Liquidmetal Technologies Inc (LQMT)

[PatentGuy1]

My interpretation was that anything shipped into LQMT territory, by Eontec, resulted in a payment to LQMT.

I believe that it is not quite as simple as that. The agreement with Eontec (i.e., Parallel License Agreement, https://www.sec.gov/Archives/edgar/data/1141240/000143774916027548/ex10-2.htm) does NOT provide for royalties in the case of Eontec selling in our territory.

Instead, the agreement states:

Eontec shall take such action and measures as shall be necessary to ensure that Eontec Licensed Products are not sold or resold in or into the LMT Exclusive Territory by Eontec or any other party in the chain of distribution (whether as a part of a finished product assembled or produced by a third party or otherwise) without first obtaining the prior written consent of LMT.

(See, section 2.3)

The agreement also states:

“Eontec Licensed Products” shall mean any product the manufacture, use, offer for sale, sale or importation of which by Eontec would, but for this Agreement, infringe a valid claim of an LMT Licensed Patent in a jurisdiction where such valid claim exists or that incorporates or uses any element of the LMT Licensed Technical Information in its design or manufacture.

(See, section 1.9)

Based on the definition of "Eontec Licensed Product," IMO an item made without infringing any of LQMT's patents would NOT be considered an "Eontec Licensed Product." In which case, section 2.3 would not apply, and therefore, Eontec could import goods into the U.S. without breaching the agreement.

Further, royalties, let alone royalty rates, are not established by the agreement. All that is required is "written consent." With Li being the CEO of Liquidmetal, how hard would it be for him to grant such consent.

IMO, people have misunderstood the exclusivity provisions of the agreement and such misunderstandings stem from reading press releases and/or summaries of the agreement instead of reading the agreement itself. IMO, in LQMT's exclusive territories, LQMT has exclusive rights to use LQMT's IP; in Eontec's exclusive territories, Eontec has exclusive rights to use Eontec IP. However, such exclusivity doesn't prevent Eontec from selling non-infringing parts (i.e., parts that do not infringe LQMT's patents) in LQMT's exclusive territories. Similarly, LQMT isn't excluded from selling non-infringing parts (i.e., parts that do not infringe Eontec's patents) in Eontec's exclusive territories.