We have received a copy of an amendment to the September 2006 voluntary License Agreement between Gilead Sciences, Inc and Ranbaxy Laboratories, Ltd concerning the manufacture and sale of Tenofovir Disoproxil Fumarate (TDF) and Emtricitabine for the treatment of HIV-AIDS.
The amendment is basically a letter from Gilead to Ranbaxy, dated May 27, 2008, that deletes section 5.2 of the original License Agreement.
Under Section 5.2 of the License Agreement, the licensee (Ranbaxy) agreed to “assist Gilead with regard to the issuing, maintenance and enforcement o the Patents” and to “reasonably assist Gilead” in enforcement actions or proceedings involving the patents licensed to Ranbaxy under the License Agreement.
This clause is problematic, especially since some Indian manufacturers and civil society have opposed the granting of Gilead’s patents for TDF. Section 5.2 could be read as Gilead trying to prevent Indian generic companies that accept the license from opposing Gilead’s intellectual property.
The legality of section 5.2 was disputed, especially in the United States after the 2006 decision on MedImmune v. Genentech where the U.S. Supreme Court ruled that a licensee could challenge a patent’s validity.
The letter, expressly recognizing the activist community’s concerns, contains the following language:
“Nothing in the License Agreement, including Section 5.2, was intended to hinder Ranbaxy’s right and ability to bring and maintain any pre-grant patent opposition proceedings or post-grant actions challenging the validity or enforceability of Gilead’s patents in India. It was never Gilaead’s intention to interfere with Ranbaxy’s right to challenge the legality of any patent applications and issued patents that are the subject of the License Agreement. However, we do understand how and why there may have been some confusion. Therefore, to avoid any further confusion on this matter, by this letter we hereby delete Section 5.2 from the License Agreement in its entirety. The rest of the License Agreement will remain unchanged.”
This amendment is a step in the right direction but more needs to be done. The terms of the Gilead voluntary licenses continue to be of concern for civil society. For example, clause 10.3 further adds that Gilead has the right to terminate the Agreement should the Licensee directly or indirectly challenge any of the patents or lend support to a third party for making such a challenge. This clause should also be deleted.
In February 2007 KEI asked the U.S. Federal Trade Commission (FTC) to investigate the Gilead effort to control the market for HIV-AIDS active ingredients and the usually off-patent drug tenofovir to keep prices artificially high.
A bigger step will be to have a major revision of the terms contained in this and other voluntary license agreements and to ensure that they respond to reasonable and non-discriminatory licensing strategies to enable generic competition to supply developing country markets with more affordable medical technologies. The revision should consider the model license terms proposed by the Essential Medical Innovation Licensing Agency (EMILA) project.