Court reduces Genentech damages in royalty suit

Ruled that contract disputes over patents are not subject to punitive damage...but the City of Hope through a very complicated contract was still short changed on the agreement...this was one of the first DNA products and lead to a hepatitis B vaccine and the development of human growth hormones...and the contract dated back to 1976. BD

Biotechnology giant Genentech must pay a Southern California medical center $300 million for withholding royalties from the sale of breakthrough gene-splicing technology developed by the center's scientists, the state Supreme Court ruled Thursday in a dispute that dates to the origins of the biotech industry. The jurors had found that Genentech not only violated the contract but also defrauded City of Hope, violating a fiduciary duty to look out for the medical center's interests when marketing the technology its scientists developed. Similar obligations can be found in some other types of contractual relationships, like stockbrokers' obligations to investors, allowing juries to award punitive damages for flagrant violations.

The unanimous ruling upheld a Los Angeles jury's verdict that Genentech had breached a 1976 contract with City of Hope National Medical Center to pay it 2 percent of all income Genentech received from licensing the technology to other companies.