Law.com reported that the California Supreme Court agreed to review an appellate decision in which a $500 million judgment for City of Hope National Medical Center against Genentech, including $200 million in punitive damages.

Genentech negotiated a license agreement to develop and market human insulin and human growth hormone based on research at City of Hope. Genentech paid a royalty on the sale of products but didn’t pay for licensing revenue. The research center sued Genentech for breach of contract. The first trial ended in a deadlock favoring Genentech, but the second ended with the $500 million award. Genentech has argued that a 2003 ruling by another division of the 2nd District that said the failure to account for and pay royalties is not a tortious breach of fiduciary duty but only a breach of contract. City of Hope has emphasized Genentech’s alleged fraud.

This is being closely watch as Disney, Intel Corp. and Microsoft Corp., among others, have submitted amicus briefs in an attempt to quash any tort liability stemming from licensing.

The case is City of Hope National Medical Center v. Genentech Inc., S129463.

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