Exhibit 10.27
SETTLEMENT AND CROSS LICENSE AGREEMENT
This is a Settlement and Cross License Agreement (the "Agreement"),
effective as of August 18, 2004 (the "Effective Date"), by and between (1)
Applera Corporation, a Delaware Corporation having its principal place of
business at 301 Merritt 7, P.O. Box 5435, Norwalk, Connecticut 06856-5435, and
all of its affiliates, divisions, and Affiliates (as defined in Article I of
this Agreement), including but not limited to Applera Corporation - Applied
Biosystems Group, an operating group of Applera Corporation, having its
principal place of business at 850 Lincoln Centre Drive, Foster City, California
94404 (collectively, Applera Corporation and all of its affiliates and
Affiliates are "Applera"); and (2) Illumina, Inc., having its principal place of
business at 9885 Towne Centre Drive, San Diego, California 92121-1975, and all
of its affiliates, divisions, and Affiliates (collectively, Illumina, Inc. and
all of its affiliates and Affiliates are "Illumina").
WHEREAS, on December 3, 2002, Applera filed a complaint for patent
infringement against Illumina in the United States District Court for the
Northern District of California, Case No. C02-05660, alleging that Illumina
infringed certain patents;
WHEREAS, on March 11, 2003, Applera dismissed its patent infringement
complaint and re-filed a substantially identical complaint for patent
infringement in the same court, Case No. C03-1048, and then, on April 22, 2003,
filed an amended complaint alleging infringement of an additional patent owned
by Applera ("the Patent Action");
WHEREAS, in November 1999, Illumina and Applera's predecessor-in-interest
PE Corporation entered into a Joint Development Agreement (the "Joint
Development Agreement") with the objective of jointly developing and
commercializing bioanalytical instrumentation systems incorporating certain
Illumina and Applera technology;
WHEREAS, on December 3, 2002, Applera served a notice and demand for
arbitration on Illumina regarding disputes alleged to be under the Joint
Development Agreement ("the Arbitration");
WHEREAS, on December 11, 2002, Illumina filed a complaint for breach of
contract, declaratory relief, and other causes of action against Applera,
including claims relating to the Joint Development Agreement in San Diego County
Superior Court, Case No. GIC 801618 ("the State Court Action"), and afterward
asked for and received a temporary restraining order and a preliminary
injunction staying Applera's arbitration demand;
WHEREAS, on May 2, 2003, Applera filed a cross-complaint in the State
Court Action for breach of contract, declaratory relief, and unfair competition,
and
WHEREAS, Applera and Illumina desire to settle all the claims,
cross-claims, and counterclaims that were asserted or could have been asserted
in the Patent Action, the
State Court Action, or the Arbitration, such settlement as provided in this
Settlement and Cross License Agreement;
NOW, THEREFORE, in consideration of the promises, terms, and conditions
set forth in this Settlement and Cross License Agreement, the parties, intending
to be legally bound, agree as follows:
ARTICLE I: DEFINITIONS
The following words and phrases shall have the meanings set forth below:
1.1 "Blocking Patents" are all patents, both domestic and foreign
counterparts, either currently or after the Effective Date, owned or licensed by
Applera, that claim inventions that would necessarily be infringed by Illumina
or its customers as a direct result of their manufacture, use, or sale of the
Defined Product, but excluding the Excluded Patent Claims.
1.2 "Defined Product" is Illumina's GoldenGate(TM) assay, as described in
Exhibit 1, as practiced through Illumina's products or services.
1.3 "Excluded Patent Claims" are claims in patents, both domestic and
foreign counterparts, either currently or after the Effective Date, owned or
licensed by Applera that claim inventions that are instruments, enzymes, dyes,
nucleic acid sequences, polymerase chain reaction (PCR) methods, or software.
1.4 "Modified Defined Product" shall mean a product (substantially similar
to a Defined Product and having all of the "steps" set forth on Exhibit 1
hereto) that is a modification of the Defined Product.
1.5 "Patents-In-Suit" [*}
1.6 "Party" shall mean Applera or Illumina, according to the appropriate
context and usage. "Parties" shall mean Applera and Illumina.
1.7 "Affiliate" means , with respect to a Party, any Person that, directly
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, such Party; where "control" refers to the
ownership, directly or indirectly, of the lesser of at least fifty percent (50%)
or the highest percentage permitted by applicable law of the voting securities
or other ownership interests of a Person (or Party) or otherwise the ability to
direct the management of such Person (or Party).
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1.8 "Person" means any individual, group, corporation, partnership,
limited liability company, joint venture, association or other organization or
entity (including, without limitation, any governmental agency or political
subdivision thereof).
1.9 A "Successor" shall mean an entity that acquires all or substantially
all of the assets of Applera or Illumina, or of one or more operating divisions
thereof, or an entity that merges into or with Applera or Illumina or any
Affiliate of either.
1.10 "Tag Sequences" are those particular sequences as set forth in
Exhibit 2 to this Agreement, developed under the First Amendment to Joint
Development Agreement, dated March 27, 2001.
ARTICLE II: REPRESENTATIONS AND WARRANTIES
2.1 Applera represents and warrants that it has legal power to extend the
rights granted to Illumina in this Agreement with respect to the Patents-In-Suit
and the Blocking Patents and any other rights granted hereunder and that it has
not made and will not make any commitments to others inconsistent with or in
derogation of such rights. Applera represents and warrants that (i) it owns the
Patents-In-Suit and has the right to grant releases and licenses with respect to
such patents of the full scope set forth herein and (ii) it has not assigned or
otherwise transferred to any third party any of its rights to any causes of
action, damages, or other remedies, or any patents, claims, counterclaims or
defenses, relating to the Patent Action, the State Court Action, or the
Arbitration.
2.2 Illumina represents and warrants that it has legal power to extend the
rights granted to Applera in this Agreement and that it has not made and will
not make any commitments to others inconsistent with or in derogation of such
rights. Illumina represents and warrants that it has not assigned or otherwise
transferred to any third party any of its rights to any causes of action,
damages, or other remedies, or any patents, claims, counterclaims or defenses,
relating to the Patent Action, the State Court Action, or the Arbitration.
ARTICLE III: TERM AND TERMINATION
3.1 Term: Once executed by Applera and Illumina, this Agreement will
become effective as of the Effective Date and will remain in effect
indefinitely.
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ARTICLE IV: PATENT LICENSE, DISMISSAL, AND RELEASE
4.1 General Release of Illumina: Subject to Illumina's payment pursuant to
section 5.1, Applera, on behalf of itself, its agents, assigns, and Successors
hereby fully and forever releases Illumina and its past and present officers,
directors, attorneys, Affiliates, employees, assigns, and Successors with
respect to any and all liabilities, claims, counterclaims, claims for injunctive
relief, demands, contracts, debts, obligations, and causes of action of any
nature, kind, and description, whether in law, equity, or otherwise, whether or
not now known or ascertained (collectively, "Claims"), to the extent they do or
may exist on or before the Effective Date, including but not limited to any
matter, cause, or claims arising out of, or which is related to, or connected
with the claims alleged in the Patent Action, the State Court Action, or the
Arbitration, except Inventorship Claims. Inventorship Claims are defined as
follows: a claim by either Party that an invention claimed in an issued patent
therefor contains Collaboration Joint Intellectual Property (to which that Party
asserts rights under section 6 of the JDA) or Collaboration [PEB or Illumina]
Intellectual Property (to which that Party asserts rights under section 6 of the
JDA). Inventorship Claims will be decided by sending a notice to initiate a
"meet and confer" process which shall be initiated no later than one hundred
twenty (120) days from the Effective Date of this agreement as to any issued
patents, (and within five days of the Effective Date, Illumina will give Applera
notice of all such issued patents) and if such process fails, then arbitration
under the JAMS Comprehensive Arbitration Rules and Procedures, which arbitration
shall be final, binding, and non-appealable. Judge Legge or Judge Lynch shall be
the arbitrator, and if neither is available, the parties shall try to agree on
an arbitrator. If they cannot agree on one, JAMS shall select the arbitrator,
which selection shall be final and binding. Any Inventorship Claim shall be
subject to the "clear and convincing" evidence standard and case law of the
Court of Appeals for the Federal Circuit.
As to any patents that have not have not issued as of the Effective Date,
the Inventorship Claim shall be brought within ninety (90) days of notice of
issuance of such patent by one party to the other, except that no Inventorship
Claim as to patents may be brought subsequent to five (5) years from the
Effective Date of this agreement. Moreover, only one Inventorship Claim may be
brought per invention, irrespective of whether such invention issues in multiple
jurisdictions. Inventorship will be corrected, if necessary, in all
jurisdictions in accordance with the resolution of the Inventorship Claim.
Although the Release of this section 4.1 will operate to the benefit of a
Successor of Illumina, the Parties understand and agree that they do not intend
to, and do not, release any Successor from any liability to Applera that the
Successor may have independently incurred prior to its becoming a Successor to
Illumina. The foregoing Release in this section 4.1 shall not apply to any
Claims that arise after the Effective Date.
4.2 Subject to the licenses granted pursuant to sections 4.5 and and the
covenant not to sue granted pursuant to section 4.7, the general release in
sections 4.1 shall not apply to any infringing acts that occur after the
Effective Date of this Settlement
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and Cross-License Agreement. The parties intend by this section 4.2 to
distinguish Augustine Medical, Inc. v. Progressive Dynamics, Inc., 194 F.3d 1367
(Fed. Cir. 1999).
4.3 General Release of Applera: Illumina, on behalf of itself, its agents,
assigns, and Successors hereby fully and forever releases Applera and its past
and present officers, directors, attorneys, Affiliates, employees, assigns, and
Successors with respect to any and all Claims, to the extent they do or may
exist on or before the Effective Date, including but not limited to any matter,
cause, or claim arising out of, which is related to, or connected with the
claims alleged in the Patent Action, the State Court Action, or the Arbitration
except Inventorship Claims as defined in section 4.1. Although this Release will
operate to the benefit of a Successor of Applera, the Parties understand and
agree that they do not intend to, and do not release any Successor from any
liability to Illumina that the Successor may have independently incurred prior
to its becoming a Successor to Applera. The foregoing release shall not apply to
any Claims that arise after the Effective Date.
4.4 Waiver of California Civil Code Section 1542: Applera and Illumina
hereby expressly waive any and all rights and benefits conferred to them by the
provisions of Section 1542 of the Civil Code of the State of California, or any
analogous or similar state law or federal law or regulation. California Civil
Code Section 1542 states as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
Applera and Illumina agree, understand, and recognize that, by executing this
Agreement, they hereby expressly waive any and all rights and benefits conferred
upon them by the provisions of Section 1542 of the Civil Code of the State of
California, and do so understanding the significance and consequences of such
waiver.
4.5 Applera License Grant To Illumina: [*]
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[*]
4.6 Illumina License Grant To Applera: Illumina grants to Applera and its
Affiliates the non-exclusive, paid-up, royalty-free, world-wide, perpetual right
and license to make, have made, import, export, use, lease, offer to sell, sell,
have sold, or otherwise dispose of Tag Sequences for any existing or future
Applera products or services including, without limitation, arrays, instruments,
oligonucleotide products, reagents, or commercial services. Illumina grants to
all direct and indirect purchasers of Applera's Tag Sequences, the
non-exclusive, world-wide, perpetual, right and license to use, lease, import,
export, offer to sell, sell, or otherwise dispose of Applera's Tag Sequences
purchased from Applera. No right to sublicense is granted except as specifically
provided for in this paragraph.
4.7 Applera Covenants Not To Sue:
(a) [*]
(b) [*]
4.8 Illumina Covenants Not To Sue:
(a) Illumina covenants that at no time will it, its Successors, or
its assigns make any claim or commence or prosecute against Applera, or its
officers, directors, attorneys, shareholders, affiliated or related companies,
Affiliates, employees, agents, assigns, Successors, distributors, customers
(direct or indirect), or other transferees any suit, action, arbitration, or
proceeding of any kind based on the manufacture, use, sale, offer for sale, or
importation of Tag Sequences for any existing or future Applera products or
services including, without limitation, arrays, instruments, oligonucleotide
products, reagents, or commercial services. This covenant not to sue is limited
to Tag Sequences, however, and does not prevent Illumina from suing Applera for
infringement of patents not claiming Tag Sequences with respect to Applera
products or services merely because such products or services contain or use a
Tag Sequence.
(b) Illumina covenants not to sue, or encourage, or pursue, directly
or
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indirectly, any litigation, suit, proceeding, charge, claim, arbitration, or
complaint against Applera or its officers, directors, attorneys, shareholders,
affiliated or related companies, Affiliates, employees, agents, assigns,
Successors, distributors, customers (direct or indirect), or other transferees
relating in any way to or arising out of any matter covered by the General
Release in paragraph 4.3 above.
4.9 Dismissal of the Patent Action, and the State Court Action, and the
Arbitration: After execution of this Agreement, and Illumina's payment pursuant
to section 5.1, the Parties shall direct their respective counsel as soon as
reasonably practicable to execute and file with the United States District Court
for the Northern District of California, the San Diego County Superior Court,
and the CPR Institute for Dispute Resolution, Stipulated Orders of Dismissal
("Stipulations").
ARTICLE V: CONSIDERATION
5.1 Payment by Illumina: In consideration of the mutual promises and
covenants contained in this Agreement, Illumina agrees to pay Applera by wire
transfer the sum of $8,500,000.00 no later than fifteen (15) days after
execution of this Agreement.
5.2 Fully Paid-Up License: At such time as Illumina has paid the payment
pursuant to section 5.1, Applera agrees that Illumina has a fully paid-up
license for the Patents-In-Suit pursuant to section 4.5 of this Agreement and an
irrevocable covenant not to sue for the Blocking Patents pursuant to section
4.7, and no further sums are due under the license for the terms of the
Patents-In-Suit.
5.3 Transfer of Agreement by Licensees: Illumina and Applera as licensees
and recipients of covenants not to sue shall have the right to assign or
transfer their respective rights or delegate their respective obligations under
this Agreement to their Successors without the prior written consent of the
other Party.
5.4 Transfer by Licensors: This Agreement shall be binding upon the
Successor or assignees of the rights of each Party as licensors or as promisors
regarding the covenants not to sue contained in this Agreement, and Applera or
Illumina, as applicable, shall require that the Successor or assignee agree in
writing to maintain such licenses or covenants not to sue.
ARTICLE VI: NEGATION OF WARRANTIES & DISCLAIMER
6.1 Nothing contained in this Agreement shall be construed as:
(a) A warranty or representation by Applera as to the validity,
scope, or enforceability of the Patents-In-Suit or the Blocking Patents; or
(b) An admission by Illumina that any of its products or services
infringe any of the Patents-In-Suit or the Blocking Patents; or
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(c) A warranty or representation by Applera or Illumina that
anything made, used, offered for sale, sold, leased, or otherwise disposed of
under a license granted in this Agreement is or will be free of infringement of
patents of third parties; or
(d) A requirement that Applera or Illumina shall file any patent
application, secure any patent, or maintain any patent in force; or
(e) An admission by Illumina that the Defined Product is a
Collaboration Product under the Joint Development Agreement; or
(f) Conferring a right on either Party to use in advertising,
publicity, or otherwise any trademark or trade name of the other Party.
6.2 Applera makes no representations, extends no warranties of any kind,
whether express or implied, including, but not limited to, the warranties of
merchantability and fitness for a particular purpose, and assumes no
responsibilities whatever with respect to the manufacture, use, sale, lease, or
other disposition by Illumina or its vendees or other transferees of products
made by Illumina incorporating or made by use of inventions covered by the
Patents-In-Suit licensed under this Agreement or covered by the Blocking
Patents. Illumina agrees to assume all financial and service obligations for
Illumina products or services manufactured, used, offered for sale, sold,
leased, or otherwise disposed of by it, and Applera shall not incur any
liability or responsibility to Illumina or to third parties for any failure in
production, design, operation, or otherwise for Illumina products or services
manufactured, used, offered for sale, sold, leased, or otherwise disposed of by
Illumina. In no event shall Applera be liable for consequential damages or
contingent liabilities arising out of the failure of Illumina products or
services to operate properly. This Section 6.2 shall survive the termination of
this Agreement.
6.3 Illumina makes no representations, extends no warranties of any kind,
whether express or implied, including, but not limited to, the warranties of
merchantability and fitness for a particular purpose, and assumes no
responsibilities whatever with respect to the manufacture, use, sale, lease, or
other disposition by Applera or its vendees or other transferees of products
made by Applera incorporating or made by use of inventions licensed to Applera
under this Agreement. Applera agrees to assume all financial and service
obligations for Applera's products or services manufactured, used, offered for
sale, sold, leased, or otherwise disposed of by it, and Illumina shall not incur
any liability or responsibility to Applera or to third parties for any failure
in production, design, operation, or otherwise for Applera products or services
manufactured, used, offered for sale, sold, leased, or otherwise disposed of by
Applera. In no event shall Illumina be liable for consequential damages or
contingent liabilities arising out of the failure of the Applera products or
services to operate properly. This Section 6.3 shall survive the termination of
this Agreement.
ARTICLE VII: CONFIDENTIALITY
7.1 This Agreement shall be confidential, except as noted in this
paragraph.
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(a) Each Party shall have the right to issue a press release within
two days of the execution of this Agreement. Neither Party may issue any
subsequent press release or written publication about this Agreement without the
prior written consent of the other Party. Neither Party will be required to
issue any press release. No Party shall make any disparaging remarks about the
other Party in any press release.
(b) Either Party is permitted to make such disclosure of any aspect
of this Agreement as is necessary to comply with applicable laws or regulations;
provided, however, that the disclosing Party shall provide reasonable prior
notification to the other Party and an opportunity for such other Party to seek
a protective order or other injunctive relief to limit or protect the
confidentiality of such disclosure.
ARTICLE VIII: MISCELLANEOUS
8.1 Termination of the Joint Development Agreement: The Parties hereby
agree that the Joint Development Agreement, including any later amendments or
modifications to the Joint Development Agreement, is terminated no later than
the Effective Date of this Agreement, pursuant to section 11.2.1 of the Joint
Development Agreement.
8.2 Entire Agreement: This Agreement and the attachments constitute the
entire and complete understanding of the Parties, and supersede all previous
communications, representations, understandings, or agreements, whether written
or oral, with respect to the subject matter of this Agreement. This Agreement
and any of the attachments may be amended or modified only by written instrument
executed by each Party.
8.3 Remedies: Waiver of one right or remedy will not be deemed a waiver of
any other right or remedy.
8.4 Modification - Waiver: No cancellation, modification, amendment,
deletion, addition, or other change in this Agreement or any provision of this
Agreement, or waiver of any right or remedy provided, shall be effective for any
purpose unless specifically set forth in a writing signed by the Party to be
bound by the change. No waiver of any right or remedy in respect of any
occurrence or event on one occasion shall be deemed a waiver of such right or
remedy in respect of such occurrence or event on any other occasion.
8.5 Controlling Law: All questions concerning the validity and operation
of this Agreement and the performance of the obligations imposed upon the
Parties under this Agreement will be governed by the laws of the State of
California, without giving effect to conflict of law provisions.
8.6 Agreement Severability: If any provision of this Agreement is held
invalid, such invalidity shall not affect other provisions of this Agreement.
The Parties agree to promptly negotiate in good faith to modify any invalid
provision consistent with the spirit and intentions of this Agreement and the
attachments.
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8.7 Notices: Any notice that is required or permitted to be given pursuant
to this Agreement shall be sent by facsimile, confirmed contemporaneously by
certified mail, postage prepaid, return receipt requested, or by hand delivery
with a signed receipt, to the addresses set forth below, or to such other
address as either Party may from time to time notify the other of in writing:
Illumina: Applera:
Illumina, Inc. Applied Biosystems Group
9885 Towne Centre Drive 850 Lincoln Centre Drive
San Diego, California 92121 Foster City, California 94404
Attn: Mr. Jay Flatley Attn: Legal Department
With a copy to: With a copy to:
James J. Elacqua Matthew D. Powers
Craig Y. Allison Vernon M. Winters
Dewey Ballantine LLP Weil, Gotshal & Manges LLP
1950 University Ave. 201 Redwood Shores Parkway
East Palo Alto, Cal. 94303 Redwood Shores, Cal. 94065
Either Party may change the person or location that can receive notices
upon thirty days prior written notice to the other Party.
8.8 The Parties agree and consent to execute such other documents or
instruments as may be necessary to effectuate the terms, conditions, and the
Parties' intentions as reflected in this Agreement. The Parties covenant that
they will work diligently and in good faith to resolve any dispute that may
arise under this Agreement or the attachments.
8.9 No Admission of Liability: The Parties acknowledge and agree that the
execution or provisions of this Agreement will not constitute any admissions of
infringement or liability of any kind by either Party.
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8.10 Signatory Authority: The Parties acknowledge that they have reviewed
the terms and conditions of this Agreement and the attachments with counsel. By
affixing their signatures, each person signing this Agreement and the
attachments personally warrants that he has been duly authorized and has full
authority: (a) to execute this Agreement or the attachment on behalf of the
Party on whose behalf he is signing, and (b) irrevocably to bind such Party and
its successors and assigns to the terms thereof.
Applera Corporation
By: /s/ PAUL GROSSMAN
--------------------------------
Paul Grossman, Ph.D.
Vice President, Intellectual Property,
Applied Biosystems Group and
Assistant Secretary, Applera
Corporation
Date: 8/18/04
Illumina, Inc.
By: /s/ JAY FLATLEY
--------------------------------
Jay Flatley
President and CEO
Date: 8/18/04
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EXHIBIT 1
Description of the GoldenGate(TM) Assay
Illumina's GoldenGate(TM) assay involves all of the following steps:
[*]
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[*]Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
EXHIBIT 2
Tag Sequences
[*]
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[*]Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.