$500-Million Award Against Genentech Is Upheld

Genentech Inc., the world’s second-largest biotechnology company, lost a bid to overturn a $500-million jury award in a dispute with a nonprofit research center over payments for the first genetically engineered drug.

The California Court of Appeal in Los Angeles on Thursday upheld the 2002 verdict to City of Hope National Medical Center.

Genentech had argued that the jury misinterpreted the contract and there was no evidence of fraud or malice to justify one portion of the verdict.

A jury told Genentech to pay $300 million in compensatory damages to City of Hope and $200 million in punitive damages after finding that the South San Francisco-based company breached a 1976 gene-research contract. Genentech recorded a loss of $518 million in legal costs after the verdict.

“While Genentech did not directly jeopardize anyone’s life, safety or health, it damaged an entity that is in the business of providing medical care to the poor, often at City of Hope’s own expense,” Judge Judith Ashmann-Gerst wrote in a unanimous decision for the three-judge panel.

A Genentech spokeswoman said the company would review the opinion before commenting.

Shares of Genentech fell 75 cents to $48.27 on the New York Stock Exchange. The opinion was released after the close of trading.