The California Supreme Court issued a decision on April 24 upholding a 2002 jury
verdict of $300.1 million in compensatory damages in favor of City of Hope, for
Genentech Inc.’s breach of a 1976 agreement in which City of Hope entrusted a groundbreaking invention to Genentech that launched the biotechnology industry.
The decision also reversed the jury’s verdict that Genentech breached a fiduciary duty to City of Hope and the jury’s award of $200 million in punitive damages.
“City of Hope is extremely pleased that the California Supreme Court followed sound legal precedent in ruling the jury’s verdict on compensatory damages was correct,” said Robert W. Stone, City of Hope general counsel.
“While we are disappointed that the court did not agree with our position on fiduciary duty, we are delighted by the overall outcome.”
At the 2002 trial, the Los Angeles County Superior Court jury decided that Genentech breached a 1976 contract with, as well as its fiduciary duty to, City of Hope. Under the contract, City of Hope entrusted a still-confidential invention to Genentech, which agreed to develop, patent and exploit it for their mutual benefit in exchange for the payment of royalties. The invention, created by Arthur Riggs, Ph.D., and Keiichi Itakura, Ph.D., is a broadly applicable method for producing human proteins through recombinant DNA technology. This method was used by Genentech and many other biotechnology companies in developing a number of important drug therapies, including synthetic human insulin. At the conclusion of the trial, the jury awarded City of Hope $300.1 million in compensatory damages. In a second phase of the trial, the jury awarded City of Hope $200 million in punitive damages.
In 2004, the California Court of Appeal upheld the jury’s 2002 decision in its entirety. The April 24 decision from the state Supreme Court follows Genentech’s appeal of that ruling.
The verdict payment, when received, will be used to further City of Hope’s mission of conducting research to quickly and safely bring new lifesaving treatments to patients.