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States Get an Edge in Patent Fights

September 1, 1999

State universities are big players in technology who often aggressively license research breakthroughs in fields such as biotechnology to companies, sometimes reaping millions in royalties. This complex intersection of public and private interests is rife with disputes over patent rights and inventions. And experts argue that a June ruling by the U.S. Supreme Court that citizens and companies can’t sue states in federal court over intellectual property could give the universities a decided edge in such legal battles.

The decision has already had an impact on at least one highprofile patent dispute.According to Martin Simpson, counsel for the University of California (UC), the ruling “obliterated”a lawsuit against the school by Genentech, a San Francisco biotech company. Genentech had been trying to void a UC patent the university
says covers recombinant human growth hormone, a drug that racked up $214 million in sales for Genentech last year. John Kidd, Genentech’s lead litigator and a partner in the New York law firm of Rogers & Wells, says firms who want to sue a state will now have to take their case to state court, where there’s no established forum for patent law.”I’ve got no place to sue,”laments Kidd.

Companies say that’s unfair because the Supreme Court decision leaves states free to sue them in federal court. In the Genentech/UC litigation, the university is countersuing Genentech for $1.2 billion, claiming the company stole key DNA code from a university lab.That case is unaffected by the Supreme Court decision.
Given the court’s ruling, it would seem that state universities can continue to dish out lawsuits, but no longer have to take them.

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