![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
England and Wales Court of Appeal (Civil Division) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> AstraZeneca UK Ltd v Tesaro Inc [2024] EWCA Civ 78 (09 February 2024) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2024/78.html Cite as: [2024] EWCA Civ 78 |
[New search]
[Context]
[View without highlighting]
[Printable PDF version]
[Help]
ON APPEAL FROM THE HIGH COURT OF JUSTICE,
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES, BUSINESS LIST (ChD)
Mr Justice Richards
Strand, London, WC2A 2LL |
||
B e f o r e :
LORD JUSTICE ARNOLD
and
LORD JUSTICE BIRSS
____________________
ASTRAZENECA UK LIMITED |
Claimant/ Respondent |
|
- and - |
||
TESARO, INC. |
Defendant/ Appellant |
____________________
Alan Maclean KC and Katherine Moggridge (instructed by Freshfields Bruckhaus Deringer LLP) for the Respondent
Hearing date : 17 January 2024
____________________
Crown Copyright ©
Lord Justice Arnold:
Introduction
The factual matrix
"i) The inclusion in apatent
licence agreement of a royalty based on total sales, and not just on sales of the
patented
product or process, is capable of amounting to
patent
misuse. Whether it does, or does not, amount to
patent
misuse will depend in many cases on an analysis of matters other than the wording of the contract, for example negotiations between the parties leading up to the total sales royalty and the way in which the
patentee
dealt with other licensees.
ii) There ispatent
misuse if a
patent
holder 'conditions' the grant of a
patent
licence on the payment of royalties on products which do not use the teaching of the
patent.
iii) 'Conditioning' for these purposes is present where thepatentee
refuses to license on any other basis and leaves the licensee with a choice between a licence containing a total sales royalty and no licence at all. Thus, there is likely to be
patent
misuse if a licensee asks to pay a royalty based on use of the
patented
product or process, but the
patentee
refuses and offers only a total sales royalty.
…
v) There will not be any 'conditioning' if a total sales royalty is agreed for the mutual convenience of bothpatentee
and licensee.
vi) However, point v) above does not mean that there is a binary choice between objectionable 'conditioning' on the one hand and benign 'mutual convenience' on the other. If the total sales royalty is driven entirely by the 'convenience' of thepatentee
with the result that the
patentee
refuses a licensee's request to pay a royalty based only on use of the
patented
product or process there is likely to be
patent
misuse on the basis that there has been straightforward 'conditioning' of the kind set out in paragraph iii). However, if a licensee requests a total sales royalty for the licensee's own convenience, but the
patentee
is either ambivalent about the proposal or even regards it as 'inconvenient', there was no rule of law in 2012 that would have resulted in the total sales royalty necessarily constituting
patent
misuse.
…
viii) Where a licence agreement includes a total sales royalty and the parties agree an express contractual statement that it was agreed for their mutual convenience, the court will have regard to that statement. However while the inclusion of such a clause would be an indication of weight that there is nopatent
misuse, neither the presence nor absence of such a statement is dispositive….
ix) If the Licence Agreements required Tesaro to pay a royalty based on total sales, there would be a risk that it would fall foul of the doctrine ofpatent
misuse. It would not have been practicable for the parties, without taking detailed US
patent
law advice to quantify the extent of the risk. Eminent experts … hold very different views on the scope of the
patent
misuse doctrine as at 2012. Therefore, if the parties had taken advice, they would probably have been told that the position was uncertain …. If the parties had taken advice, they would have been told that the risk could be reduced, but not eliminated, by including a statement in the Licence Agreements that any total sales royalty was included for reasons of mutual convenience."
The relevant terms of the Licence Agreements
"(A) WHEREAS, Under the terms of a Licence and Collaboration Agreement dated 25th July 2004 and made between to KuDOS Pharmaceuticals Limited … and the University of Sheffield … (the 'KuDOS Agreement'), Sheffield granted KuDOS the exclusive worldwide rights (including the right to grant sublicences) to use thePatents
Rights (as defined in the KuDOS Agreement) to develop and sell any compound which has been demonstrated to inhibit poly (ADP-ribose) polymerase (PARP), the manufacture, formulation, use of or method of treatment of which is covered by a Valid Claim in the
Patent
Rights;
…
(D) WHEREAS, TESARO desires to obtain from AstraZeneca, and AstraZeneca is willing to grant to TESARO, an exclusive licence under the above-mentionedPatent
Rights to develop and commercialise its proprietary pharmaceutical compounds niraparib and MK-2512 for the inhibition of PARP for the treatment of cancer in the Field, all in accordance with the terms and conditions set out below in this Agreement;".
"Subject to the terms and conditions of this Agreement, AstraZeneca hereby grants to TESARO and its Affiliates an exclusive (even as to AstraZeneca), royalty-bearing, license (the 'License') under AstraZeneca's rights in the LicensedPatents
solely to Exploit the Compound and the Licensed Products within the Field in the Territory."
"In partial consideration of the License and other rights granted by AstraZeneca to TESARO hereunder, TESARO shall pay to AstraZeneca during the royalty term stated in Section 5.5 a royalty of [a specified percentage] of the aggregate Net Sales of Licensed Products in the Territory ... TESARO shall have the responsibility to account for and report to AstraZeneca all sales of any Licensed Product that are subject to royalty payments under this Section 5.3."
"5.5.1 TESARO's obligation to pay royalties in respect of each Licensed Product shall commence, on a country-by-country basis, on the date of the First Commercial Sale of such Licensed Product in such country. In the event that in a particular country the First Commercial Sale of a Licensed Product occurs prior to the issuance in such country of a grantedPatent
which is a Licensed
Patent
that covers or claims the Exploitation of such Licensed Product, then royalties on such Licensed Product in such country shall be calculated pursuant to Section 5.3 and 5.4 from the date of the First Commercial Sale of the Licensed Product and the accumulated aggregate amount of such royalties shall be paid by TESARO to AstraZeneca within thirty (30) days of the issuance in the relevant country of such Licensed
Patent.
5.5.2 TESARO's obligation to pay royalties shall expire, on a country-by-country basis, with respect to each separate Licensed Product, at such time as there is no longer any Valid Claim that covers or claims the Exploitation of such Licensed Product in such country."
"TESARO's PARP inhibitor compounds niraparib and Mk-2512 the use of which may be claimed or covered by, or the Exploitation of which may be claimed or covered by, one or more of the LicensedPatents."
The dispute between the parties is as to the meaning of the words I have italicised in this definition ("the italicised words"), and in particular the words "may be".
Interpretation of the Licence Agreements
Conclusion
Lord Justice Birss:
Lady Justice King: