The agreement reached with GlobalSantaFe will permit GlobalSantaFe to utilize Transocean's dual activity drilling technology on its Development Driller I and II rigs currently working in the Gulf of Mexico and on its Development Driller III rig after delivery from the shipyard in Singapore. In exchange for this right, GlobalSantaFe has agreed to discontinue any further proceedings challenging Transocean's dual activity patents and has agreed to pay a $4 million fee for each of the Development Drillers I, II and III and approximately $3 million in aggregate for use to date by its two operating rigs as a royalty, for a combined payment of approximately $15 million. GlobalSantaFe has further agreed to pay 3% of future revenues received on the three Development Driller rigs, and 5% of revenues on any other rigs which GlobalSantaFe may acquire which incorporate the dual activity technology, as a license fee going forward when operating in an area where Transocean has dual activity patent rights. Transocean has not given any rights to build any additional rigs incorporating the dual activity technology and any such construction would be subject to further negotiation or litigation. Transocean has reached this agreement to permit GlobalSantaFe to utilize its technology for its customers and welcomes the opportunity to discuss licensing arrangements with other drilling contractors for its dual activity technology.
On January 19, 2007, Judge Sim Lake of the U.S. District Court for the Southern District of Texas entered an amended final judgment against GlobalSantaFe following a jury verdict in Transocean's favor. In August 2006, a federal jury found in favor of Transocean after a trial of approximately two weeks before Judge Lake. The jury upheld the validity and enforceability of the Transocean dual activity patents, and awarded reasonable royalty damages of 5% of the revenue received by GlobalSantaFe for its infringing rigs. Based on the jury findings and an April 2005 summary judgment of infringement against GlobalSantaFe's Development Drillers I and II semisubmersible rigs, Judge Lake issued the amended final judgment awarding Transocean approximately $5.1 million in damages and a permanent injunction against further infringement by GlobalSantaFe. The damage award was based upon 5% of GlobalSantaFe's revenues from two infringing Development Drillers I and II operating in the Gulf of Mexico from start up until GlobalSantaFe modified the structure of its rigs in late December 2006 to comply with the terms of the permanent injunction.
Transocean developed its dual activity drilling design in 1996 as part of a project to more efficiently construct wells in deepwater through the use of two complete drilling systems, allowing for parallel drilling operations to be conducted on a single well that saves operators both time and money, compared with conventional rigs. Transocean continues to discover new ways of saving its customers time and money in the drilling of deepwater exploration and development wells with the patented design.
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