Genentech in $0.5bn reverse
The California Court of Appeal has upheld a 2002 judgment of the Los Angeles County Superior Court award for City of Hope (COH), and against Genentech. The latter has announced it will seek review by the California Supreme Court, which has discretion over which cases it will review.
The California Court of Appeal has upheld a 2002 judgment of the Los Angeles County Superior Court award for City of Hope (COH), and against Genentech. The latter has announced it will seek review by the California Supreme Court, which has discretion over which cases it will review.
'We are disappointed with today's appellate court decision, and we plan to seek review by the California Supreme Court,' said Stephen G. Juelsgaard, executive vice president, general counsel and secretary of Genentech. 'Today's decision will have no effect on the company's day-to-day operations or its ability to continue providing medicines for serious or life-threatening medical conditions such as cancer and immunological disorders. While we will seek review, we have already recorded litigation-related special charges for the amount of the judgment and related costs.'
The original 2002 award of approximately $300m in compensatory and $200m in punitive damages resulted from a retrial of a 1999 contract dispute lawsuit brought by COH against Genentech.
About the Contract Dispute and Lawsuit
Genentech will promptly seek review of this decision. Under the long-held Genentech interpretation of the 1976 agreement in question, it paid COH royalty payments on sales of products made using DNA produced by COH and that used the patented technology that resulted from the sponsored research. 'We have always believed that we treated City of Hope fairly, living up to the letter and spirit of the contract, and paying them more than $300m over 20 years,' said Juelsgaard.
COH filed the original contract dispute suit against Genentech in 1999. The first trial resulted in a hung jury, 7-5 in Genentech's favour, in October 2001. In the retrial, the jury deliberated for 17 days before announcing the verdict on June 10, 2002, which directed Genentech to pay approximately $300m in additional royalties, including royalties on products for which Genentech itself did not receive royalties. The trial continued three days and the jury deliberated an additional three days before announcing the punitive damages award granted to COH.