitration). They finally offered (after notice of breach and expiration of the time to cure as provided in the agreement) to pay for the unauthorized licenses, and we have sent an invoice, but it has still not been paid. The documented violation occurred six months ago, and another appears to have occurred over one year ago. The licensee was notified of the violation more than two months ago. The amounts are fairly substantial (to us anyway).
Also, the agreement clearly states that the IP is copyrighted material and that I own the copyright and grant licensee limited, non-exclusive distribution rights subject to certain terms and conditions (i.e. proper accounting and payment of fees among others). Is licensee's unauthorized distribution a copyright violation? If so, is it an absolute requirement that the IP copyright be registered for me to initiate action for the infringement (it's not)? If so, is it too late to register?
We are a small company with limited resources and they are a big company with lots of money for litigation. I am trying to decide whether to just "cave in", i.e. continue performing the contract, or fight, i.e. enforce the termination. Or, am I just being naive by expecting people to take this stuff seriously? I trust my lawyer, but this is very scary and I want as many opinions as possible before making a decision. Any help is greatly appreciated.
The term of the agreement is still in effect (i.e. it has not expired). I have recently learned that licensee has distributed the IP without proper authorization or payment of fees due under the agreement. (I have copies of the letter of invoice to licensee's customer and the check paid by the customer). I demanded records of license sales so that I could reconcile this and any other differences with my records and determine the extent of damages. The licensee claims that the violation was simply an accounting mistake (they "forgot" to submit the required documents and payment), and they cannot produce any records of sales to their customers because they are lost or cannot be located. In addition, we now have reason to suspect that this has occurred previously on at least one and possibly other occasions.
My question is, is this (i.e. failure to maintain records) a "material breach" of the agreement? If so, am I justified in terminating the agreement and the license to distribute my IP? (The agreement has provisions for termination in the event of "material breach" with proper notices, provisions for time to cure, etc., all of which have been served per the terms of the agreement).
My attorney says it is a "material breach". The licensee has said verbally that in their opinion it is not a material breach and they refuse to acknowledge termination, and demand that I continue authorizing distribution or they will sue me (even though contract provides for arbitration). They finally offered (after notice of breach and expiration of the time to cure as provided in the agreement) to pay for the unauthorized licenses, and we have sent an invoice, but it has still not been paid. The documented violation occurred six months ago, and another appears to have occurred over one year ago. The licensee was notified of the violation more than two months ago. The amounts are fairly substantial (to us anyway).
Also, the agreement clearly states that the IP is copyrighted material and that I own the copyright and grant licensee limited, non-exclusive distribution rights subject to certain terms and conditions (i.e. proper accounting and payment of fees among others). Is licensee's unauthorized distribution a copyright violation? If so, is it an absolute requirement that the IP copyright be registered for me to initiate action for the infringement (it's not)? If so, is it too late to register?
We are a small company with limited resources and they are a big company with lots of money for litigation. I am trying to decide whether to just "cave in", i.e. continue performing the contract, or fight, i.e. enforce the termination. Or, am I just being naive by expecting people to take this stuff seriously? I trust my lawyer, but this is very scary and I want as many opinions as possible before making a decision. Any help is greatly appreciated.