| In June 2002 the US trial jury's decisions in a contract dispute between City of Hope National Medical Center (COH) and Genentech, over royalties payable to COH under a research agreement, led to orders that Genentech pay COH US$500 million in damages (US$300 million compensatory and US$200 million punitive). This article discusses the dispute and raises points for consideration when drafting biotechnology and pharmaceutical research agreements. Under an agreement dated 5th August 1976, Genentech funded the research of Dr Riggs and Dr Itakura at COH regarding synthesis of DNA strands coding for somatostatin and insulin. The 1976 agreement contained provisions that Genentech would own patents that arose but pay royalties to COH on exploitation of the technology by Genentech or third party licensees. The Riggs/Itakura research is said to have led to over 100 patents held by Genentech worldwide and has yielded commercially successful technology, including synthetic insulin products (1). There were only three products for which COH provided synthetic DNA to Genentech: insulin, growth hormone and somatostatin. There is no commercial product associated with the third. Over the years, Genentech has paid COH royalties on the first two totalling approximately US$300 million. |
