Wisconsin uni to pay $32 million for withholding Zemplar royalties

St. Louis-based Washington University has won more than $31.6 million from a patent victory over the University of Wisconsin’s technology transfer office.

The US Court of Appeals for the Third Circuit affirmed yesterday, October 28 that the Wisconsin Alumni Research Foundation (WARF) underpaid royalties owed to Washington from sales of AbbVie’s chronic kidney disease drug Zemplar (paricalcitol).

Washington sued WARF in 2013 at the US District Court for the District of Delaware which, in November 2018, found that the Wisconsin university had breached a royalty agreement to share revenues from the licensing of a jointly-owned patent.

According to the Delaware court, WARF undervalued the patent, which was part of a larger portfolio licensed to AbbVie in 1998.

The AbbVie deal saw WARF earn more than $426 million from sales of Zemplar, while Washington saw only $1 million. That’s because, the district court found, WARF valued the patent as being worth less than 1% of the portfolio when it was in fact worth closer to 27%.

WARF challenged the damages award at the Third Circuit, arguing that Washington’s 2013 suit was time-barred, as it related to a deal struck in 1998.

But the Ninth Circuit yesterday upheld the Delaware court’s position that Washington’s suit was not time-barred given that WARF upheld crucial information about the deal from its partner.

“WARF does not seriously challenge any of these factual findings. Instead, it presents a series of arguments to the effect that Washington University should have known about WARF’s dilution of royalties for the ’815 patent in spite of WARF’s actions. None is persuasive,” the Ninth Circuit ruled.

In a further win for Washington, the Ninth Circuit overturned the Delaware court’s judgment that WARF did not have to pay prejudgment interest on the $31.6 million damages award.

“If WARF does not have to pay prejudgment interest here, then it would be the beneficiary of a $31,617,498 interest-free loan, denying the [Washington] the time value of its wrongfully withheld royalty payments,” the Ninth Circuit ruled.

The case will now be sent back to the Delaware district court to resolve how much WARF must pay in prejudgment interest.

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