Re: MIT License Agreement
These paragraphs are excerpted from the Form S-3/A Prospectus filed Oct 8.
NOTES to Consolidated Financial Statements | 12. Commitments:
The Company has entered into various license agreements which require the Company to pay royalties based upon a set percentage of product sales, subject, in some cases, to certain minimum amounts. Total royalty expense approximated $25,500 in 1996, $24,000 in 1997, $25,000 in 1998 and $13,000 for the six months ended July 3, 1999.
BUSINESS | Patents, Proprietary Rights and Licenses:
In 1985, we obtained a license from MIT to certain patents and patent applications directed to device wafers and related technology. The license grants to Kopin a worldwide license to make, have made, use, and sell products covered by the licensed patents for the life of these patents. The license was exclusive with respect to commercial applications until April 22, 1999, and became non-exclusive at that time...
In some previous SEC filings, made during the period of exclusivity, Kopin also included the sentence:
The company pays royalties to MIT equal to the greater of $25,000 per year or 3% of net sales of products covered by the patents during the period of exclusivity.
Royalties were essentially constant through periods when both HBT wafer and CyberDisplay sales were increasing rapidly. For the six months ended July 3, sales of both products were significantly above the level equivalent to a royalty payment of $13,000. CyberDisplay revenues were 10.0% of product revenues or about $1.4 million. It follows that neither product uses technology "covered by the patents" licensed from MIT. I've noticed that Dr. Fan has always been careful to use the phrase "initial technology developed at MIT." Now I see why: for legal reasons wrt the royalty situation. Am I right, or am I right?
My guess is that the royalties paid out were just the $25,000 minimum with minor adjustments.
Still, Kopin loves to talk up the MIT connection whenever they get the chance. <g>
WT |
