REAL-TIME INSTRUMENT PATENT LICENSE AGREEMENT

Exhibit 10.17

 

REAL-TIME INSTRUMENT PATENT LICENSE AGREEMENT

This Agreement, is signed as of February 9, 2006 (the “Signing Date”) but is made effective as of April 1, 2005 (the "Effective Date" ), by and between Applera Corporation, a corporation of the State of Delaware, through its Applied Biosystems Group, having an office at 850 Lincoln Centre Drive, Foster City, California 94404 (" ABI ") on the one hand, and Bio-Rad Laboratories, Inc., having an office at 1000 Alfred Nobel Drive, Hercules, California 94547 (“BRL”) and BRL’s wholly owned subsidiary MJ Research, Inc. ("MJR"), having an office at 590 Lincoln Street, Waltham, MA 02451, each of ABI, BRL and MJR  hereafter referred to as a “Party” and, collectively, as “Parties”.

WHEREAS, on April 2, 2004, the jury, in the proceeding entitled Applera Corporation, et al. v. MJ Research, Inc., Case No. 3-98-CV-1201 pending in the United States District Court for the District of Connecticut (such proceeding, the “Connecticut Litigation”) rendered a verdict finding, among other things, that (i) defendants induced infringement of U.S. Patent Nos. 4,683,195; 4,683,202, 4,965,188; 5,333,675; 5,656,493 and 5,475,610, and directly and contributorily infringed U.S. Patent Nos. 5,333,675; 5,656,493 and 5,475,610, and (ii) defendants’ inducement of infringement of U.S. Patent Nos. 4,683,195; 4,683,202, 4,965,188 and 5,656,493 was willful.  The jury’s verdict was entered on April 15, 2004; and

 

WHEREAS, on or before August 18, 2004, BRL succeeded to the interests and liabilities of MJ Research and its Affiliates by acquiring MJ Geneworks, Inc., and its subsidiaries including MJ Research;

 

WHEREAS, an oral decision of the Opposition Division of the EPO on December 8, 2004 held that EP 872562 is invalid and ABI has filed an appeal with the European Patent Office;

 

WHEREAS, Applera is asserting infringement by BRL and its Affiliates of U.S. Patent No. 6,814,934 in litigation entitled Applera Corp. v. Bio-Rad Laboratories et al., Case No. 3:04-CV-01881 (RNC), USDC D. Conn. (the “Real-Time Litigation”);

 

WHEREAS, the Parties wish to settle their differences in the U.S. with respect to the Real-Time Litigation;

 

WHEREAS, simultaneously with this Agreement, the Parties have settled the Connecticut Litigation pursuant to a separate settlement agreement, consent judgment (entered in the Connecticut Litigation) and the Amended and Restated Thermal Cycler Supplier Agreement entered into by the Parties and the other litigants in the Connecticut Litigation;

 

Legend:

1.

[**] This material has been omitted pursuant to a request for confidential treatment.  The material has been filed separately with the Commission.

 

 

 

 

WHEREAS, under the Amended and Restated Thermal Cycler Supplier Agreement between the Parties, dated of even date herewith, Licensee has been granted certain license rights in certain fields under certain identified patents and patent applications claiming methods and apparatus for nucleic acid amplification, including the polymerase chain reaction ("PCR") process, but not including real-time thermal cycling apparatus rights that are the subject of this Agreement;

 

WHEREAS, in order to bring about a settlement of the Real-Time Litigation relating to Applera’s real-time PCR instrument patents, the Parties have entered into that certain “Real-Time Settlement Agreement” including that certain Consent Judgment and Permanent Injunction (the “Consent Judgment”) entered into of even date herewith and its integral components including this Agreement; and

 

WHEREAS, pursuant to the Settlement Agreement and this Agreement, Applera is willing to grant Licensee a license in certain fields under Applera’s United States Patent No. 6,814,934; and

WHEREAS, Applera offered but Licensee rejected a license under Japanese Patent No. JP 3136129, European Patent No. EP 0 872 562 B1 counterparts of United States Patent No. 6,814,934  claiming thermal cycling apparatus capable of performing nucleic acid amplification and detecting that amplification in real time.

NOW, THEREFORE, in consideration of the recitals set forth above and the terms and conditions set forth below, the Parties agree as follows:

1.

Definitions

For the purpose of this Agreement the terms set forth hereinafter shall be defined as follows:

1.1

"Affiliate" of a Party to this Agreement shall mean an organization: a) whose voting stock is controlled or owned directly or indirectly to the extent of fifty percent (50%) or more by the Party; b) which directly or indirectly owns or controls fifty percent (50%) or more of the voting stock of the Party; c) whose majority ownership is directly or indirectly common to that of the Party; or d) defined under a), b), or c) above except the amount of said ownership is less than fifty percent (50%) but that amount is the maximum amount permitted by law and Licensee has effective control.

It is understood and agreed that OEM Systems KK, a Japanese corporation with offices at 84, Mekawa Maskishima-cho, Uji, Kyoto, 611-0041 Japan ("OEM Systems KK") shall be deemed an Affiliate of Licensee for so long as Licensee maintains at least [**]  ownership interest in OEM Systems KK.

 

2.

 

 

 

 

1.2

“BRL Subsidiaries” shall mean the BRL subsidiaries, as evidenced in the United States Securities and Exchange Commission filings of BRL as of the Effective Date, whose voting stock is owned as of the Effective Date by BRL to the extent of the lesser of: (a)      [**]       or (b) the greatest percentage permitted under applicable law.  For the avoidance of doubt, any such subsidiary shall cease to be a BRL Subsidiary when BRL ceases to own      [**]      (or the greatest amount allowed by applicable law) of the voting stock of such entity.

1.3

“ Developing Countries ” shall mean all countries except for the following:

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1.4

“Existing Product” shall mean the Licensed Real-Time Thermal Cyclers that as of the Effective Date were manufactured, made publicly available and identified in Licensee’s then current product catalogs.  The term “Existing Product” shall also include the following BRL products, sold as of the Signing Date, that are identified on BRL’s catalog as: MiniOpticon Real-Time PCR Detection System, the IQ5 Real-Time PCR Detection System and the MyiQ Single-Color Real-Time PCR Detection System and the Chromo4 Four-Color Real-Time PCR System, which products are further described on Appendix B attached hereto.

1.5

"Fields" shall mean research, and all applied fields, specifically including food testing.  The term “Fields” does not include  the Human In Vitro Diagnostic Field or veterinary in vitro diagnostic applications.

1.6

"Human In Vitro Diagnostic Field" shall mean the in vitro measurement, observation, and/or determination of attributes, characteristics, diseases, traits or other conditions of a human being for the medical management of a human being.  

 

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1.7

"Licensed Real-Time Thermal Cycler" shall mean an instrument, whether sold as an integrated product or as one or more components or modules, the manufacture, importation, offer for sale, sale or use of which would, but for the rights granted under this Agreement, infringe at least one Valid Claim of the Real-Time Apparatus Patent Rights.  For the purposes of the license set forth in Article 2 of this Agreement, Licensed Real-Time Thermal Cyclers are limited to instruments that are capable of thermally cycling                                      [**]                                               

 

3.

 

 

 

 

  The foregoing shall not preclude the networking of multiple Licensed Real-Time Thermal Cyclers.

1.8

“Licensee” shall mean MJR, BRL and BRL Subsidiaries.

1.9

"Net Sales Price" shall mean

 

 

 

 

 

 

 

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1.10

“Optics Improvement Patents” shall mean any U.S. patents claiming priority to (i) U.S. provisional patent application no. 60/085,765, filed May 16, 1998, and (ii) U.S. provisional patent application no. 60/092,784, filed Jul. 14, 1998 (including United States Patent No. 6,818,437), and all foreign counterparts (including, without limitation, EP 1 078 245, EP 1 619 491, JP 2005-274579, CN 1 664 562, CN 1 201 016, CA 2,328,609, AU 759 974) of any of the foregoing and any other patents owned or controlled by Applera as of the Signing Date that claim optical elements of an apparatus configured for real-time detection of polymerase chain reaction (PCR) amplification, or methods of using such optical elements of an apparatus for real-time detection of polymerase chain reaction (PCR) amplification.  The term “Optics Improvement Patents” expressly excludes: (i) the Category I Real-Time Rights, EP 872562 and all applications and/or patents claiming priority thereto, (ii) Japanese Patent No. 3,136,129, (iii) any patents and patent applications that cover real-time chemistry, reagents, reagent-containing kits, reagent-containing systems, and methods employing particular real-time chemistry, reagents, reagent-containing kits, reagent-containing systems, that instrument users, including Licensee, may wish or need for the performance of amplification and detection methods, including without limitation real-time detection methods, utilizing Licensed Real-Time Thermal Cyclers.

1.11

"Real-Time Apparatus Patent Rights" shall mean (a) Applera's United States Patent No. 6,814,934 B1; (b) Applera's other U.S. patents and applications that claim priority to United States patent application Serial No.  07/695,201; (c) and any Canadian counterparts of any of the foregoing (the patents and patent applications in part (a) through (c) above of this Section 1.11 (collectively, “Category I Real-Time Rights”).  Without limiting the foregoing, the term “Real-Time Apparatus Patent Rights” shall include any Valid Claims of other patents or patent applications (including, without limitation, the Optics Improvements Patents) owned by Applera as of the Signing Date (or controlled by Applera, as of the Signing Date, with the right to grant sublicenses) that (but for the license herein) are infringed by Licensee’s manufacture and selling within the scope of the license granted in Section 2.1 of Existing Products.  Notwithstanding anything herein to the contrary, the term “Real-Time Apparatus Patent Rights” expressly excludes: (i) EP 872562 and all applications and/or patents claiming priority thereto, (ii) Japanese Patent No. 3,136,129, (iii) any patents and patent applications that cover real-time chemistry, reagents, reagent-containing kits, reagent-containing systems, and methods employing particular real-time chemistry, reagents, reagent-containing kits,

 

5.

 

 

 

 

reagent-containing systems, that instrument users, including Licensee, may wish or need for the performance of amplification and detection methods, including without limitation real-time detection methods, utilizing Licensed Real-Time Thermal Cyclers; and (iv) any patents and patent applications licensed under the Amended and Restated Thermal Cycler Supplier Agreement.  The Real-Time Apparatus Patent Rights other than the Category I Real-Time Rights are referred to collectively as the “Added Real-Time Rights”.

1.12

"Temperature Cycling Instrument" shall mean an instrument, whether in single or multiple modules, that includes a Thermal Cycler and additional structure for performing one or more other functions.

1.13

"Thermal Cycler" shall mean an instrument, whether in single or multiple modules, that is capable in itself of automatically cycling samples in the PCR process.

1.14

"Territory"

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1.15

"Third Party" shall mean a Party other than one of the Parties to this Agreement.

1.16

"Valid Claim" shall mean a claim of an unexpired patent [**] which has not been held invalid or unenforceable by a decision of a court, Patent Office, or administrative tribunal from which no appeal is available.

2.

Grant

2.1

Upon the terms and subject to the exceptions and conditions of this Agreement, ABI grants to Licensee under the Real-Time Apparatus Patent Rights a personal, non-transferable, royalty-bearing, non-exclusive license in the Fields and in the Territory, to make, but not have made, to use and to import, Licensed Real-Time Thermal Cyclers, and to offer to sell, sell and distribute the same solely to end users, and solely under Licensee's name and trademarks.

 

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2.2

Upon the terms and subject to the exceptions and conditions of this Agreement, ABI grants to Licensee under the Real-Time Apparatus Patent Rights a personal, non-transferable, royalty-bearing, non-exclusive license in the Fields and in the Territory, to make, but not have made, to use and to import add-on and substitute components, modules and software for Licensed Real-Time Thermal Cyclers, and to offer, sell and distribute the same solely to end-user Third-Party owners of Licensed Real-Time Thermal Cyclers purchased from Licensee.

2.3

 

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2.4

The grants under Sections 2.1 and 2.2 include no right, immunity, authorization or license, either expressly or by implication, under any patent or patent application that is not included in the Real-Time Apparatus Patent Rights, such as, by way of example but not of limitation, any patent claim or patent application claim to a real-time process or method.

2.5

Rights granted to Licensee by this Agreement are personal to Licensee alone.  Licensee shall have no right to sublicense, assign or otherwise transfer or share its rights hereunder.  Without limiting other acts or omissions constituting material breach hereof or ABI’s remedies or causes of action for the same: (i) any use, sale or promotion by Licensee of Licensed Real-Time Thermal Cyclers (including, without limitation, using or promoting the use of Licensed Real-Time Thermal Cyclers with assays or reagents in

 

7.

 

 

 

 

the Human In Vitro Diagnostic Field) in the Human In Vitro Diagnostic Field shall be deemed a material breach of this agreement; and (ii) any breach by the Licensee of Article 2 (including, without limitation, by Licensee exceeding the scope of the license herein) shall be deemed a material breach by Licensee of this Agreement.

2.6

Notwithstanding the prohibition of Section 2.5, Licensee's rights to sell to end users under the grants of Sections 2.1 and 2.2 include the right to sell through Affiliates (so long as Licensee reports and pays under this Agreement on their behalf) and through distributors of Licensee and such Affiliates, as well as directly; provided that: (i) as for distributors being used as of the Effective Date to distribute Licensed Real-Time Thermal Cyclers, Licensee inform such distributors within sixty (60) days of Licensee’s field and license restrictions under this Agreement and further inform such distributors that any sale by such distributors that exceeds the scope of the license hereunder will result in such distributors no longer having the right to distribute Licensed Real-Time Thermal Cyclers; (ii) as for new distribution agreements (whether renewals or new agreements with new distributors) such distributors contractually agree to abide by the terms and conditions of this Agreement; and (iii) Affiliates contractually agree to abide by the terms and conditions of this Agreement.

2.7

ABI covenants not to sue Licensee under any Valid Claims of patents issuing anywhere in the world claiming priority from United States patent serial number 08/113,168 or 08/266,061.

3.

Fees, Royalties, Records and Reports

3.1

For licenses and rights granted under Article 2, Licensee shall pay to ABI:

(a)

 

 

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(b)

                                         

 

 

 

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(c)

for each Licensed Real-Time Thermal Cycler, including, without limitation, all modules and components, including software and computers and for each add-on or substitute component, module or software (excluding software upgrades valued or sold at US$ 300 or less) and associated warranty sold, delivered, invoiced or otherwise provided by any of Licensee, its Affiliates or distributors after the Effective Date,                             [**]            

 

(d)

for each repair or replacement component of a Licensed Real-Time Thermal Cycler, including any replacement modules and components, including software and computers, sold, delivered, invoiced or otherwise transferred by any of Licensee, its Affiliates or distributors after the Effective Date,                                                   [**]                 , except that parts supplied free of charge under

 

9.

 

 

 

 

warranty, or repair, not amounting to reconstruction, of a Licensed Real-Time Thermal Cycler for which a royalty already has been paid under this Agreement, including replacement of components by identical components shall not be subject to royalty hereunder unless the component itself would directly or contributorily infringe the Real-Time Apparatus Patent Rights;

 

(e)

for each detector module or combination of detector modules which is less than a complete Licensed Real-Time Thermal Cycler, sold, delivered, invoiced or otherwise transferred by any of Licensee, an Affiliate or distributor after the Effective Date,

 

 

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; and

 

(f)

for each Licensed Real-Time Thermal Cycler placed as a no-charge "loaner" or demonstration instrument, wherein the quantity of such loaner or demonstration instruments placed in a given year does not exceed

 

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  For any quantity of loaners or demonstration instruments above

 

 

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                    However, if any module or component is subsequently added or substituted, payment under subsections 3.1(d) and 3.1(e) shall be made for such module or component.

 

3.2

So long as Licensee remains a licensee under its Amended and Restated Thermal Cycler Supplier Agreement ( "TCSA" ) with ABI, for each royalty-bearing item under Section 3.1 for which Licensee pays, inter alia , a percentage of the Net Sales Price under its TCSA,

 

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3.3

All amounts payable hereunder shall be payable in United States dollars.  Sales in other countries shall be converted to U.S. dollars based on the New York rate of exchange as quoted in the Wall Street Journal for the last business day of the applicable month in which such payment obligation accrued.  If not so published, the Parties may agree in writing on a substitute publication.  In the event there is no comparable publication, the applicable rate for such date by the appropriate governmental agency in such country shall apply.

3.4

Licensee shall keep, and shall require its pertinent Affiliates and distributors to keep, full, true and accurate records containing all particulars necessary to show the amount payable to ABI under this Agreement and to demonstrate Licensee’s (and its Affiliates and distributors’) compliance with its obligations under this Agreement.  Licensee shall keep records

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                                                          under the second paragraph of Section 2.1, which records shall be supplied to ABI as part of the quarterly royalty report to be delivered in accordance with Section 3.5 herein.  Such records and the supporting data shall be open at all reasonable times,                          [**]                                   the end of the calendar year to which they pertain (and access shall not be denied thereafter, if reasonably available), to the inspection of an independent certified public accounting firm retained by ABI.  Such accounting firm will hold such records and supporting data in strict confidence, except as necessary to consult with and report to ABI and Licensee on Licensee's compliance with this Agreement.  If in dispute, such records shall be kept until the later of        [**]             or the date the dispute is settled.  Inspection shall be at ABI's expense, unless the inspector concludes that the amount payable that is stated in a report is understated by                                              [**]

 

3.5

Licensee shall within             [**]              after the first of January, April, July and October deliver (by U.S. mail or nationally recognized courier service with a text copy in excel format (or other reasonable format requested in writing by ABI) of such report transmitted by email to royalties@appliedbiosystems.com) to ABI a true and accurate royalty accounting report.  This report shall be on a country-by-country basis and shall give such particulars of the business conducted by Licensee i