Genentech, the South San Francisco, Calif., biotech powerhouse, suffered a legal setback in June when a court ordered the company to pay more than $500 million (US) in damages to the nonprofit City of Hope National Medical Center in Duarte, Calif. A Los Angeles County Superior Court jury ruled that Genentech breached a 1976 contract with the institution when the company failed to pay the cancer center royalties from numerous third-party licenses that the company fraudulently concealed.
In 1976, Genentech agreed to sponsor efforts by Arthur D. Riggs and Keiichi Itakura, researchers in City of Hope's Department of Molecular Biology, to synthesize the gene for human insulin. It took two years for the biologists to successfully synthesize the sequence, insert it into Escherichia coli, and induce the bacterium to produce significant volumes of human insulin. Under the contract, Genentech owned the patents in exchange for paying a 2% licensing royalty ...
