The University of California announced today (Feb. 27) that it has reached a settlement with Monsanto Co., including in partial consideration a payment by Monsanto of an up-front royalty of $100 million, to resolve claims that the company infringed on UC's patent for the recombinant DNA used to make somatotropin, a dairy cow growth hormone.
"This settlement represents a positive outcome for both parties, by protecting the university's patent rights and by providing Monsanto with the opportunity to market and distribute this important product," said James E. Holst, UC's general counsel.
Bovine somatotropin is used to enhance milk production and serves as an important tool to help dairy producers improve the efficiency of their operations.
The settlement resolves claims filed against the agricultural products company in a February 2004 lawsuit.
Under the settlement, Monsanto will pay UC an up-front royalty of $100 million in partial consideration for an exclusive license to the university's patent rights to the recombinant DNA to make bovine growth hormone (bGH) protein also known as somatotropin (sold under the Monsanto brand name POSILAC® bovine somatotropin), as well as a covenant not to sue in related patent rights. The settlement also includes an ongoing royalty of 15 cents per dose of POSILAC® to a dairy cow with a minimum annual royalty of $5 million for the life of the last to expire of the university's exclusively licensed patents.
"We're pleased that we've come to an agreement that will allow our dairy producer-customers to continue to use POSILAC® bovine somatotropin," said Carl Casale, Monsanto's executive vice president for North America commercial operations. "This agreement illustrates that we are willing to work jointly to resolve disputes, and it allows us to avoid the expense and inconvenience of protracted litigation."
The isolated DNA was a discovery by UC San Francisco scientists Walter L. Miller, Joseph A. Martial and John D. Baxter.
Monsanto's license is subject to certain rights maintained by the U.S. government because the university's work was performed with federal funding. The university also retains certain non-commercial rights to practice the invention for research and educational purposes.
The university's patent (U.S. No. 6,692,941) will expire in 2021; however, a new patent claiming the protein made as a product of the recombinant DNA would run until 2023. The settlement includes licensing fees and royalties to the 2023 expiration of UC's patent rights.
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