Free Declaration in Support - District Court of California - California

Case 3:O7—cv—O2845—WHA Document 63-14 FiIed12/06/2007 Page10f3

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‘ Bye Linda Frazeur, CSR#6697......_
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December 1994
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Joseph Smith, Esq. _ —
Applied Bidhystems
850 Lincolniltlentre Drive
Foster City,li'CA 94404
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Dear Joe: W .
‘ I have heafd that some Applied Biosystems managers and employees have made remarks
regarding ppitported Applied Biosystems' rights in Lynx technology that are not consistent with
the agreemeptibetween our companies. It is obviously in our mutual interest to ensure that
everybody spares the same accurate perception of the terms of our agreement to minimize the
risk of disappointment and bad feelings downstream. .This is especially important now that
Lynx is to linance a new company to develop commercial products based on the
inventions tif Dr. Brenner. I do not want to respond directly to the comments that have been
made as theiieports I have heard may well be inaccurate or exaggerated. Still, 1 would like to state `
my understaitding of the pertinent provisions of the Lynx/ABI agreement. Assuming we have
. the same urtderstanding, we can then discuss what measures should be taken to correct any
confusions that may exist.
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The licenseliigreement between Lynx and ABI provides for a grant by ABI to Lynx of a "royalty
free, world Swide, nonexclusive license (with the tight to grant sublicenses) in the Therapeutics
Field underiiiny patent issued or issuing in respect of any invention reduced to practice by ABI i
at any timelpiior to June 30, 1995, to make, have made, use and sell oligonucleotides in the
Therapeutids Eield." (See Section 3.b.) Section 5.a contains a parallel grant by Lynx to ABI of "a
royalty free; world wide license (with the tight to grant sublicenses) under any patent issued or
issuing on invention reduced to practice by Lynx prior to June 30, 1995, to make, have made,
. use and seiljproducts in and for the Research Field" In addition, Section 5.c gives ABI "the first
‘ rright to neg§t?te1§or a license to any invention not otherwise licensed to ABI for use outside the
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Lynx has adquired limited rights to certain inventions of Dr. Brenner. These inventions were
reduced toil practice by Dr. Brenner independently of Lynx and are embodied in patent
applicationd riarning him as the inventor. As you know, I brought these inventions to ABI's
attention ldngf before considering acquiring certain rights to them for Lynx, and ABI declined to
pursue theiih bn terms acceptable to Dr. Brenner. Nearly a year later, Lynx negotiated its
agreement Dr. Brenner. Under this agreement Lynx agreed to conduct an initial evaluation of
the inventiiins with the objective of justifying independent financing of the project. At the
conclusion Qpfithe Lynx study, the agreement calls for any developments Lynx may have made, as
well as Dr.i|Bi·ennér's inventions, to be assigned to a new company (subject to reservation of a
license for Else by Lynx solely in its own antisense drug development programs) that will seek
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financing foil commercial development of the inventions. It was assumed that, after venture
capital finariéizig, Lynx would end up with a minority equity interest in the new company and a
license to us? the technology in its own antisense research. We are, at the moment, considering
providing jtinancing directly from Lynx, so that Lynx may retain a majority of the equity
(and its pottintial appreciation) for the benefit of its shareholders. Dr. Brenner’s approval is
necessary tdl this alternate pathway and is conditional on preserving intact the new c0mpany’s
control of his technology. ‘ ·
I believe thnl following statements are correct with respect to the application of our license
agreement ttil the Brenner project:

— l. Dr. Brennerln inventions are not covered by Section 5.a as they were not reduced to practice by
` Lynx. In éevent, the purpose of the licenses in Sections 3.b and 5.a was to encourage the
scientists 0fiLyux and Applied Biosystems to collaborate freely for a time, to further develop the
technologies] shared by the companies, by providing for appropriate cross licensing of their
inventive work.
2. Section 5.c iilso does not apply to the inventions of Dr. Brenner as they are not "patentable
inventions of Lynx." ’ I
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The above iiotvwithstandhig, since funding from corporate partners will ultimately be important
to the abilitji er the new company to complete its projects successfully, Lynx would certainly be
happy to disptiss such a funding relationship with AB/PE if they are interested.
Please give a call once you have had a chance to review this so that we can discuss how to
clarify rnatt§rs for all concemed. I believe my statements are correct and am more concerned
about any cdniiision than being wrong. Such confusion could make it more diiiicult for Lynx to
retain a majiir equity stake in the new company. Hence my interest in clearing it up quickly. A
protracted rpsdlution of differences of opinion would, in fact, be moot as Dr. Brenner would not
wait for it. lielieve it would be contrary to the interests of both AB/PE and Lynx if] as a result
of such confusion, Dr. Brenner exercises his prerogative to ask Lynx to seek VC financing, leaving
to Lynx otilyia license to use his technology in its antisense drug development in return, as _
agreed, for Ts help to date in conducting the initial evaluations. _
Very truly yours, .
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, Sam Eletr, l;h.;D. W
Chief Exectitive Officer and "
Chairman of the Board
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