SAN FRANCISCO, CA, March 6, 2006 – LAWFUEL – The Law News Network – In a major settlement involving one of the first biotechnology patents ever applied for, Monsanto Co. has agreed to pay the University of California an upfront royalty of $100 million plus ongoing royalties that could easily double that amount, to resolve claims that the agribusiness giant infringed on the University’s DNA patent used to make a dairy cow growth hormone. The settlement was reached a day before trial.
Morrison & Foerster LLP represented the University of California.
The patent, originally sought in 1979, covers a form of recombinant DNA to produce bovine growth hormone protein now sold under the Monsanto brand name POSILAC® bovine somatotropin. The hormone increases dairy cow milk production between 10-30%. About 30% of dairy cows in America are given somatotropin and it is expected to become an increasing factor in dairy farming in developing countries.
In addition to the $100 million paid upfront, Monsanto will pay the university additional royalties of 15 cents on each dose sold to dairy producers internationally until the patent expires in 2023, with a minimum yearly payment of $5 million. That could increase the ultimate value of the settlement to in excess of $250 million, making it one of the highest patent payments to a university research institution.
In turn, Monsanto will receive an exclusive license for the patent in continued production of POSILAC.
“This was an excellent resolution for the university, involving a fundamental biotech patent in modern agribusiness,” said Jerry Dodson, the senior patent litigator at Morrison & Foerster who led the representation. “In addition to a sizable upfront payment, there will be continued royalties for the life of the patents.”
The original discovery of the DNA process was made in 1979 by UC San Francisco researchers, but it took until 1993 for somatotropin to be approved for use by the Food & Drug Administration. However, the university fought with the U.S. Patent & Trademark Office for recognition until a final determination was made in the university’s favor in 2004.
“The patent was one of the first ever sought for a biotech product. Because of its pioneering nature, it took a real battle with the patent office to get final approval,” said Mr. Dodson.
Noting the last-minute settlement, Mr. Dodson praised the work of the Morrison & Foerster litigation team. “We were fully expecting a trial. Obviously Monsanto was impressed by the strength of our case,” said Mr. Dodson.
Morrison & Foerster had previously represented the University of California in a case against biotechnology research company Genentech Inc, which settled in 1999 for a then-record $200 million.
In addition to Mr. Dodson, the university was represented by Morrison & Foerster litigation partners Erik Olson, Kenneth Kuwayti and Erica Wilson, all of the Palo Alto office.
