San Diego

The biotechnology company Genentech last week agreed to pay $200 million to settle a patent infringement lawsuit, over the alleged use of human growth hormone DNA taken 20 years ago from the University of California at San Francisco (UCSF).

The settlement — the largest such payment in a biotechnology case — ends a federal lawsuit that has exposed a seamy side to the relations between universities and industry at the dawn of the biotechnology era.

The university sued Genentech nearly a decade ago, claiming that a midnight ‘theft’ in 1978 of growth hormone DNA was key to the firm's development of its blockbuster growth-hormone drugs. The company acknowledged receiving the growth hormone DNA, but insisted that it was not used to produce its drugs.

About $85 million of the settlement will be split equally between three inventors formerly at UCSF — Peter Seeburg of Germany, John Shine of Australia and Howard Goodman of Harvard University — and two collaborators, John Baxter of UCSF and Juan Martial of Belgium.

The settlement also includes a Genentech contribution of $50 million towards the construction of a research building on UCSF's developing Mission Bay Campus. Genentech has the right to name the building, which will cost $235 million. The remaining $65 million will go to the university and UCSF.

UCSF Chancellor Michael Bishop says that the settlement “was negotiated in an amicable manner out of mutual respect. The relationship between these two institutions in the past has been collegial and historic. Now, we can continue in the same spirit.” A joint statement by the university and the company noted that the settlement is not an admission of patent infringement.

Arthur Levinson, Genentech's chairman and chief executive, said that the company “has decided to put this matter behind us and avoid the distraction and uncertainty of another jury trial covering complex patent issues that are based on events that took place nearly 20 years ago”. Genentech will take the $200 million as a one-time expense during the next quarter, he said.

Last June, in the eyes of many observers, the university nearly won its demand for $400 million in damages, which it sought to have tripled because of Genentech's conduct. After a six-week trial, eight of the nine jurors found that the university's patent had been infringed (see Nature 399, 512; 1999), but a unanimous verdict was required. This set the stage for a retrial, scheduled for January.

Seeburg, who is now at the Max Planck Institute for Medical Research in Cologne, remains under investigation for possible scientific misconduct 20 years ago. At last spring's trial, Seeburg testified about how he took the growth hormone DNA from UCSF to Genentech, where he had gone to work after leaving UCSF.

The UCSF DNA was used to produce Genentech's drug, he testified, and a Nature article in 1979 (see Nature 281, 544–548; 1979) contained “technical inaccuracies” which effectively disguised Genentech's use of the UCSF DNA. This testimony prompted the ongoing probe.

UCSF officials acknowledged last week that the investigating German authorities have requested assistance, adding that the university is in the process of responding. Contacted in Germany, Seeburg said that he was “very relieved” about the settlement, although he denied that he had been required to contribute towards the legal costs incurred.