University of Wisconsin Ordered to Pay Ex-Partner $32 Million

(Bloomberg) -- The University of Wisconsin’s patent-licensing arm must pay Washington University in St. Louis, its former partner in medical research, $31.6 million for breaching a royalties contract related to the sale of an AbbVie Inc. kidney-disease drug.

The judgment, issued Monday alongside a sealed opinion in federal court in Wilmington, Delaware, marks the culmination of a rare legal fight involving two universities that had formed a patent-licensing deal with a corporation.

The dispute has its roots in the early 1990s, when researchers at Washington University and Wisconsin began collaborating on treatments of conditions associated with kidney disease. The scientists applied for a patent connected to one such treatment in 1995, and the schools signed an agreement allowing the Wisconsin Alumni Research Foundation, which handles licensing for the university, to take the lead in obtaining the patent and licensing it in return for a larger share of any royalties.

WARF licensed the patent to Abbott Laboratories in 1998 for use in connection with the drug Zemplar. AbbVie was spun off from Abbott in 2013. Washington University claimed WARF breached their deal by undervaluing the patent, and that it was misled by WARF because it couldn’t accurately value the patent on its own.

The lawsuit was complicated because the patent is one of almost three dozen tied to Zemplar, with royalties distributed among owners.

Lawyers for Washington University said during a trial that WARF told the school in 2013 that the patent was "meaningless and largely irrelevant," though it assured Abbott in 1998 that the patent "directly supports" Zemplar. Washington University sought more than $38 million in the lawsuit.

A Washington University spokeswoman praised the ruling. "The court recognized WARF’s failure to properly value the co-owned patent and the contributions of Washington University’s researcher, and to share critical information with Washington University," Caroline Arbanas said. "We remain disappointed that WARF would not negotiate a resolution and that we had to resolve this matter through the court system."

WARF is reviewing the decision, said Jeanan Yasiri Moe, a spokeswoman for the foundation.

The case is The Washington University v. Wisconsin Alumni Research Foundation, 13-cv-2091, U.S. District Court, Delaware (Wilmington).

To contact the reporter on this story: Christopher Yasiejko in Wilmington, Delaware, at cyasiejko1@bloomberg.net

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Joe Schneider, Steve Stroth

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