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Frequently Asked Questions (FAQs)

CLA · HALA

FAQs for Card License Agreement (CLA)

All section references and defined terms used in this FAQ refer to the current version of the SD Memory Card License Agreement (Rev. August 2018)

Q1.What is the CLA?
A1.CLA is an acronym for SD Memory Card License Agreement. The CLA grants Licensees a license to the SD Group Specifications, which are owned by the SD Group and licensed by the SD-3C LLC ("SD-3C"), to manufacture, use and sell SD Memory Cards. The SD Group Specifications include Parts 1-4 of the overall SD Specifications.
Q2.What companies comprise the SD Group?
A2.The SD Group is comprised of three companies: Panasonic Holdings Corporation (formerly known as Panasonic Corporation), SanDisk LLC (formerly known as SanDisk Corporation), and KIOXIA Corporation (formerly known as Toshiba Memory Corporation).
Q3.What rights are included under the CLA?
A3. The CLA provides a Licensee with several non-exclusive rights including:
  • Essential Patent Claims of the SD Group
  • Copyright to the SD Group Specifications
  • SD Logos
  • SD Design Patents
Q4.Under what circumstances do I need to execute the CLA?
A4.You need to execute the CLA if you are manufacturing semiconductor memory products (e.g., flash memory cards, ROM Cards, SD I/O Combo Cards, OTP Cards) which utilize SD technology (for example, cards based on the SD Group Specifications (as defined in the CLA)). Please also see Q7 below.
Q5.How do I become a CLA Licensee ("Licensee") and what contracts do I need to sign?
A5. Please contact the SD-3C LLC's licensing administrator (Miller Kaplan Arase LLP at admin@sd-3c.com ) and execute a CLA Non-disclosure Agreement ("CLA NDA"). After executing the CLA NDA, you will be provided with a copy of the CLA. Upon mutual execution of the CLA and payment of certain fees, you will become a Licensee. Depending on the products that you wish to manufacture, you may also be required to execute the SDA License Agreement ("SDALA") with the SD Association ("SDA"). The SDA and SD-3C LLC are independent and separate entities.
Q6.What types of cards are licensed under the CLA?
A6.The CLA allows you to select the types of cards that you wish to include in your license under Schedule E.
Q7.Does an SD Memory Card need to comply with all of Part 1, Part 2 and Part 3 of the SD Group Specifications?
A7.Yes, provided that an SD Memory Card needs to only comply with a single "mechanical form factor" and "pin assignment" therefor, and all the other portions of Part 1 of the SD Group Specifications to fully comply with Part 1 of the SD Group Specifications.
Q8.What is the cost of the CLA?
A8. The CLA includes an annual administrative fee and a royalty based on sales of licensed products. The specific costs associated with the CLA are confidential and can be obtained after executing the CLA NDA. Please contact the SD-3C LLC's licensing administrator at admin@sd-3c.com
Q9.Is it permitted for a Licensee to have components of a card consigned to such Licensee from another party ("Consignor"), such that the Licensee makes a card for the Consignor and then sells the card to the Consignor less the price of the consigned components, and then offers a lower total royalty amount to the Licensor based on the lower sale price to the Consignor?
A9. No. This is not permitted, and is a sham sale of an unlicensed product. If the Licensee is making cards on behalf of the Consignor, the Consignor should be a CLA Licensee, and it is the Consignor who should be paying the royalty to the Licensor. The "Licensee" would not need to be a CLA Licensee and would merely be making the cards under the "have-made" rights of the Consignor. Additionally, the first sentence of Section 7.2 of the CLA which states:
"Licensee shall not engage in the sale, use or other disposition of SD Memory Cards, the main objective of which is to reduce the Royalty paid by Licensee to Licensor, provided, however, that Licensee shall be free to determine in good faith the Sales Price of SD Memory Cards, as long as the Sales Price of SD Memory Cards is the subject of good faith, arms-length transaction, and normal and customary discounts, allowances and returns, the purpose of which is not to lower the Royalty due by Licensee"
clearly prohibits the type of transaction referenced in Question 9. In the case of a disposition of a product to (or for the account of) a party which provided (whether by consignment or otherwise) one or more components or subassemblies of such product, revenues recognized shall mean the revenues recognized from the first third party which did not provide (or one on whose behalf there was not provided) one or more components or subassemblies of such product. For the avoidance of doubt, the royalty must be based on a price that is reasonably equivalent to the then prevailing fair market price of the entire card as a whole.
Q10. Is the following scenario a permitted use of the license under a CLA:
  • Party A signs the CLA and makes cards under such license.
  • Party A then sells these cards to Party B for an artificially low price of $X.
  • Party B then sells the card to Party C at the then prevailing fair market price of $4X.
  • Party A and Party B arrange for other exchanges to adjust for the $3X "discount" that was given by Party A.
  • Party A offers the Licensor a royalty based on the sale at $X.
A10. Although the manufacture by Party A is a permitted use under the CLA, the royalty being offered to the Licensor is based on a sham sale and thus is an unlicensed sale. Section 7.2 of the CLA which states:
"Licensee shall not engage in the sale, use or other disposition of SD Memory Cards, the main objective of which is to reduce the Royalty paid by Licensee to Licensor, provided, however, that Licensee shall be free to determine in good faith the Sales Price of SD Memory Cards, as long as the Sales Price of SD Memory Cards is the subject of good faith, arms-length transaction, and normal and customary discounts, allowances and returns, the purpose of which is not to lower the Royalty due by Licensee"
clearly prohibits the type of transaction referenced in Question 10. The correct royalty offered to the Licensor by Party A should be based on the sale of cards at the then prevailing fair market price. One way to judge whether the price at which Party A is selling its cards is a fair market price, is if Party A makes its cards available for purchase at the same price by any and all third parties.
Q11.With regard to Section 7.2 of the CLA, what types of "discounts, allowances and returns" are permitted under the CLA?
A11.Normal and customary discounts, allowances and returns are permitted under the CLA. Such normal and customary discounts, allowances and returns are limited to those amounts which are routinely provided by Licensee to its customers and are generally considered as normal and customary in the industry.
Q12. In the following scenario, do Party A and Party B both have to pay royalties to Licensor on the sale of the Memory Card?
  • Party A is a Licensee who makes and sells the Memory Card to Party B.
  • Party A pays the applicable royalty for the Memory Card to Licensor.
  • Party B then sells the Memory Card to Party C.
A12.No. Only Party A has to pay a royalty to Licensor. Please note that the sale by Party A must be in compliance with the terms and conditions of the CLA.
Q13.What names can I use for an SD Memory Card?
A13. Pursuant to Section 4.8 of the CLA, the names that are permitted for use by a Licensee for SD Memory Cards are:
  1. For SD Flash Memory Cards:
    1. SD Flash Memory Card,
    2. SD Memory Card;
    3. SD Card;
    4. miniSD Flash Memory Card,
    5. miniSD Memory Card;
    6. miniSD Card;
    7. microSD Flash Memory Card,
    8. microSD Memory Card; and
    9. microSD Card, as applicable.
  1. For SD ROM Cards:
    1. SD ROM Card,
    2. SD Memory Card;
    3. SD Card;
    4. miniSD ROM Card,
    5. miniSD Memory Card;
    6. miniSD Card;
    7. microSD ROM Card,
    8. microSD Memory Card; and
    9. microSD Card, as applicable.
  1. For SD OTP Cards:
    1. SD OTP Card,
    2. SD Memory Card;
    3. SD Card;
    4. miniSD OTP Card,
    5. miniSD Memory Card;
    6. miniSD Card;
    7. microSD OTP Card,
    8. microSD Memory Card; and
    9. microSD Card, as applicable.
Q14.Are there any verification tools available from SD-3C to assist in testing?
A14.There are no verification tools provided or certified by SD-3C. However, there may be products available in the market that could help with self-verification. Note that any such products are independent of SD-3C, and SD-3C takes no responsibility for the performance of such products.
Q15.I want to manufacture an SDIO card without Memory Storage. What contracts do I need to sign?
A15.The SD Host/Ancillary Product License Agreement ("HALA") from SD-3C and the SDALA (which can be obtained from the SD Association).
Q16.I want to manufacture an SDIO card with Memory Storage. What contracts do I need to sign?
A16.The CLA and the SDALA (which can be obtained from the SD Association).
Q17.What is Memory Storage?
A17."Memory Storage" is defined in the CLA and HALA as the storage of any data in a non-volatile memory device, regardless of whether the non-volatile memory storage device is used for the storage of executable code, non-executable code, drivers, or any other type of data or information.
Q18.If Party A and Party B are both CLA Licensees as well as licensees under the HALA, do they get the benefit of the royalty-free license from the other party under Section 2.4 of the CLA or are they covered by the non-discriminatory, fair and reasonable license under Section 2.5 of the HALA?
A18.Party A and Party B shall each receive the benefit of the more favorable royalty-free license under Section 2.4 of the CLA with respect to the other party.
Q19.How do I obtain a license for an SD I/O Card which is capable of performing any function other than memory storage and which has a non-volatile memory capacity of 2.0 Megabytes (uncompressed) or less where this memory is used expressly for storing executable code that is used solely for facilitating the interface between a host device and the SD I/O Card, or storing executable code solely for the performance of a non-memory storage ancillary function ("SD I/O Supplemental Code Storage Card" or "SD I/O SCS Card")?
A19. To obtain a license for an SD I/O SCS Card, you need to execute the CLA and the SDALA. Such an SD I/O SCS Card is deemed to be an SD Memory Card under the CLA, even though this SD I/O SCS Card does not comply in whole or in part with Part 3 of the SD Group Specifications and the SDA Specifications. An SD I/O SCS Card must comply:
  1. with Part 1 of the SD Group Specifications and the SDA Specifications,
  2. with Part E-1 of the SDA Specifications, and
  3. in whole or in part with Part 2 of the SD Group Specifications and SDA Specifications with respect to a Code Storage Area ("CSA") implementation as defined in Part E-1 of the SDA Specifications.
Q20.Is it true that the non-volatile memory capacity of 2.0 Megabytes (uncompressed) for an SD I/O SCS Card referenced in Question 19 above has been raised to 16.0 Megabytes (uncompressed)?
A20.Yes, provided that such non-volatile memory capacity is used expressly for storing executable code that is used solely for facilitating the interface between a host device and the SD I/O SCS Card, or storing executable code solely for the performance of a non-memory storage ancillary function.
Q21.Is a CLA licensee required to mark an SD Card with the applicable SD Logo?
A21.Yes.
Q22.In addition to the rights licensed under the CLA, what other value does SD-3C provide to licensees?
A22.In order to add value for a CLA licensee, SD-3C engages in various activities including working with various authorities around the world to assist in the seizure and destruction of counterfeit SD products. Names of current CLA licensees are provided every month to Customs authorities. Names of known counterfeiters are also provided for the purpose of deterring the manufacture and sale of unlicensed products.
Q23.What if the SD Association ("SDA") changes the SDA specification?
A23. The Specifications Addenda may be amended by Licensor from time to time to include specifications duly adopted by the SDA, which will be described in these CLA FAQs. As of mid-2018, the CLA's Specifications Addenda has been amended to include the following SDA specifications:
  1. SD Specifications Part 1 Physical Layer Specification Version 7.00 (June 12, 2018)
  2. SD Specifications Part 2 File System Specification Version 7.00 (June 12, 2018)
  3. SD Specifications Part 3 Security Specification Version 7.00 (June 12, 2018)
  4. SD Specifications Part E1 SDIO Specification Version 4.10 (September 16, 2014)
Q24.Who should potential Licensees contact with further questions about the CLA?
A24. Inquiries regarding interpretation of the CLA and billing inquiries for CLA administrative fee and royalties should be directed to the SD-3C's licensing administrator via e-mail at admin@sd-3c.com
Q25.Are there interpretations of certain sections of the CLA that SD-3C has agreed to follow?
A25. Yes. Please see below
  1. Definition of Net Sales Price (Sec. 1.11). Section 1.11 of the CLA provides that “Net Sales Price shall mean the Sales Price, less sales, use and excise taxes and actual shipping charges included in those revenues.” In applying this Section, SD-3C agrees that when a Licensee can demonstrate actual sales, use and excise taxes and actual shipping charges but cannot reasonably and separately identify and attribute such expenses directly to the sale of specific SD Memory Cards, it can instead deduct a flat one percent (1%) of the Sales Price to arrive at a Net Sales Price. (Effective October 1, 2020.)
  2. Increasing the CLA Administrative Fee (Sec. 7.11 and 7.12). Sections 7.11 and 7.12 provide two bases on which SD-3C may increase the CLA Administrative Fee. In applying these Sections, SD-3C agrees that it will not raise the referenced fees under these provisions at any time during the initial five (5) years of a Licensee’s Term. (Effective October 1, 2020.)
  3. Exercise of Annual Non-Renewal Right (Sec. 14.1). Section 14.1 of the CLA provides, among other things, that the CLA shall be in force for a period of one (1) year (for a maximum of ten (10) years) unless either party delivers a written notice of termination to the other party at least sixty (60) days prior to the expiration of the then current term. In applying this Section, SD-3C agrees that it will not exercise this non-renewal right at any time prior to the initial two (2) years of a Licensee’s Term. This does not in any way limit either party’s right to terminate for breach. (Effective October 1, 2020.)
  4. Licensee’s Obligations to Support Licensor Efforts to Protect SD-3C Trademarks (Sec. 15.3). Section 15.3 of the CLA requires Licensees in certain situations to use commercially reasonable efforts to support SD-3C’s efforts to protect its trademarks as against third-parties. In applying this Section, SD-3C agrees to make only reasonable requests for assistance in this regard and agrees that Licensees need not provide certain proprietary information if doing so adversely affects their business. (Effective October 1, 2020.)
  5. Applying for a New CLA. If a Licensee has been terminated for breach, it (or its related party) may apply for a new CLA, which SD-3C may in its sole discretion grant or deny, and if granted SD-3C may require a material financial security deposit as a condition of entering into a new CLA. The amount and conditions of such security deposit shall be solely determined by SD-3C. (Effective October 1, 2020.)

FAQs for SD Host/Ancillary Product License Agreement ("HALA")

All section references and defined terms used in this FAQ refer to the current version of the SD Host/Ancillary Product License Agreement (Rev. January, 2013).

Q1.What is the HALA?
A1.HALA is an acronym for SD Host/Ancillary Product License Agreement. The HALA grants Licensees a license to the SD Group Specifications, which are owned by the SD Group and licensed by the SD-3C LLC ("SD-3C"). The SD Group Specifications include Parts 1-4 of the overall SD Specifications.
Q2.What companies comprise the SD Group?
A2.The SD Group is comprised of three companies: Panasonic Holdings Corporation (formerly known as Panasonic Corporation), SanDisk LLC (formerly known as SanDisk Corporation), and KIOXIA Corporation (formerly known as Toshiba Memory Corporation).
Q3.What is licensed under the HALA?
A3. The HALA provides a Licensee with several non-exclusive rights including:
  • Essential Patent Claims of the SD Group
  • Copyright to the SD Group Specifications
  • SD Logos
  • SD Design Patents
Q4.What is the cost of the HALA?
A4.The HALA has an annual license fee of $5,000.
Q5.Does each subsidiary of a Licensee need to sign the HALA and pay the annual fees in order to use the SD Group Specifications?
A5.No, not necessarily. A HALA Licensee may choose to designate as many Affiliates as it desires to be Licensee's Affiliates, provided that each entity it designates meets the definition of an "Affiliate" as set forth in the HALA. Each properly designated Affiliate may use the SD Group Specifications according to the terms of the HALA, and does not have to sign a separate HALA or pay an additional fee. If a Licensee prefers, a Licensee may choose to have its affiliated company sign a separate HALA, in which case such affiliated company would pay a license fee. (See Section 1.1 of the HALA.)
Q6.Why is there an option for a Licensee to designate individual Affiliates, or "All Affiliates", that may use the SD Group Specifications under Licensee's HALA?
A6.Each Affiliate that Licensee lists on Schedule C of its HALA may use the SD Group Specifications according to the terms of the HALA. However, each such Affiliate is also subject to the license grant back provisions of the HALA. A Licensee may prefer to designate "All Affiliates" for the sake of convenience, or a Licensee may prefer to designate only those Affiliates it knows will need to use the SD Group Specifications so as not to subject unnecessarily to the grant back provisions other affiliated companies that will not actually need to use the SD Group Specifications. (See Sections 1.1 and 2.4 of the HALA.) Additionally, given the SD-3C enforcement activities, Customs services globally are provided with a list of HALA licensee names and their specific affiliate company names. In order to avoid unnecessary detentions of imported goods bearing the SD trademarks, it may be advisable to identify Affiliates specifically.
Q7.Why is a Licensee required to indemnify the Licensor for claims arising out of its use of the SD Group Specifications even though no indemnification is given by the Licensor to Licensee?
A7.Since the HALA license fee is set at such a nominal rate and open to all who wish to take a license and profit from the sale of licensed products without any royalty obligations to Licensor under the HALA, the indemnification obligation in Section 11.1 of the HALA is meant to provide protection to the Licensor against third party claims. By the same token, given the economics involved, Licensor is unable to offer any type of indemnification to Licensees.
Q8.May a Licensee use a subcontractor to manufacture and/or design an SD Host Product or SD Ancillary Product?
A8.Yes. Licensee's rights and obligations regarding the use of third party subcontractors are set forth in Sections 2.1, 3.1, and 3.2 of the HALA.
Q9.Must a subcontractor of a HALA Licensee execute a separate HALA and pay the associated fees?
A9.No, not necessarily. Provided that Licensee agrees it will not disclose Confidential Information to the subcontractor unless Licensee has entered into a suitable confidentiality agreement with the subcontractor and Licensee agrees to be responsible and financially liable for the subcontractor, the subcontractor does not need to sign a separate HALA or pay any additional fees. (See Section 3.2 of the HALA.)
Q10.If a company desires to manufacture a standalone product that hosts SD Cards, what agreement should it sign?
A10.The HALA.
Q11.What are SD Ancillary Products?
A11. "SD Ancillary Products" as defined by the HALA are products, or parts of software thereof, that:
  1. in whole or in part comply with all applicable portions of Part 1, Part 2 or Part 3 of the SD Specifications; AND
  2. are interoperable with SD Host Products or SD Memory Cards.
SD Ancillary Products include, but are not limited to, adapters and software applications, and SD I/O Cards, but do NOT include SD Host Products, SD Memory Cards, other products incorporating semiconductor memory products (including but not limited to flash memory, ROM or RAM) used for data storage in accordance with Part 2 of the SD Specifications, flash memory storage devices, or flash memory controllers.
Q12.If a company desires to manufacture an ancillary product that is interoperable with SD Host Products or SD Memory Cards, what agreement should it sign?
A12.The HALA.
Q13.If a company desires to manufacture SD Memory Cards, what agreement should it sign?
A13.The HALA applies only to SD Host Products and SD Ancillary Products. A company that desires to manufacture SD Memory Cards should contact SD-3C about executing the SD Memory Card License. (See Sections 1.19 and 3.6 of the HALA.) For certain types of SD Memory Cards (e.g. SDIO Combo Cards, miniSD Cards, and microSD Cards), the SD Association License Agreement ("SDALA") (which can be obtained from the SD Association) may also be required.
Q14.How are Essential Patent Claims to higher levels and future versions of the SD Specifications to be licensed?
A14. The Essential Patent Claims licensed under the HALA are limited in scope to Parts 1-4 of the SD Group Specifications by the definition further described in Schedule A (note that the specification books for Parts 1-4 are fixed to a date certain). Patent claims essential to implement a higher level SD Specification (Parts 5 and higher) or a future version, including any new SD Application Format not listed on Schedule A, will be licensed in accordance with items 2 and 5 of the SD Association ("SDA") IP Policy. Nothing in the HALA or these FAQs, however, shall be construed as a representation that all third party entities owning Essential Patent Claims have licensed such claims under the HALA or the SDA IP Policy.
Q15.Is implementation of the SD Group Specifications mandatory or optional for SD Host Products?
A15.Implementation of Part 1 (Physical Layer) and Part 2 (File System) of the SD Specifications is mandatory for all SD Host Products. Implementation of Parts 3 and higher of the SD Specifications is optional. All HALA Licensees that manufacture Host Products are encouraged to implement all applicable portions of the optional parts of the SD Specifications (Parts 3 and higher) in order to facilitate interoperability.
Q16.Is implementation of the security specification (Part 3) mandatory for all SD Host Products or SD Ancillary Products?
A16. No. Licensee may implement any security feature it chooses. However, if a Licensee's SD Host Products or SD Ancillary Products use, incorporate or support Content Protection for Recordable Media ("CPRM") as a security feature, the Licensee must comply with all applicable portions of Part 3 of the SD Specifications, and may need to enter into a CPRM license with the 4C Entity, LLC. (See Sections 3.5 and 3.7 of the HALA.)
Q17.When can a Licensee use the SD Logos in connection with a Host/Ancillary Product under the HALA?
A17.A HALA Licensee who manufactures Host/Ancillary Products compliant with the applicable specifications may use the SD Logos on the associated product and packaging, and must use the SD Logos on all user manuals that accompany such product. (See Sections 1.8, 1.15, 4.3, and 4.4 of the HALA.)
Q18.Is verification of product compliance mandatory?
A18.Yes. All Licensees are obligated to conduct self-verification in accordance with the procedures outlined in Schedule D of the HALA. (See Section 5.2 and Schedule D of the HALA.)
Q19.Are there any verification tools available from SD-3C to assist in testing?
A19.There are no verification tools provided or certified by SD-3C. However, there may be products available in the market that could help with self-verification. Note that any such products are independent of SD-3C, and SD-3C takes no responsibility for the performance of such products.
Q20.I want to manufacture an SDIO card without Memory Storage. What contracts do I need to sign?
A20.The HALA and the SD Association License Agreement (which can be obtained from the SD Association).
Q21.I want to manufacture an SDIO card with Memory Storage. What contracts do I need to sign?
A21.The SD Memory Card License Agreement ("CLA") and the SDALA.
Q22.What is Memory Storage?
A22."Memory Storage" is defined in the CLA and HALA as the storage of any data in a non-volatile memory device, regardless of whether the non-volatile memory storage device is used for the storage of executable code, non-executable code, drivers, or any other type of data or information.
Q23.If Party A and Party B are both HALA Licensees as well as licensees under the SD Memory Card License Agreement ("CLA"), do they get the benefit of the royalty-free license from the other party under Section 2.4 of the HALA or are they covered by the non-discriminatory, fair and reasonable license under Section 2.5 of the CLA?
A23.Party A and Party B shall each receive the benefit of the more favorable royalty-free license under Section 2.4 of the HALA with respect to the other party.
Q24.Who should potential Licensees contact with further questions about the HALA?
A24. Inquiries regarding interpretation of the HALA and billing inquiries for HALA license fees should be directed to the SD-3C's licensing administrator Miller Kaplan Arase LLP, via e-mail at admin@sd-3c.com
Q25.What is the term or length of the HALA?
A25.The HALA is effective for a period of three (3) years and may be extended for additional periods of three (3) years.