Judge Declares Mistrial in Genentech Lawsuit
With jurors hopelessly deadlocked, a judge declared a mistrial Wednesday in City of Hope National Medical Center’s $445-million suit against Genentech Inc.
Jurors told Superior Court Judge Edward Y. Kakita that they couldn’t reach a decision on allegations by City of Hope that the biotechnology company concealed patent licensing agreements to avoid paying it millions of dollars in royalties. Jurors split 7-5 in favor of Genentech; nine votes are needed for a verdict.
“There is one result that would have been better, but we are pretty pleased by this,” said Sean Johnston, vice president of intellectual property for Genentech. “We are especially gratified that the majority were not affected by City of Hope’s outrageous claims concerning our hiding information from them.”
City of Hope general counsel Glenn Krinsky said the hospital will retry the breach-of-contract case. “We would not be doing a service to our patients or our donors if we do not vigorously pursue what we are entitled to, especially a sum of this magnitude,” he said. “We are confident in our position and the fact that we will prevail.”
The lawsuit revolved around a 25-year-old research contract that led to the discovery of a method for producing human insulin, the world’s first biotechnology drug. Under the pact, City of Hope gave Genentech patents on its inventions in exchange for research funding and royalties.
In 1978, scientists at City of Hope, with backing from Genentech, made the gene for human insulin and then produced insulin by putting the gene in bacteria. (Genes are molecular recipes for proteins.) As a result of their breakthrough, City of Hope scientists Arthur D. Riggs and Keiichi Itakura were named as inventors on 11 U.S. patents, which under contract belongs to Genentech.
Genentech, then a tiny start-up, licensed the patents to Eli Lilly & Co., which produced human insulin, and Swedish drug maker Kabi Vitrum, now part of Pharmacia, which made human growth hormone. Genentech has paid City of Hope in excess of $285 million in royalties on those drugs, which hospital scientists worked on.
Genentech licensed the patents to 22 other drug companies but has not paid City of Hope royalties from those deals. The hospital claims Genentech owes it $332 million in royalties and $114 million in interest on those drugs, which include vaccines and cancer medications. The hospital accused Genentech of hiding the third-party deals to avoid paying royalties.
But Genentech said it is obligated to pay royalties only if City of Hope scientists helped develop the gene for a specific bioengineered drug. Genentech said insulin and human growth hormone are the only commercial products City of Hope collaborated on.
The mistrial ended six days of deliberations by a jury deadlocked nearly from the start. Last week, the jury asked Kakita if City of Hope’s damage claim included royalties on human insulin and human growth hormone, a sign that some jurors were confused about the substance of the dispute.
