CONFIDENTIAL PROVISIONS MARKED EXHIBIT 10.26 (CONFIDENTIAL) AMENDMENT NO. 2 TO THE PATENT LICENSING MASTER AGREEMENT

Exhibit 10.26

[...] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

CONFIDENTIAL PROVISIONS MARKED

EXHIBIT 10.26 (CONFIDENTIAL)

AMENDMENT NO. 2 TO THE PATENT LICENSING MASTER AGREEMENT

This Amendment No. 2 to the Patent Licensing Master Agreement ( “Amendment” ) is entered into as of December 18, 2003 by and between Genentech, Inc. ( “GNE” ), a Delaware corporation having offices at 1 DNA Way, South San Francisco, California 94080 and Protein Design Labs, Inc. ( “PDL” ), a Delaware corporation having offices at 34801 Campus Drive, Fremont, California 94555 (collectively, the “Parties” ) and amends that certain Patent Licensing Master Agreement dated September 25, 1998 (including the form PDL License Agreement attached thereto as Exhibit C), as amended by Amendment No. 1 to the Patent Licensing Master Agreement dated September 18, 2003 (collectively the “PLMA”). Except as expressly provided herein, capitalized terms shall have the meanings set forth in the PLMA and references to Sections, Exhibits and Articles shall be deemed references to the PLMA.

RECITALS

WHEREAS, GNE and PDL are Parties to the PLMA; and

WHEREAS, in connection with the Parties’ execution of a settlement agreement of even date herewith (the “Settlement Agreement”), GNE and PDL desire to amend the PLMA (including, without limitation, the form PDL License Agreement attached thereto) to conform to the provisions of the Settlement Agreement.

NOW THEREFORE, the Parties agree as follows:

1. GNE and PDL agree that the effective date of this Amendment will be the Effective Date of the Settlement Agreement.

2. The PLMA is amended as follows:

A new Section 1.18 is added and shall read in full as follows:

1.18 “GNE ROW Net Sales” means Net Sales (as such term is defined under the form PDL License Agreement) of GNE Licensed Product(s) other than GNE US Net Sales.

A new Section 1.19 is added and shall read in full as follows:

1.19 “GNE US Net Sales” means Net Sales (as such term is defined under the form PDL License Agreement) of GNE Licensed Products(s) made, imported, used, offered for sale or sold in the United States.

A new Section 1.20 is added and shall read in full as follows:

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1.20 “PDL ROW Net Sales” means Net Sales (as such term is defined under the GNE License Agreement) of PDL Licensed Product(s)) other than PDL US Net Sales.

A new Section 1.21 is added and shall read in full as follows:

1.21 “PDL US Net Sales” means Net Sales (as such term is defined under the form GNE License Agreement) of PDL Licensed Products(s) made, imported, used, offered for sale or sold in the United States.

Section 2.3 is amended to read in full as follows:

2.3 Procedure for Exercise of License Rights. GNE shall provide PDL with written notice identifying the Antigen for which GNE desires to enter into a PDL License Agreement pursuant to the provisions of Section 2.1. Such written notice shall occur no later than ten (10) days following first regulatory approval of a product incorporating an Antibody directed against the relevant Antigen. Within fifteen (15) business days of the written notice, GNE shall pay the applicable License Exercise Fee specified in Section 3.2(a). PDL shall promptly review and respond in writing to the request by GNE for a license within ten (10) business days of receipt of the written request. PDL may deny GNE’s request for a license grant only if PDL has previously granted an exclusive or co-exclusive license or an unexpired option for an exclusive or co-exclusive license with respect to Antibodies to the identical Antigen or is then actively engaged in bona fide negotiations for such an exclusive or co-exclusive license or option for an exclusive or co-exclusive license; provided, however, that with respect to each of the GNE Named Antigens and […], PDL shall provide GNE written notice prior to entering into an exclusive or co-exclusive license or option with any third party with respect to that GNE Named Antigen or […] and shall permit GNE the opportunity to exercise its rights under Section 2.1 for a period not to exceed fifteen (15) days for a license for such GNE Named Antigen or […] prior to the conclusion of an agreement with such third party for such a license or option. In the event that PDL denies GNE’s request, as set forth herein, for a PDL License Agreement, GNE’s right under Section 2.1 shall not be considered exercised. If PDL affirms GNE’s request or has not responded within ten (10) business days of receipt of GNE’s request under this Section 2.3(b), then GNE and PDL shall enter into a PDL License Agreement with respect to the Antigen. For the avoidance of doubt, if GNE has not given PDL notice of its desire to enter into a PDL License Agreement with respect to an Antigen within ten (10) days after first regulatory approval of a product incorporating an Antibody directed against such Antigen, GNE shall no longer have the right to exercise a PDL License Agreement with respect to such Antibody under this Agreement, but GNE shall retain the right to exercise a PDL License Agreement with respect to a different Antibody directed at such Antigen. If, after GNE has exercised its license rights with respect to a particular Antigen and has entered into a PDL License Agreement pursuant to Section 2.1, GNE later has another product incorporating an Antibody that is directed against the same Antigen, then GNE must provide an additional written notice that such product is a GNE Licensed Product no later than ten (10) days following regulatory approval of such other product.

Section 4.1 is amended to read in full as follows:

4.1 Royalties.

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Such total annual GNE US Net Sales shall be calculated on a calendar year basis. Royalties for any GNE US Net Sales of any GNE Licensed Product sold prior to the effective date of such PDL License Agreement shall be paid in the first royalty payment under such PDL License Agreement, and shall be included in the total annual GNE US Net Sales for the calendar year in which such GNE US Net Sales occur.

Section 5.3 is amended to read in full as follows:

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