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CONFIDENTIAL
Exhibit 10.13
PUBLIC HEALTH SERVICE
PATENT LICENSE AGREEMENT-EXCLUSIVE
COVER PAGE
For PHS internal use only:
Patent License Number: L-226-96/D
Serial Numbers of Licensed Patents: U.S. PAT. 5,614,191 AND
U.S. PAT. 4,892,827
Licensee: NEOPHARM, INC.
CRADA Number (if applicable): N/A
Additional Remarks: None
This Patent License Agreement, hereinafter referred to as THE "AGREEMENT,"
consists of this Cover Page, an attached AGREEMENT, a Signature Page, Appendix
A (List of Patent(s) or Patent Applications(s)), Appendix B (Fields of Use and
Territory), Appendix C (Royalties), Appendix D (Benchmarks), and Appendix E
(Commercial Development Plan). The Parties to this AGREEMENT are:
1) The National Institutes of Health ("NIH"), the Centers for Disease Control
and Prevention ("CDC"), or the Food and Drug Administration ("FDA"),
hereinafter singly or collectively referred to as "PHS," agencies ("DHHS");
and
2) The person, corporation, or institution identified ABOVE AND/OR ON THE
Signature Page, having offices at the address indicated on the Signature
Page, hereinafter referred to as "Licensee."
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PHS PATENT LICENSE AGREEMENT--EXCLUSIVE
PHS and LICENSEE agree as follows:
1. BACKGROUND
1.01 In the course of conducting biomedical and behavioral research, PHS
investigators made inventions that may have commercial applicability.
1.02 By assignment of rights from PHS employees and other inventors, DHHS,
on behalf of the United States Government, owns intellectual property
rights claimed in any United States and foreign patent applications
or patents corresponding to the assigned inventions. DHHS also owns
any tangible embodiments of these inventions actually reduced to
practice by PHS.
1.03 The Assistant Secretary for Health of DHHS has delegated to PHS the
authority to enter into this AGREEMENT for the licensing of rights to
these inventions under 35 U.S.C. Sections 200-212, the Federal
Technology Transfer Act of 1986, 15 U.S.C. Section 3710a, and/or
the regulations governing the licensing of Government-owned
inventions, 37 CFR Part 404.
1.04 PHS desires to transfer these inventions to the private sector
through commercialization licenses to facilitate the commercial
development of products and processes for public use and benefit.
1.05 LICENSEE desires to acquire commercialization rights to certain of
these inventions in order to develop processes, methods, or
marketable products for public use and benefit.
2. DEFINITIONS
2.01 "BACKGROUND PATENT RIGHTS" shall mean U.S. Patent No. 4,892,827.
2.02 "BENCHMARKS" mean the performance milestones that are set forth in
Appendix D.
2.03 "COMMERCIAL DEVELOPMENT PLAN" means the written commercialization
plan attched as Appendix E.
2.04 "FIRST COMMERCIAL SALE" means the initial transfer by or on behalf of
LICENSEE or its sublicensees of LICENSED PRODUCTS or the initial
practice of a LICENSED PROCESS by or on behalf of LICENSEE or its
sublicensees in exchange for cash or some equivalent to which value
can be assigned for the purpose of determining NET SALES.
2.05 "GOVERNMENT" means the Government of the United States of America.
2.06 "LICENSED FIELDS OF USE" means the fields of use identified in
Appendix B.
2.07 "LICENSED PATENT RIGHTS" means the fields of use identified in
Appendix B.
a) U.S. patent applications and patents listed in Appendix A as such,
all divisions and continuations of these applications, all patents
issuing from such applications, divisions, and continuations,
and any reissues, reexaminations, and extensions of all such
patents;
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b) to the extent the following contain one or more claims directed to
the invention or inventions disclosed in a) above: i)
continuations-in-part of a) above; ii) all divisions and
continuations of these continuations-in-part; iii) all patents
issuing from such continuations-in-part, divisions, and
continuations; and iv) any reissues, reexaminations, AND EXTENSIONS
OF ALL SUCH PATENTS;
C) to the extent that the following contain one or more claims
directed to the invention or inventions disclosed in a) above: all
counterpart foreign applications and patents to a) and b) above,
including those listed in Appendix A.
LICENSED PATENT RIGHTS shall not include b) or c) above to the extent
that they contain one or more claims directed to new matter which
is not the subject matter disclosed in a) above.
2.08 "LICENSED PROCESS(es)" means processes which, in the course of being
practiced would, in the absence of this AGREEMENT, infringe one or
more claims of the LICENSED PATENT RIGHTS that have not been held
invalid or unenforceable by an unappealed or unappealable judgment
of a court of competent jurisdiction.
2.09 "LICENSED PRODUCT(s)" means tangible materials which, in the course
of manufacture, use, or sale would, in the absence of this
AGREEMENT, infringe one or more claims of the LICENSED PATENT RIGHTS
that have not been held invalid or unenforceable by an unappealed or
unappealable judgment of a court of competent jurisdiction.
2.10 "LICENSED TERRITORY" means the geographical area identified in
Appendix B.
2.11 "NET SALES" means the total gross receipts for sales of LICENSED
PRODUCTS or practice of LICENSED PROCESSES by or on behalf of
Licensee or its sublicensees, and from leasing, renting, or otherwise
making LICENSED PRODUCTS available to others without sale or other
dispositions, whether invoiced or not, less returns and allowances
actually granted, packing costs, insurance costs, freight out, taxes
or excise duties imposed on the transaction (if separately invoiced),
and wholesaler and cash discounts in amounts customary in the trade.
No deductions shall be made for commissions paid to individuals,
whether they be with independent sales agencies or regularly employed
by LICENSEE, or sublicensees, and on its payroll, or for the cost of
collections.
2.12 "PRACTICAL APPLICATION" means to manufacture in the case of a
composition or product, to practice in the case of a process or
method, or to operate in the case of a machine or system; and in each
case, under such conditions as to establish that the invention is
being utilized and that its benefits are to the extent permitted by
law or GOVERNMENT regulations available to the public on reasonable
terms.
2.13 "RESEARCH LICENSE" means a nontransferable, nonexclusive license to
make and to use the LICENSED PRODUCTS OR LICENSED PROCESSES as
defined by the LICENSED PATENT RIGHTS for purposes of research
including human clinical trials and not for purposes of commercial
manufacture or distribution or in lieu of purchase if LICENSED
PRODUCTS or LICENSED PROCESSES are marketed by LICENSEE.
3. GRANT OF RIGHTS
3.01 PHS hereby grants and LICENSEE accepts, subject to the terms and
conditions of this AGREEMENT, an exclusive license under the
LICENSED PATENT RIGHTS in the LICENSED TERRITORY to make and have
made, to use and have used, and to sell and have sold any LICENSED
PRODUCTS in the LICENSED FIELDS OF USE and to practice and have
practiced any LICENSED PROCESSES in the LICENSED FIELDS OF USE.
3.02 PHS hereby grants and LICENSEE accepts, subject to the terms and
conditions of this AGREEMENT, a non-exclusive license under the
BACKGROUND PATENT RIGHTS in the LICENSED TERRITORY to
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make and have made, to use and have used, and to sell and have sold
any LICENSED PRODUCTS in the LICENSED FIELDS OF USE and to practice
and have practiced any LICENSED PROCESSES in the LICENSED FIELDS OF
USE.
3.03 This AGREEMENT confers no license or rights by implication, estoppel,
or otherwise under any patent applications or patents of PHS other
than LICENSED PATENT RIGHTS and BACKGROUND PATENT RIGHTS regardless
of whether such patents are dominant or subordinate to LICENSED
PATENT RIGHTS or BACKGROUND PATENT RIGHTS.
4. SUBLICENSING
4.01 Upon written approval by PHS which will be given within thirty (30)
days of a written request by LICENSEE, said approval not to be
unreasonably withheld, LICENSEE may enter into sublicensing
agreements under the LICENSED PATENT RIGHTS.
4.02 LICENSEE agrees that any sublicenses granted by it shall provide
that the obligations to PHS of Paragraphs 5.01-5.04, 8.01,
10.01, 10.02, 12.05 and 13.07-13.09 of this AGREEMENT shall be
binding upon the sublicensee as if it were a party to this AGREEMENT.
LICENSEE further agrees to attach copies of these Paragraphs to all
sublicense agreements.
4.03 Any sublicenses granted by LICENSEE shall provide for the
termination of the sublicense, or the conversion to a license
directly between such sublicensees and PHS, at the option of the
sublicensee, upon termination of this AGREEMENT under Article 13.
Such conversion is subject to PHS approval and contingent upon
acceptance by the sublicensee of the remaining provisions of this
AGREEMENT.
4.04 LICENSEE agrees to forward to PHS a copy of each fully executed
sublicense agreement postmarked within thirty (30) days of the
execution of such agreement. To the extent permitted by law, PHS
agrees to maintain each such sublicense agreement in confidence.
5. STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS
5.01 PHS reserves on behalf of the GOVERNMENT an irrevocable,
nonexclusive, nontransferable, royalty-free license for the
practice of all inventions licensed under the LICENSED PATENT RIGHTS
throughout the world by or on behalf of the GOVERNMENT and on behalf
of any foreign government or international organization pursuant to
any existing or future treaty or agreement to which the GOVERNMENT is
a signatory. Prior to the FIRST COMMERCIAL SALE, LICENSEE agrees to
provide PHS reasonable quantities of LICENSED PRODUCTS or materials
made through the LICENSED PROCESSES for PHS research use including
for human clinical trials but not for purposes of commercial
development, manufacture or distribution.
5.02 LICENSEE agrees that products used or sold in the United States
embodying LICENSED PRODUCTS or produced through use of
LICENSED PROCESSES shall be manufactured substantially in the United
States, unless a written waiver is obtained in advance from PHS.
5.03 LICENSEE acknowledges that PHS may enter into future Cooperative
Research and Development Agreements (CRADAs) under the Federal
Technology Transfer Act of 1986 that relate to the subject matter of
this AGREEMENT. LICENSEE agrees not to unreasonably deny requests for
a Research License from such future collaborators with PHS when
acquiring such rights is necessary in order to make a CRADA project
feasible. LICENSEE may request an opportunity to join as a party to
the proposed CRADA.
5.04 In addition to the reserved license of Paragraph 5.01 above, PHS
reserves the right to grant such nonexclusive RESEARCH LICENSES
directly or to require LICENSEE to grant nonexclusive RESEARCH
LICENSES on reasonable terms. The purpose of this RESEARCH LICENSE is
to encourage basic
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research, whether conducted at an academic or corporate facility.
In order to safeguard the LICENSED PATENT RIGHTS, however, PHS shall
consult with LICENSEE before granting to commercial entities a
RESEARCH LICENSE or providing to them research samples of the
materials.
6. ROYALTIES AND REIMBURSEMENT
6.01 LICENSEE agrees to pay to PHS a noncreditable, nonrefundable
license issue royalty as set forth in Appendix C within
thirty (30) days from the date that this AGREEMENT becomes
effective.
6.02 LICENSEE agrees to pay to PHS a nonrefundable minimum annual
royalty as set forth in Appendix C. The minimum annual royalty
is due and payable on January 1 of each calendar year and may be
credited against any earned royalties due for sales made in that
year. The minimum annual royalty due for the first calendar year of
this AGREEMENT may be prorated according to the fraction of the
calendar year remaining between the effective date of this
AGREEMENT and the next subsequent January 1.
6.03 LICENSEE agrees to pay PHS earned royalties as set forth in
Appendix C.
6.04 LICENSEE agrees to pay PHS benchmark royalties as set forth in
Appendix C.
6.05 LICENSEE agrees to pay PHS sublicensing royalties as set forth in
Appendix C.
6.06 LICENSEE agrees to pay PHS assignment royalties as set forth in
Appendix C.
6.07 A claim of a patent or patent application licensed under
this AGREEMENT shall cease to fall within the LICENSED PATENT
RIGHTS or BACKGROUND PATENT RIGHTS for the purpose of computing the
minimum annual royalty and earned royalty payments in any given
country on the earliest of the dates that a) the claim has been
abandoned but not continued, b) the patent expires or irrevocably
lapses, or c) the claim has been held to be invalid or
unenforceable by an unappealed or unappealable decision of a court
of competent jurisdiction or administrative agency.
6.08 No multiple royalties shall be payable because any LICENSED
PRODUCTS or LICENSED PROCESSES are covered by more than one of the
LICENSED PATENT RIGHTS.
6.09(a) Transfer of LICENSED PRODUCTS by LICENSEE to sublicensees or an
affiliated party made in other than an arm's-length
transaction for no further resale shall be attributed a value which
would have been received in an arm's-length transaction of like
quantity and quality of products sold on or about the time of the
transfer of LICENSED PRODUCTS for the purpose of calculating NET
SALES.
6.09(b) Transfer of LICENSED PRODUCTS by LICENSEE to sublicensees or
affiliated party for further resale shall have attributed either
a value which would have been received in an arm's-length
transaction based on sales of like quantity and quality of products
transferred on or about the time of such transfer of LICENSED
PRODUCTS or the actual value received in a later arm's-length
transaction, whichever is greater, for purposes of calculating NET
SALES.
6.10(a) With regard to expenses associated with the preparation, filing,
prosecution, and maintenance of all patent applications and
patents included within the LICENSED PATENT RIGHTS incurred by PHS
prior to the effective date of this AGREEMENT, LICENSEE shall pay
to PHS, as an additional royalty, within sixty (60) days of PHS's
submission of a statement and request for payment to LICENSEE, an
amount equivalent to such patent expenses previously incurred by
PHS.
6.10(b) With regard to expenses associated with the preparation, filing,
prosecution, and maintenance of all patents included within the
BACKGROUND PATENT RIGHTS incurred by PHS prior to the effective
date of this AGREEMENT, LICENSEE shall pay to PHS, as an additional
royalty, within (60) days of
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PHS's submission of a statement and request for payment an amount
equivalent to three-thousand three-hundred dollars ($3,300.00).
6.11 With regard to expenses associated with the preparation, filing,
prosecution, and maintenance of all patent applications and
patents included within the LICENSED PATENT RIGHTS incurred by PHS
on or after the effective date of this AGREEMENT, PHS, at its sole
option, may require LICENSEE:
(a) to pay PHS on an annual basis, within sixty (60) days of PHS's
submission of a statement and request for payment, a royalty amount
equivalent to all such patent expenses incurred during the previous
calendar year(s); or
(b) to pay such expenses directly to the law firm employed by PHS to
handle such functions. However, in such event, PHS and not LICENSEE
shall be the client of such law firm.
Under exceptional circumstances, LICENSEE may be given the right
to assume responsibility for the preparation, filing, prosecution, or
maintenance of any patent application or patent included with the
LICENSED PATENT RIGHTS. In that event, LICENSEE shall directly pay
the attorneys or agents engaged to prepare, file, prosecute or
maintain such patent applications or patents and shall provide to PHS
copies of each invoice associated with such services as well as
documentation that such invoices have been paid.
6.12 LICENSEE may elect to surrender its rights in any country of
the LICENSED TERRITORY under any LICENSED PATENT RIGHTS upon
sixty (60) days written notice to PHS and owe no payment obligation
under Article 6.10 (a) for patent-related expenses incurred in that
country after the effective date of such written notice.
7. PATENT FILING, PROSECUTION, AND MAINTENANCE
7.01 Except as otherwise provided in this Article 7, PHS agrees to take
responsibility for, but to consult with, the LICENSEE in the
preparation, filing, prosecution, and maintenance of any and all
patent applications or patents included in the LICENSED PATENT RIGHTS
and shall furnish copies of relevant patent-related documents to
LICENSEE.
7.02 Upon PHS's written request, LICENSEE shall assume the
responsibility for the preparation, filing, prosecution, and
maintenance of any and all patent applications or patents included
in the LICENSED PATENT RIGHTS and shall on an ongoing basis
promptly furnish copies of all patent-related documents to PHS. In
such event, LICENSEE shall, subject to the prior approval of PHS,
select registered patent attorneys or patent agents to provide such
services on behalf of LICENSEE and PHS.PHS shall provide
appropriate powers of attorney and other documents necessary to
undertake such actions to the patent attorneys or patent agents
providing such services. LICENSEE and its attorneys or agents shall
consult with PHS in all aspects of the preparation, filing,
prosecution and maintenance of patent applications and patents
included within the LICENSED PATENT RIGHTS and shall provide PHS
sufficient opportunity to comment on any document that LICENSEE
intends to file or to cause to be filed with the relevant
intellectual property or patent office.
7.03 At any time, PHS may provide LICENSEE with written notice that PHS
wishes to assume control of the preparation, filing,
prosecution, and maintenance of any and all patent applications or
patents included in the LICENSED PATENT RIGHTS. If PHS elects to
assume such responsibilities, LICENSEE agrees to cooperate fully with
PHS, its attorneys and agents in the preparation, filing,
prosecution, and maintenance of any and all patent applications or
patents included in the LICENSED PATENT RIGHTS and to provide PHS
with complete copies of any and all documents or other materials that
PHS deems necessary to undertake such responsibilities. If PHS elects
to assume control of the preparation, filing, prosecution, and
maintenance of any and all patent applications or patents included in
the LICENSED PATENT RIGHTS for a reason other than LICENSEE'S failure
to perform under this AGREEMENT, PHS shall be responsible for all
costs associated with transferring patent prosecution
responsibilities to an attorney or agent of PHS's choice.
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7.04 Each party shall promptly inform the other as to all matters that
come to its attention that may affect the preparation, filing,
prosecution, or maintenance of the LICENSED PATENT RIGHTS and permit
each other to provide comments and suggestions with respect to the
preparation, filing, and prosecution of LICENSED PATENT RIGHTS, which
comments and suggestions shall be considered by the other party.
8. RECORD KEEPING
8.01 LICENSEE agrees to keep accurate and correct records of LICENSED
PRODUCTS made, used, or sold and LICENSED PROCESSES practiced under
this Agreement appropriate to determine the amount of royalties due
PHS. Such records shall be retained for at least five (5) years
following a given reporting period. They shall be available during
normal business hours for inspection at the expense of PHS by an
accountant or other designated auditor selected by PHS for the sole
purpose of verifying reports and payments hereunder. The accountant
or auditor shall only disclose to PHS information relating to the
accuracy of reports and payments made under this AGREEMENT. If an
inspection shows an underreporting or underpayment in excess of five
percent (5%) for any twelve (12) month period, then LICENSEE shall
reimburse PHS for the cost of the inspection at the time Licensee
pays the unreported royalties, including any late charges as required
by Paragraph 9.08 of this AGREEMENT. All payments required under this
Paragraph shall be due within thirty (30) days of the date PHS
provides LICENSEE notice of the payment due.
8.02 LICENSEE agrees to conduct an independent audit of sales and
royalties at least every two years if annual sales of the LICENSED
PRODUCT or LICENSED PROCESSES are over two (2) million dollars. The
audit may be conducted in conjunction with the annual audit performed
on behalf of LICENSEE. The audit shall address, at a minimum, the
amount of gross sales by or on behalf of LICENSEE during the audit
period, the amount of funds owed to the GOVERNMENT under this
AGREEMENT, and whether the amount owed has been paid to the
GOVERNMENT and is reflected in the records of the LICENSEE. A report
by the auditor shall be submitted promptly to PHS on completion.
LICENSEE shall pay for the entire cost of the audit.
9. REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS
9.01 Prior to signing this AGREEMENT, LICENSEE has provided to PHS the
COMMERCIAL DEVELOPMENT PLAN at Appendix F, under which
LICENSEE intends to bring the subject matter of the LICENSED PATENT
RIGHTS to the point of PRACTICAL APPLICATION. This COMMERCIAL
DEVELOPMENT PLAN is hereby incorporated by reference into this
Agreement. Based on this plan, performance BENCHMARKS are determined
as specified in Appendix D.
9.02 LICENSEE shall provide written annual reports on its product
development progress or efforts to commercialize under the
COMMERCIAL DEVELOPMENT PLAN for each of the LICENSED FIELDS OF USE
within sixty (60) days after December 31 of each calendar year. These
progress reports shall include, but not be limited to: progress on
research and development, status of applications for regulatory
approvals, manufacturing, sublicensing, marketing, and sales during
the preceding calendar year, as well as plans for the present
calendar year. PHS also encourages these reports to include
information on any of LICENSEE'S public service activities that
relate to the LICENSED PATENT RIGHTS. If reported progress differs
from that projected in the COMMERCIAL DEVELOPMENT PLAN and
BENCHMARKS, LICENSEE shall explain the reasons for such differences.
In any such annual report, LICENSEE may propose amendments to the
COMMERCIAL DEVELOPMENT PLAN, acceptance of which by PHS may not be
denied unreasonably. LICENSEE agrees to provide any additional
information reasonably required by PHS to evaluate LICENSEE'S
performance under this AGREEMENT. LICENSEE may amend the Benchmarks
at any time upon written consent by PHS. PHS shall not unreasonably
withhold approval of any request of LICENSEE to extend the time
periods of this schedule if such request is supported by a reasonable
showing by LICENSEE of diligence in its performance under the
COMMERCIAL DEVELOPMENT PLAN and toward bringing the
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LICENSED PRODUCTS to the point of practical application as defined
in 37 CFR 404.3(d). LICENSEE shall amend the COMMERCIAL
DEVELOPMENT PLAN and BENCHMARKS at the request of PHS to address any
LICENSED FIELDS OF USE not specifically addressed in the plan
originally submitted.
9.03 LICENSEE shall report to PHS the date of the FIRST COMMERCIAL SALE
in each country in the LICENSED TERRITORY within thirty (30) days
of such occurrence.
9.04 LICENSEE shall submit to PHS within sixty (60) days after each
calendar half-year ending June 30 and December 31 a royalty
report setting forth for the preceding half-year period the amount
of the LICENSED PRODUCTS sold or LICENSED PROCESSES practiced by or
on behalf of LICENSEE in each country within the LICENSED TERRITORY,
the NET SALES, and the amount of royalty accordingly due. With each
such royalty report, LICENSEE shall submit payment of the earned
royalties due. If no earned royalties are due to PHS for any
reporting period, the written report shall so state. The royalty
report shall be certified as correct by an authorized officer of
LICENSEE and shall include a detailed listing of all deductions made
under Paragraph 2.11 to determine NET SALES made under Article 6 to
determine royalties due.
9.05 LICENSEE agrees to forward semi-annually to PHS a copy of such
reports received by LICENSEE from its sublicensees during the
preceding half-year period as shall be pertinent to a royalty
accounting to PHS by LICENSEE for activities under the sublicense.
9.06 Royalties due under Article 6 shall be paid in U.S. dollars. For
conversion of foreign currency to U.S. dollars, the conversion
rate shall be the New York foreign exchange rate quoted in The Wall
Street Journal on the day that the payment is due. All checks and
bank drafts shall be drawn on United States banks and shall be
payable, as appropriate, for FDA or NIH licenses to the National
Institutes of Health, P.O. Box 360120, Pittsburgh, Pennsylvania
15251-6120. Any loss of exchange, value, taxes, or other expenses
incurred in the transfer or conversion to U.S. dollars shall be paid
entirely by LICENSEE. The royalty report required by Paragraph 9.04
of this AGREEMENT shall accompany each such payment and a copy of
such report shall also be mailed to PHS at its address for notices
indicated on the Signature Page of this AGREEMENT.
9.07 LICENSEE shall be solely responsible for determining if any tax on
royalty income is owed outside the United States and shall pay
any such tax and be responsible for all filings with appropriate
agencies of foreign governments. The taxes paid by LICENSEE on
behalf of PHS may be deducted from the earned royalty due under
paragraph 6.03.
9.08 Late charges will be assessed by PHS as additional royalties on any
overdue payments at a rate of one (1) percent per month
compounded monthly. The payment of such late charges shall not
prevent PHS from exercising any other rights it may have as a
consequence of the lateness of any payment.
9.09 All plans and reports required by this Article 9 and marked
"confidential" by LICENSEE shall, to the extent permitted by law, be
treated by PHS as commercial and financial information obtained from
a person and as privileged and confidential and any proposed
disclosure of such records by the PHS under the Freedom of
Information Act, 5 U.S.C. Section 552 shall be subject to the
predisclosure notification requirements of 45 CFR Section 5.65(d).
10. PERFORMANCE
10.01 LICENSEE shall use its reasonable best efforts to bring
the License Products and Licensed Processes to Practical
Application. "Reasonable best efforts" for the purposes of this
provision shall include adherence to the COMMERCIAL DEVELOPMENT
PLAN at Appendix F and performance of the BENCHMARKS at Appendix
D. The efforts of a sublicensee shall be considered the efforts of
LICENSEE.
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10.02 Upon the FIRST COMMERCIAL SALE, until the expiration of this
Agreement, LICENSEE shall use its reasonable best efforts to make
LICENSED PRODUCTS and LICENSED PROCESSES reasonably accessible to
the United States public.
11. INFRINGEMENT AND PATENT ENFORCEMENT
11.01 PHS and LICENSEE agree to notify each other promptly of each
infringement or possible infringement of the LICENSED PATENT RIGHTS,
as well as any facts which may affect the validity, scope, or
enforceability of the LICENSED PATENT RIGHTS of which either Party
becomes aware.
11.02 Pursuant to this AGREEMENT and the provisions of Chapter 29 of
title 35, United States Code, LICENSEE may a) bring suit in its own
name, at its own expense, and on its own behalf for infringement
of presumably valid claims in the LICENSED PATENT RIGHTS; b) in any
such suit, enjoin infringement and collect for its use, damages,
profits, and awards of whatever nature recoverable for such
infringement; and c) settle any claim or suit for infringement of
the LICENSED PATENT RIGHTS provided, however, that PHS and
appropriate GOVERNMENT authorities shall have the first right to
take such actions. If LICENSEE desires to initiate a suit for patent
infringement, LICENSEE shall notify PHS in writing. If PHS does not
notify LICENSEE of its intent to pursue legal action within ninety
(90) days, LICENSEE will be free to initiate suit. PHS shall have a
continuing right to intervene in such suit. LICENSEE shall take no
action to compel the GOVERNMENT either to initiate or to join in any
such suit for patent infringement. LICENSEE may request the
GOVERNMENT to initiate or join in any such suit if necessary to
avoid dismissal of the suit. Should the GOVERNMENT be made a party
to any such suit, LICENSEE shall reimburse the GOVERNMENT for any
costs, expenses, or fees which the GOVERNMENT incurs as a result of
such motion or other action, including any and all costs incurred by
the GOVERNMENT in opposing any such motion or other action. In all
cases, LICENSEE agrees to keep PHS reasonably apprised of the status
and progress of any litigation. Before LICENSEE commences an
infringement action, LICENSEE shall notify PHS and give careful
consideration to the views of PHS and to any potential effects of
the litigation on the public health in deciding whether to bring
suit.
11.03 In the event that a declaratory judgment action alleging invalidity
or non-infringement of any of the LICENSED PATENT RIGHTS shall be
brought against LICENSEE or raised by way of counterclaim or
affirmative defense in an infringement suit brought by LICENSEE
under Paragraph 11.02, pursuant to this AGREEMENT and the provisions
of Chapter 29 of Title 35, United States Code or other statutes,
LICENSEE may a) defend the suit in its own name, at its own expense,
and on its own behalf for presumably valid claims in the LICENSED
PATENT RIGHTS; b) in any such suit, ultimately to enjoin
infringement and to collect for its use, damages, profits, and
awards of whatever nature recoverable for such infringement; and c)
settle any claim or suit for declaratory judgment involving the
LICENSED PATENT Rights-provided, however, that PHS and appropriate
Government authorities shall have the first right to take such
actions and shall have a continuing right to intervene in such suit.
If PHS does not notify LICENSEE of its intent to respond to the
legal action within a reasonable time, LICENSEE will be free to do
so. Licensee shall take no action to compel the GOVERNMENT either to
initiate or to join in any such declaratory judgment action.
LICENSEE may request the GOVERNMENT to initiate or to join any such
suit if necessary to avoid dismissal of the suit. Should the
GOVERNMENT be made a party to any such suit by motion or any other
action of LICENSEE, LICENSEE shall reimburse the GOVERNMENT for any
costs, expenses, or fees which the GOVERNMENT incurs as a result of
such motion or other action. If LICENSEE elects not to defend
against such declaratory judgment action, PHS, at its option, may do
so at its own expense. In all cases, LICENSEE agrees to keep PHS
reasonably apprised of the status and progress of any litigation.
Before LICENSEE commences an infringement action, LICENSEE shall
notify PHS and give careful consideration to the views of PHS and to
any potential effects of the litigation on the public health in
deciding whether to bring suit.
11.04 In any action under Paragraphs 11.02 or 11.03, the expenses
including costs, fees, attorney fees, and disbursements,
shall be paid by LICENSEE. Up to twenty-five percent (25%) of such
expenses may be credited against the royalties payable to PHS under
Paragraph 6.03 under the LICENSED
10
PATENT RIGHTS in the country in which such a suit is filed. In the
event that twenty-five percent (25%) of such expenses exceed the
amount of royalties payable by LICENSEE in any calendar year, the
expenses in excess may be carried over as a credit on the same basis
into succeeding calendar years. A credit against litigation
expenses, however, may not reduce the royalties due in any calendar
year to less than the minimum annual royalty. Any recovery made by
LICENSEE, through court judgment or settlement, first shall be
applied to reimburse PHS for royalties withheld as a credit against
litigation expenses and then to reimburse LICENSEE for its
litigation expense. Any remaining recoveries shall be split with
seventy-five (75%) going to Licensee and twenty-five percent (25%)
going to PHS.
11.05 PHS shall cooperate fully with LICENSEE in connection with any
action under Paragraphs 11.02 or 11.03. PHS agrees promptly
to provide access to all necessary documents and to render
reasonable assistance in response to a request by LICENSEE.
12. NEGATION OF WARRANTIES AND INDEMNIFICATION
12.01 PHS offers no warranties other than those specified in Article 1.
12.02 PHS does not warrant the validity of the LICENSED PATENT
RIGHTS and makes no representations whatsoever with regard to the
scope of the LICENSED PATENT RIGHTS, or that the LICENSED PATENT
RIGHTS may be exploited without infringing other patents or other
intellectual property rights of third parties.
12.03 PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER OR
DEFINED BY THE CLAIMS OF THE LICENSED PATENT RIGHTS.
12.04 PHS does not represent that it will commence legal actions against
third parties infringing the LICENSED PATENT RIGHTS.
12.05 LICENSEE shall indemnify and hold PHS, its employees, students,
fellows, agents, and consultants harmless from and against all
liability, demands, damages, expenses, and losses, including but not
limited to death, personal injury, illness, or property damage in
connection with or arising out of a) the use by or on behalf of
LICENSEE, its sublicensees, directors, employees, or third parties
of any LICENSED PATENT RIGHTS, or b) the design, manufacture,
distribution, or use of any LICENSED PRODUCTS, LICENSED PROCESSES or
materials by Licensee, or other products or processes developed in
connection with or arising out of the LICENSED PATENT RIGHTS.
LICENSEE agrees to maintain a liability insurance program consistent
with sound business practice.
13. TERM TERMINATION. AND MODIFICATION OF RIGHTS
13.01 This AGREEMENT is effective when signed by all parties and
shall extend to the expiration of the last to expire of the
LICENSED PATENT RIGHTS unless sooner terminated as provided in
this Article 13.
13.02 In the event that LICENSEE is in default in the performance of any
material obligations under this AGREEMENT, including but not
limited to the obligations listed in Article 13.05, and if the
default has not been remedied within ninety (90) days after the date
of notice in writing of such default, PHS may terminate this
AGREEMENT by written notice.
13.03 In the event that LICENSEE becomes insolvent, files a petition in
bankruptcy, has such a petition filed against it, determines to
file a petition in bankruptcy, or receives notice of a third party's
intention to file an involuntary petition in bankruptcy, LICENSEE
shall immediately notify PHS in writing.
13.04 LICENSEE shall have a unilateral right to terminate this AGREEMENT
and/or any licenses in any
11
country by giving PHS sixty (60) days written notice to that
effect.
13.05 PHS shall specifically have the right to terminate or modify, at
its option, this AGREEMENT, if PHS determines that the LICENSEE:
1) is not executing the COMMERCIAL DEVELOPMENT PLAN submitted
with its request for a license and the LICENSEE cannot otherwise
demonstrate to PHS's satisfaction that the LICENSEE has taken,
or can be expected to take within a reasonable time, effective
steps to achieve practical application of the LICENSED PRODUCTS
or LICENSED PROCESSES; 2) has not achieved the Benchmarks as may
be modified under Paragraph 9.02; 3) has willfully made a false
statement of, or willfully omitted, a material fact in the
license application or in any report required by the license
agreement; 4) has committed a material breach of a covenant or
agreement contained in the license; 5) is not keeping LICENSED
PRODUCTS or LICENSED PROCESSES reasonably available to the
public after commercial use commences; 6) cannot reasonably
satisfy unmet health and safety needs; or 7) cannot reasonably
justify a failure to comply with the domestic production
requirement of Paragraph 5.02 unless waived. In making this
determination, PHS will take into account the normal course of
such commercial development programs conducted with sound and
reasonable business practices and judgment and the annual
reports submitted by LICENSEE under Paragraph 9.02. Prior to
invoking this right, PHS shall give written notice to LICENSEE
providing LICENSEE specific notice of, and a ninety (90) day
opportunity to respond to, PHS's concerns as to the previous
items 1) to 7). If LICENSEE fails to alleviate PHS's concerns as
to the previous items 1) to 7) or fails to initiate corrective
action to PHS's satisfaction, PHS may terminate this AGREEMENT.
13.06 When the public health and safety so require, and after written
notice to LICENSEE providing LICENSEE a sixty (60) day
opportunity to respond, PHS shall have the right to require
LICENSEE to grant sublicenses to responsible applicants, on
resonable terms, in any Licensed Fields of Use under the
Licensed Patent Rights, unless LICENSEE can reasonably
demonstrate that the granting of the sublicense would not
materially increase the availability to the public of the
subject matter of the LICENSED PATENT RIGHTS. PHS will not
require the granting of a sublicense unless the responsible
applicant has first negotiated in good faith with LICENSEE.
13.07 PHS reserves the right according to 35 U.S.C. Section 209(f)(4)
to terminate or modify this AGREEMENT if it is determined that
such action is necessary to meet requirements for public use
specified by federal regulations issued after the date of the
license and such requirements are not reasonably satisfied by
LICENSEE.
13.08 Within thirty (30) days of receipt of written notice of PHS's
unilateral decision to modify or terminate this Agreement,
LICENSEE may, consistent with the provisions of 37 CFR 404.11,
appeal the decision by written submission to the designated PHS
official. The decision of the designated PHS official shall be
the final agency decision. LICENSEE may thereafter exercise any
and all administrative or judicial remedies that may be
available.
13.09 Within ninety (90) days of termination of this AGREEMENT under
this Article 13 or expiration under Paragraph 3.02, a final
report shall be submitted by LICENSEE. Any royalty payments,
including those related to patent expense, due to PHS shall
become immediately due and payable upon termination or
expiration. If terminated under this Article 13, sublicensees
may elect to convert their sublicenses to direct licenses with
PHS pursuant to Paragraph 4.03.
14. GENERAL PROVISIONS
14.01 Neither Party may waive or release any of its rights or
interests in this AGREEMENT except in writing. The failure of
the GOVERNMENT to assert a right hereunder or to insist upon
compliance with any term or condition of this AGREEMENT shall
not constitute a waiver of that right by the GOVERNMENT or
excuse a similar subsequent failure to perform any such term or
condition by LICENSEE.
14.02 This AGREEMENT constitutes the entire agreement between the
Parties relating to the subject
12
matter of the LICENSED PATENT RIGHTS, and all negotiations,
representations, agreements, and understandings are merged into,
extinguished by, and completely expressed by this AGREEMENT.
14.03 The provisions of this AGREEMENT are severable, and in the event that
any provision of this AGREEMENT shall be determined to be invalid or
unenforceable under any controlling body of law such determination shall
not in any way affect the validity or enforceability of the remaining
provisions of this AGREEMENT.
14.04 If either Party desires a modification to this AGREEMENT, the Parties
shall, upon reasonable notice of the proposed modification by the Party
desiring the change, confer in good faith to determine the desirability
of such modification. No modification will be effecffve until a written
amendment is signed by the signatories to this AGREEMENT or their
designees.
14.05 The construction, validity, performance, and effect of this AGREEMENT
shall be governed by Federal law as applied by the Federal courts in the
District of Columbia.
14.06 All notices required or permitted by this AGREEMENT shall be given by
prepaid, first class, registered or certified mail properly addressed to
the other Party at the address designated on the following Signature
Page, or to such other address as may be designated in writing by such
other Party, and shall be effective as of the date of the postmark of
such notice..
14.07 This AGREEMENT shall not be assigned by LICENSEE except a) with the
prior written consent of PHS, such consent not to be withheld
unreasonably; or b) as part of a sale or transfer of substantially the
entire business of LICENSEE relating to operations which concern this
Agreement. LICENSEE shall notify PHS within ten (10) days of any
assignment of this Agreement by LICENSEE.
14.08 LICENSEE agrees in its use of any PHS-supplied materials to comply with
all applicable statutes, regulations, and guidelines, including Public
Health Service and National Institutes of Health regulations and
guidelines. LICENSEE agrees not to use the materials for research
involving human subjects or clinical trials in the United States without
complying with 21 CFR Part 50 and 45 CFR Part 46. Licensee agrees not to
use the materials for research involving human subjects or clinical
trials outside of the United States without notifying PHS, in writing, of
such research or trials and complying with the applicable regulations of
the appropriate national control authorities.. Written notification to
PHS of research involving human subjects or clinical trials outside of
the United States shall be given no later than sixty (60) days prior to
commencement of such research or trials.
14.09 LICENSEE acknowledges that it is subject to and agrees to abide by
the United States laws and regulations (including the Export
Administration Act of 1979 and Arms Export Control Act) controlling the
export of technical data, computer software, laboratory prototypes,
biological material, and other commodities. The transfer of such items
may require a license from the cognizant Agency of the U.S. GOVERNMENT
or written assurances by LICENSEE that it shall not export such items
to certain foreign countries without prior approval of such agency. PHS
neither represents that a license is or is not required or that, if
required, it shall be issued.
14.10 LICENSEE agrees to mark the LICENSED PRODUCTS or their packaging sold
in the United States with all applicable U.S. patent numbers and
similarly to indicate "Patent Pending" status. All LICENSED PRODUCTS
manufactured in, shipped to, or sold in other countries shall be marked
in such a manner as to preserve PHS patent rights in such countries.
14.11 By entering into this AGREEMENT, PHS does not directly or indirectly
endorse any product or service provided, or to be provided, by LICENSEE
whether directly or indirectly related to this Agreement. LICENSEE shall
not state or imply that this AGREEMENT is an endorsement by the
GOVERNMENT, PHS, any other GOVERNMENT organizational unit, or any
GOVERNMENT employee.
13
Additionally, LICENSEE shall not use the names of NIH, CDC, PHS,
or DHHS or the GOVERNMENT or their employees in any advertising,
promotional, or sales literature without the prior written
consent of PHS.
14.12 The Parties agree to attempt to settle amicably any controversy
or claim arising under this Agreement or a breach of this
Agreement, except for appeals of modifications or termination
decisions provided for in Article 13. LICENSEE agrees first to
appeal any such unsettled claims or controversies to the
designated PHS official, or designee, whose decision shall be
considered the final agency decision. Thereafter, LICENSEE may
exercise any administrative or judicial remedies that may be
available.
14.13 Nothing relating to the grant of a license, nor the grant
itself, shall be construed to confer upon any person any
immunity from or defenses under the antitrust laws or from a
charge of patent misuse, and acquisition and use of rights
pursuant to 37 CFR Part 404 shall not be immunized from the
operation of state or Federal law by reason of the source of the
grant.
14.14 Paragraphs 4.03, 8.01, 9.06-9.08, 12.01-12.05, 13.08, 13.09, and
14.12 of this AGREEMENT shall survive termination of this
AGREEMENT.
SIGNATURES BEGIN ON NEXT PAGE
14
PHS PATENT LICENSE AGREEMENT -- EXCLUSIVE
SIGNATURE PAGE
For PHS:
/s/ 9/23/97
- ------------------------------------------------ ----------------
Signature of Authorized PHS Official Date
- ------------------------------------------------
Printed Name
- ------------------------------------------------
Title
Mailing Address for Notices:
- ------------------------------------------------
- ------------------------------------------------
- ------------------------------------------------
For LICENSEE (Upon, information and belief, the undersigned expressly certifies
or affirms that the contents of any statements of LICENSEE made or referred to
in this document are truthful and accurate.):
by:
/s/
- ------------------------------------------------ ----------------
Signature of Authorized Official Date
John N. Kapoor, Ph.D.
- ------------------------------------------------
Printed Name
Chairman
- ------------------------------------------------
Title
Mailing Address for Notices:
225 East Deerpath Rd.
- ------------------------------------------------
Suite 250
- ------------------------------------------------
Lake Forest, IL 60045
- ------------------------------------------------
15
APPENDIX A -- PATENT(s) OR PATENT APPLICATION(s)
PATENT(s) OR PATENT APPLICATION(s) THAT ARE LICENSED PATENT RIGHTS:
U.S. Patent 5,614,191 issued March 25, 1997
USSN 08/821,840 (div of 08/404,685) filed March 21, 1997
PATENT(s) OR PATENT APPLICATION(s) THAT ARE BACKGROUND PATENT RIGHTS:
U.S. Patent 4,892,827 issued January 9, 1990
16
APPENDIX B -- LICENSED FIELDS OF USE AND TERRITORY
LICENSED FIELDS OF USE: Use of the chimeric molecule hIL-13-PE38QQR or
cphIL-13-PE38QQR to treat cancer.
LICENSED TERRITORY: World-wide
17
APPENDIX C -- ROYALTIES
ROYALTIES:
1. LICENSEE agrees to pay to PHS a noncreditable, nonrefundable license issue
royalty in the amount of seventy-five thousand dollars ($75,000).
2. LICENSEE agrees to pay to PHS a nonrefundable minimum annual royalty in the
amount of ten thousand dollars ($10,000) prior to the FIRST COMMERCIAL SALE or
twenty-five thousand dollars ($25,000.00) after the FIRST COMMERCIAL SALE.
3. LICENSEE agrees to pay PHS an earned royalty of four percent (4%) on NET
SALES; provided however that LICENSEE shall be entitled to a credit of one-half
percent (0.5%) against the earned royalty rate for each percent point in excess
of two percent (2.0%) that LICENSEE must pay to an unaffiliated licensor for
the manufacture and sale of LICENSED PRODUCTS. Said credit, however, shall not
reduce the earned royalty due to PHS for LICENSED PRODUCTS below two percent
(2.0%).
4. LICENSEE agrees to pay PHS benchmark royalties as follows:
1. Submission of first IND $25,000
2. Completion of first Phase I Clinical Trial $50,000
3. Completion of first Phase II Clinical Trial $75,000
4. Completion of each additional Phase II Clinical Trial $35,000
5. Completion of first Phase III Clinical Trial $100,000
6. Completion of each additional Phase III Clinical Trial $50,000
7. Approval of first BLA/ELA/PLA/NDA $300,000
8. Approval of each additional BLA/PLA/ELA/NDA $150,000
5. LICENSEE agrees to pay PHS sublicensing royalties as follows:
(a) Twenty-five percent (25%) of earned royalties paid by a sublicensee on
NET SALES or two percent of the NET SALES of a sublicensee, whichever is
greater; and
(b) Twenty percent (20%) of all non-creditable and non-refundable
consideration received for granting a sublicense, if the technology is
sublicensed on or before the one year anniversary of this AGREEMENT; or
ten percent (10%) of all non-creditable and non-refundable
consideration received in granting a sublicense, if the technology is
sublicensed after the one year anniversary of this AGREEMENT. Fees paid
expressly for research and development of LICENSED PRODUCT and LICENSED
PROCESSES, such as clinical trial support, shall be excluded.
6. In the event that Licensee shall transfer, in a separate and distinct
transaction, that aspect of its business involving this AGREEMENT, Licensee
agres to pay PHS an assignment royalty of fifteen-percent (15%) of any cash
consideration received as part of such sale or transfer, provided, however,
that no such royalty shall be owned to PHS in the event that the foregoing
transfer is part of or results from a merger, consolidation or other
reorganization of the LICENSEE or from a sale, exchange or other transfer of
all or substantially all of its assets.
18
APPENDIX D -- Benchmarks and Performance
LICENSEE agrees to the following BENCHMARKS, for its performance under this
AGREEMENT and, within ten (10) days of achieving a BENCHMARK, shall notify
PHTS that the BENCHMARK has been achieved.
BENCHMARK DEADLINE
---------- --------
1. Pilot Scale Up Production 1. within one year of executing this Agreement but
no later than August 1, 1998
2. Initiation of In Vivo Efficacy Studies 2. December 1, 1998
3 Completion of In Vivo Efficacy Studies 3. October 1, 1999
4 Initiation of Toxicological end Pharmacological 4. April 1, 2000
Studies
5. Completion of Toxicological and 5. April 1, 2001
Pharmacological Studies
6. IND Submission 6. November 1, 2001
7 Initiation of Phase I Clinical Trial 7. March 1, 2002
8 Completion of Phase I Clinical Trial 8. March 1, 2003
9. Initiation of Small Phase II Clinical Trials for 9. September 1, 2003
Renal Cell Carcinoma (use 20 patients)
10. Completion of Small Phase II Clinical Trial in 10. March 1, 2004
patients with Renal Cell Carcinoma
11. Initiation of Large Phase II Clinical Trials in Renal 11. September, 2004
Cell Carcinoma (use at least 150 patients)
12. Election of 2nd cancer type* for development 12. March, 2005
13. Initiation of Small Phase II Clinical Trial on 2nd 13. September, 2005
Cancer type to be developed
14. Completion of Large Phase II in patients with 14. March, 2006
Renal Cell Carcinoma
15. Completion of Small Phase II Clinical Trial on 2nd 15. June, 2006
Cancer to be developed
16. Initiation of Phase III Clinical Trial for Renal Cell 16. September, 2006
Cancer
17. Initiation of Large Phase II Clinical Trial for 2nd 17. January, 2007
Cancer type to be developed
18. Submission of a Revised Development Plan which 18. June, 2007
includes election of 3rd indication to be developed
and benchmarks for development
19. Completion of Large Phase II Clinical Trial for 2nd 19. June, 2008
Cancer type to be developed
20. Completion of Phase III Clinical Trial Renal Cell 20. September, 2008
Cancer
21. Initiation of Phase III Clinical Trial for 2nd Cancer 21. January, 2009
type to be developed
22 BLA Submission for Renal Cell Cancer 22. March, 2009
23 Product Launch for Renal Cell Cancer 23. March, 2010
24. Completion of Phase III Clinical Trial for 2nd 24. January, 2011
Cancer type in development
25 BLA Submission for 2nd Cancer Type Developed 25. June, 2011
26 Product Launch for 2nd Cancer Type Developed 26. June, 2012
- ---------------------------
* The next therapy to be developed will treat
either brain, pancreatic, ovarian, prostate, breast
or colon cancer or Karposi's sarcoma.
19
APPENDIX E -- COMMERCIAL DEVELOPMENT PLAN
SEE ATTACHED