Ensuring Continuity refers to provisions that grant rights to a funder, licensor or purchaser to take actions to ensure that their objectives can still be met even if another party does not fulfill their obligations under an agreement. Provisions of this nature are often found in development funding agreements in the form of licenses that allow funders to take over or reassign the development of a product if the developer does not meet certain requirements. The terminology used to describe these rights is often specific to certain funders for example Humanitarian License (Gates Foundation), Global Access License (Gates Foundation), Public Health License (CEPI), and Bayh-Dole ‘march-in’ rights (U.S. Government).

In addition to the scope and triggers for any continuity rights, agreement parties need to consider whether any documents, data or materials should be held by a third party (“in escrow”) until the continuity rights are exercised. Holding materials in escrow can help to ensure that the necessary information is consolidated in one location and will be accessible in a timely manner.

The parties also need to decide if the license grants included in the scope of continuity rights are secured by the receiving party upon signature of the agreement, or at a later date (when the rights “vest”). Licenses that vest upon agreement execution provide more protection for the continuity rights in the event that a product developer goes into bankruptcy proceedings or is acquired.

Ensuring Continuity provisions are an important tool for achieving equitable access objectives and protecting funders’ investments because they provide options for continuing a project in the event that the original development partner can’t or won’t produce a suitable product.

Questions to consider when developing provisions for ensuring continuity

• Under what circumstances can the continuity rights be exercised? (What are the conditions precedent?)
• What is an appropriate scope for the continuity rights? What are the rights and obligations of each party?
• Should related license grants vest upon execution of the agreement, or at a later stage in development? 
• Should there be an escrow requirement?
• Should there be any restrictions on the developer’s ability to transfer project-related intellectual property to a third party?

Example approaches found in the MAPGuide

• Under what circumstances can the continuity rights be exercised? (What are the conditions precedent?)
  • Some funding agreements in the MAPGuide specify that continuity rights may only be exercised if the developer has meaningfully progressed development of the product under the funding agreement.
  • There are a variety of triggers (and combinations thereof) for the exercise of continuity rights included in funding agreements in the MAPGuide. They include:
    • The developer fails to, or the funder reasonably expects that the developer will be unable to, take actions requested in the event of an outbreak. This could include meeting certain cost, timeframe or volume requirements.
    • The developer fails to make progress with developing the product in accordance with the development plan; 
    • The developer does not reach agreed project milestones; 
    • The developer elects not to develop or market the product for use in certain territories; 
    • A contract termination event occurs (for example, breach of the agreement or insolvency of the developer);
    • The developer has not developed a manufacturing process that will fulfil volume or cost of goods requirements.
  • Some advance purchase agreements in the MAPGuide also provide the purchaser with the right to acquire a license to relevant intellectual property if the developer decides to abandon development of the product.
  • Some manufacturing and license agreements permit the licensor to step-in if the developer will not be able to meet its supply commitments for a certain country. The right only applies to that particular supply shortfall.

• What is an appropriate scope for the continuity rights? What are the rights and obligations of each party?
  • Some agreements in the MAPGuide include a requirement for Funder to notify the developer in writing that they intend to exercise their continuity rights. Some of these provisions also extend to an opportunity for the developer to object and take the matter to a dispute resolution process.
  • Continuity rights usually include the grant of licenses to the intellectual property and other materials needed by the funder or purchaser to continue the development, manufacturing and marketing of a product. The license grants are usually non-exclusive, worldwide, royalty free and sublicensable. In some cases, the license grants are restricted to a particular field of use and/or territory.
  • Other rights granted to funders in some ensuring continuity provisions include:
    • Making decisions related to the product in a certain field and territory, and instructing the developer to stop development and marketing of the product.
    • Reaching an agreement to continue development and manufacturing with a previously identified Trusted Collaborator, or identifying a new third party to work with.
  • Additional obligations for the developer include:
    • Providing reasonable technology transfer assistance and materials
    • Taking reasonable actions to secure the grant of licenses to third party intellectual property.
    • Allowing access to, and the right to cross-reference, regulatory filings.
    • Providing copies of relevant sub-contracts and facilitating the creation of direct contractual relationships between the funder and sub-contractors.

• Should there be an escrow requirement?
  • Not all of the ensuring continuity provisions in the MAPGuide include a reference to escrow, but some state that the parties will establish an escrow arrangement and that the information and materials will be released to the relevant party if a condition precedent occurs.

• Should there be any restrictions on the developer’s ability to transfer project-related intellectual property to a third party?
  • Some agreements in the MAPGuide state that any transfer of project intellectual property to a third party must include a transfer of the access obligations under the agreement (sometimes known as ‘obligations follow the product’).
  • Similarly, some ensuring continuity provisions state that the product developer may not make any restrictions regarding ownership or access to project-related intellectual property which would affect the exercise continuity rights.