Friday, Nov 19, 1999

University of California and Genentech Settle Patent Infringement Lawsuits

San Francisco and South San Francisco, Calif. -- November 19, 1999 -- The University of California and Genentech, Inc. today agreed to a proposed settlement of the patent infringement lawsuits brought by the University of California (UC) relating to Genentech's human growth hormone products.

Under the terms of the settlement agreement approved today by the UC Board of Regents, Genentech will pay the University of California $150 million and make a contribution in the amount of $50 million toward construction of the first biological sciences research building at Mission Bay, a new 43-acre research and teaching campus of the University of California, San Francisco (UCSF). The building will bear a name proposed by Genentech and acceptable to the University of California.

Both parties agree that this settlement is not an admission that Genentech infringed UC's patent or used the genetic material in question.

"Genentech 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 twenty years ago," said Arthur D. Levinson, Ph.D., chairman and chief executive officer at Genentech. "We are focusing our efforts on developing drugs that treat serious illnesses, and we are gratified that some of this settlement will support UCSF's biological research efforts.

"Having been a postdoctoral fellow at UCSF, I know first-hand the many ways that UC's research contributes to the advancement of science and medicine and how important it is for institutions like UC and companies like Genentech to work cooperatively in making scientific progress," said Levinson.

"I am pleased by this settlement," said J. Michael Bishop, M.D., chancellor of the University of California, San Francisco. "It was negotiated by the current leadership of Genentech and UCSF, in an amicable manner and 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."

"This agreement affirms the important role of both University-based research and research in private industry in bringing products to market," said Zach W. Hall, Ph.D., UCSF vice chancellor for research. "We are pleased that the contributions of University scientists are recognized by this agreement, and that part of the rewards of their work will support future research in the University. We look forward to continuing collaborations with Genentech and our other commercial partners."

Commenting on the proposed agreement, University of California President Richard Atkinson said, "The proposed settlement underscores the value that research at the University of California contributes to advancing science, spawning new industries and improving people's lives. The University and Genentech have continued cooperative research relations throughout this patent dispute. Now that this issue is behind us, we look forward to accelerating our scientific collaborations."

The proposed settlement resolves all outstanding litigation on this matter between UC and Genentech and is subject to the completion and execution of definitive settlement documents. The settlement and contribution will be drawn from Genentech's cash balance and will be recorded and paid as a special charge in Genentech's fourth quarter financials.

From the total settlement of $200 million, and in accordance with the established University patent policy, the University of California general fund will receive approximately $30 million, the three inventors and two collaborators will share approximately $85 million, and UCSF will receive the $50 million building contribution and the balance of approximately $35 million, which will be used in support of research throughout UCSF and, in particular, to meet large capital needs.

UC filed its patent infringement suits against Genentech in 1990 and 1997. A jury trial was held in the U.S. District Court for the Northern District of California beginning in April, 1999. In June, 1999, the jury was unable to reach a verdict on the infringement issue. A second trial was scheduled to begin on January 3, 2000.

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