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WUSTL is suing WARF, claiming it was cheated out of $38M in royalties from kidney disease drug

Washington University in St. Louis is seeking $38 million in royalties in a suit against the Wisconsin Alumni Research Foundation, citing “shabby treatment” by its former partner in a deal that brought in big royalty dollars that WUSTL claims it should have gotten a bigger share of.

It’s rare for universities to sue one another when those institutions are joint patent owners in a licensing deal, but WUSTL’s potential gain — and its belief that it was cheated in this case — has landed the two schools in a Delaware courtroom.

“It is striking how little litigation there is between academic institutions,” said WUSTL lawyer Michael Jacobs in his opening statement. “This is basically a case about sharing” — and about whether WARF misled its fellow university “through obfuscation,” he said.

The trial in Wilmington has its roots in a collaboration from the early 1990s, when researchers from the two schools worked together on therapeutics for conditions associated with kidney disease. They jointly applied for a patent in 1995 and signed an agreement in which WARF would take the lead in obtaining the patent and licensing in return for a larger share of any royalties, according to the complaint.

WARF licensed the patent to Abbott Laboratories in 1998 for use in connection with the drug Zemplar, which generated sales of more than $400 million in 2011 alone. AbbVie was spun off from Abbott in 2013. The lawsuit is complicated because the patent is one of almost three dozen tied to Zemplar, with royalties distributed among patent owners.

WUSTL claims WARF breached its agreement by undervaluing the patent when initially licensing it to Abbott, and that it was misled by WARF’s representation because it couldn’t gauge valuation on its own. Jacobs said that WARF told Washington University in 2013 that the patent was “meaningless and largely irrelevant,” though it assured Abbott in 1998 that the patent “directly supports” Zemplar.

WARF’S lawyer, Robert Shaffer, argued that WUSTL is seeking to rewrite the “unambiguous” terms of the contract, in which allocation of royalties among all patents in the portfolio was fair. “A deal is a deal,” Shaffer said. “They didn’t ask during the course of negotiations” for a particular method of valuation, he added.

WUSTL points to a 2012 lawsuit in which Abbott and WARF accused Hospira Inc. of infringing the same patent. In that case, WARF said the patent was valuable, Jacobs said – a claim the judge in the case seemed to put stock in.

“You guys made a big deal” about the value of the patent previously, District Judge Joseph Bataillon Bataillon said to Shaffer. “Now, you reap what you’ve sown.”

Shaffer called the decision to use the patent in the Hospira case “a litigation strategic decision.” By then, Shaffer said, WARF had been paying Washington University for more than a decade to the tune of $1.5 million — more that WUSTL was even entitled to under the agreement.

Source: St. Louis Post-Dispatch

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