Exclusive License to NIH Invention Used in Lilly Antibody Treatment Contains Termination Clause and Government-Use Rights

KEI has reviewed an exclusive license between the National Institute of Allergy and Infectious Diseases (NIAID) and AbCellera Biologics (“AbCellera”) concerning a technology invented by NIAID that apparently is being used for the Eli Lilly (“Lilly”) antibody treatment for COVID-19 (LY-CoV555). 

Licensing a Publicly-Owned Antibody Treatment Against COVID-19 on an Exclusive Basis

The technology covered in the NIAID-AbCellera license is redacted, but the license states that its “Public Benefit” is the “[d]evelopment of therapeutic or prophylactic antibodies for treatment or prevention of SARS-CoV-2 infection[.]” Not only does this license pertain to an antibody treatment against COVID-19, but it also appears to directly relate to LY-CoV555. 

AbCellera is party to a research collaboration and license agreement with Eli Lilly for the development of LY-CoV555 and for the sharing of intellectual property in support of that effort. 

It thus appears that the NIAID-AbCellera license gives Lilly, through its partnership with AbCellera, exclusive rights to a publicly-owned invention needed to manufacture an important COVID-19 antibody treatment. As a further indication of this relationship, a NIAID webpage states as follows: 

“The monoclonal antibody was discovered by AbCellera Biologics, based in Vancouver, in collaboration with NIAID’s Vaccine Research Center. Subsequently, it was developed and manufactured by Indianapolis-based Lilly Research Laboratories, Eli Lilly and Company, in partnership with AbCellera.”

The Bayh-Dole and Licenses to Federally-Owned Inventions

Under the Bayh-Dole Act, all licenses to inventions owned by the federal government must contain a clause stating that the license can be terminated if the licensee fails to achieve practical application of the invention. 35 U.S.C. § 209(d). “Practical application” is defined as requiring that the benefits of an invention are made “available to the public on reasonable terms.” 35 U.S.C. § 201(f). 

The government can thus use its termination authority under the license to make it nonexclusive (and permit others to use the invention) if Abcellera fails to make the benefits of the invention available to the public on reasonable terms. 

Obligations on Sublicensees

The NIAID-AbCellera license states that certain obligations to NIAID are binding on all sublicensees. These include the government’s:

“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.”

Another provision binding on any sublicensee is NIAID’s ability to terminate or modify the sublicense to meet requirements for public use not reasonably satisfied by the licensee or sublicensee.

Accordingly, even the AbCellera-Lilly research collaboration and license agreement can be terminated (if it is in fact a sublicense) if Lilly is not able to satisfy public use requirements. And the government always has its broad license to practice the invention “by or on behalf of the Government”–even as regards the sublicense to Lilly. 

Apparent Non-Transparency of the License

One thing is odd about the NIAID-AbCellera license: When federal agencies plan on granting an exclusive license to a federally-owned invention, they are required to first notify the public and consider all timely-submitted objections. 35 U.S.C. § 209(e). Strangely, the AbCellera license was executed in May of 2020, but no such notice was provided in the Federal Register. The notice requirement does not apply if the exclusive license emanates from a Cooperative Research and Development Agreement (CRADA), but the AbCellera license states that there is no pertinent CRADA. 

The National Institute of Standards and Technology (NIST), which is responsible for promulgating regulations implementing the Bayh-Dole Act, is proposing a new regulation that would gut the termination authority for failure to achieve practical application by allowing agencies to negotiate licenses stating that practical application is achieved whenever a company makes their license payments. 

The new regulation would add language to the regulations implementing the Bayh-Dole Act to state as follows (emphasis added):

“In negotiating licenses, the Government may consider payments under a licensing agreement as a means for promoting the practical application of a subject invention and as a method to ensure commercialization by the licensee.”

The early development of the Lilly antibody treatment was subsidized by the federal government. In addition, Lilly has received at least three awards for the development or purchase of the treatment:

  1. Oct 27, 2020, W911QY-21-C-0016,$312,500,000;
  2. December 2, 2020, number unknown, $812,500,000; and 
  3. January 26, 2021, W911QY-21-C-0016 (P00007) $625,000,000.