Washington University wins $31.6m in patent licensing spat
The University of Wisconsin’s licensing arm has been ordered to pay Washington University $31.6 million in a fight over patent licensing relating to one of AbbVie’s kidney drugs.
Senior District Judge Joseph Bataillon made the order at the US District Court for the District of Delaware on Monday, November 26.
Researchers at the two universities had worked together to develop treatments for kidney-related conditions in the 1990s.
In 1995, they applied for a patent covering one of the treatments, and the two institutions agreed to allow the Wisconsin Alumni Research Foundation—which handles the university’s licensing—to obtain the patent and license it, in exchange for a larger share of any royalties.
The foundation licensed it to Abbott Laboratories (which AbbVie was spun out of) in 1998, for use in connection with Zemplar (paricalcitol).
Zemplar, which is used to treat secondary hyperparathyroidism in people with chronic kidney failure, is covered by 31 patents belonging to different entities; royalties from the drug are distributed among these owners.
In December 2013, Washington University claimed that the foundation breached the 1995 agreement by undervaluing the patent, in a lawsuit which asked for more than $38 million from the University of Wisconsin.
The purpose of the 1995 agreement “was to facilitate commercialisation of the valuable invention”, with both institutions “fairly” sharing the resulting revenue, Washington University said.
From 2001, the foundation made royalty payments to Washington University, but these were allegedly “based on a tiny percentage” that the foundation had assigned as the patent’s relative value in the context of the many patents which cover Zemplar.
Washington University said that, in 2012, it discovered that the value the foundation had assigned to the patent to calculate the royalties was “improper”, as the patent was “worth far more” than that.
The foundation had allegedly told Washington University that the patent was irrelevant to the drug, but it had informed Abbott that it directly supports Zemplar.
But the university said that Zemplar had “generated hundreds of millions of dollars in licensing revenues” for the foundation, which failed to share the “windfall” with Washington University. It estimated that the foundation retained more than 99% of the royalties, in excess of $300 million, for itself.
Finally, the foundation had identified itself as the patent assignee in US Patent and Trademark Office documents, “when in fact the patent is jointly owned” by the institutions, Washington University claimed.
The university said it had contacted the foundation about the “false ownership statements”, but the mistakes were not corrected in a timely manner.
Washington University listed breach of contract and breach of fiduciary duty as the claims against the foundation.
Now, nearly five years after the suit was filed, Bataillon has sided with Washington University and ordered that the foundation must pay it $31.6 million.
Speaking to LSIPR, a spokesperson for Washington University said that they are pleased with the decision.
By awarding Washington University just over $31 million, the court recognised the foundation's failure to properly value the co-owned patent, the spokesperson said.
"We remain disappointed that the foundation would not negotiate a resolution and that we had to resolve this matter through the court system," they concluded.
A spokesperson for the foundation told LSIPR that they are reviewing the decision.
Did you enjoy reading this story? Sign up to our free newsletters and get stories like this sent straight to your inbox.
