Astrazeneca UK Ltd v Tesaro, Inc. [2023] EWHC 803 (Ch) (05 April 2023)

Astrazeneca UK Ltd v Tesaro, Inc. [2023] EWHC 803 (Ch) (05 April 2023)

The royalty provisions in the Licence Agreements are to be interpreted according to their natural and ordinary meaning in the context of the factual matrix, including the parties' knowledge and commercial circumstances at the time of contracting. There is no clear evidence that the parties intended a 'pay to infringe' royalty or that AZ had a policy not to profit from sublicensing. The Head Licence Agreements are relevant background but do not dictate the royalty basis in the Licence Agreements. The risk of patent misuse under US law does not preclude the interpretation advanced by AZ, but the court finds the royalty obligation is not limited to infringing sales only.

Citation
[2023] EWHC 803 (Ch)
Parties
Claimant: AstraZeneca UK Limited; Defendant: Tesaro, Inc.
Jurisdiction
England and Wales
Judgment Date
05 April 2023
Procedural Posture
Commercial Contract Dispute / High Court Judgment
Outcome
Claimant's interpretation of royalty provisions accepted; royalties payable on total sales as per Licence Agreements.
Legal Topics
Patent Licensing, Royalty Calculation, Contract Interpretation, Patent Misuse
Contract Law Intellectual Property Law Patent Licensing Royalty Calculation Contract Interpretation Patent Misuse

Case Brief

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Parties

AstraZeneca UK Limited

Claimant

Tesaro, Inc.

Defendant

Procedural Posture

Commercial Contract Dispute / High Court Judgment

Legal Issues

  1. 1 Proper construction of royalty provisions in patent licence agreements
  2. 2 Scope of Licensed Patents and royalty obligations
  3. 3 Relevance of factual matrix and Head Licence Agreements

Ratio Decidendi

The royalty provisions in the Licence Agreements are to be interpreted according to their natural and ordinary meaning in the context of the factual matrix, including the parties' knowledge and commercial circumstances at the time of contracting. There is no clear evidence that the parties intended a 'pay to infringe' royalty or that AZ had a policy not to profit from sublicensing. The Head Licence Agreements are relevant background but do not dictate the royalty basis in the Licence Agreements. The risk of patent misuse under US law does not preclude the interpretation advanced by AZ, but the court finds the royalty obligation is not limited to infringing sales only.

Court Disposition

Claimant's interpretation of royalty provisions accepted; royalties payable on total sales as per Licence Agreements.

Orders

  • Tesaro to pay royalties to AZ calculated by reference to total sales of relevant products for use as cancer treatments.
  • Costs to be determined in subsequent proceedings.