Case Analysis: AstraZeneca UK Ltd V Tesaro Inc.

Future royalty term considerations at early stage R&D licences.

Summary

This case concerned the interpretation of the scope of royalty clauses in two sub-licence agreements concerning second medical use patents sub-licensed by AstraZeneca to Tesaro for the use of a PARP inhibitor to treat cancer. Although the licensed patents only claimed use of the PARP inhibitor in cancers possessing a particular subset of cells, the royalty was stated to be payable on total net sales for all uses of the product to treat cancer.

Tesaro argued that the U.S. doctrine of patent misuse meant that the total sales royalty was not valid as it sought to extend the scope of the licensed patents beyond their claims. However, although the High Court found that the U.S. doctrine of patent misuse could have relevance in interpreting a contract governed by English law when a royalty went beyond the sales of a patented product or use, that was not the case here. In the present case