Ranbaxy Laboratories Ltd has entered into an agreement with Cephalon Inc. to settle their pending patent infringement dispute in the United States related to Provigil (modafinil) tablets [C-IV].

In connection with the settlement, Cephalon will grant the company a non-exclusive royalty-bearing right to market and sell a generic version of Provigil in the United States. The company's license will become effective in October 2011 absence of a paediatric extension for Provigil, which would delay the entry date by six months (to April, 2012). An earlier entry by Ranbaxy may occur based upon the entry of another generic version of Provigil, states a company release.

The companies also agreed to a series of business arrangements related to modafinil. Ranbaxy has agreed to grant to Cephalon a non-exclusive license, effective immediately, to certain of its worldwide intellectual property rights related to modafinil in exchange for milestone payments. Cephalon also has agreed to enter into certain arrangements with the company related to its supply of the active pharmaceutical ingredient modafinil.

The terms of the agreement are confidential, and are subject to review by the US Federal Trade Commission. Financial terms were not disclosed.

The parties promptly will file a dismissal with prejudice with the United States District Court for the District of New Jersey that will conclude all pending litigation between the parties regarding Provigil.