On October 6, 2011, Patriot Scientific Corporation (the “Company”) entered into a settlement agreement with Technology Properties Limited LLC (“TPL”), pursuant to which the Company and TPL settled all claims relating to their current litigation. A description of the litigation is contained in the Company’s Form 10-K for the fiscal year ended May 31, 2011, under the caption “ TPL Litigation ” at Item 3. Legal Proceedings.
Pursuant to the terms of the settlement agreement, TPL has agreed to have PDS allocate to the Company $1,100,000 at the rate of five and ten percent of future distributions due to TPL as a member of PDS; TPL has agreed to increased review and procedures by PDS and the Company on all MSD licensing; the Company has agreed to have PDS pay TPL for certain litigation and reexamination support services at the rate of $172,000 for June 2011, and $86,000 per month thereafter until 60 days after the Markman hearing in the current patent infringement litigation; and the parties have agreed to established guidelines and procedures relating to proposed license arrangements to be entered into by TPL involving the MSD Patents and one or more other patents within TPL’s portfolio that is not an MSD Patent, and a procedure for allocating revenue between the MSD Patents and the non-MSD Patents, if needed.
