On October 21, 2004, a California court of appeals affirmed a jury award of $500 million (including $200 million in punitive
damages) in a breach of contract suit between City of Hope National Medical Center, a leading research and treatment center,
and Genentech, Inc., a leading biotechnology firm.
The case involved a 1976 collaboration between City of Hope and Genentech to develop synthesized DNA for use in producing,
among other products, insulin and human growth hormone. City of Hope assigned its patent and other intellectual property rights
to Genentech in exchange for certain royalties. Ambiguities in the license language defining the royalties and how they were
to be calculated led to litigation. Ultimately, a jury decided this question in favor of City of Hope. While the punitive
damages portion of this case is pending review by the California Supreme Court, this license case demonstrates the importance
of intellectual property law to biopharmaceutical businesses. Understanding intellectual property laws concerning patent,
trademark, copyright, and trade secret issues is critical to the success of biopharmaceutical companies.
What is Intellectual Property?
Intellectual property is, by definition, a group of intangible rights that lay claim to products of human intellect.2 While the following list is not exhaustive, the main categories of intellectual property are: patent, copyright, trademark,
and trade secret. Some of these rights, such as patent and copyright, are mentioned in the United States Constitution, where
Congress is authorized "to promote the Progress of Science and the useful Arts, by securing for limited Times to Authors and
Inventors the exclusive Right to their respective Writings and Discoveries."3 Other rights, such as trade secrets, generally are created by state statutory or common law.
A thumbnail sketch of the main attributes of the four primary intellectual property rights is listed here.
Patent law grants an inventor a legal monopoly on the use of the invention for a limited period of time.4 To obtain a patent, an inventor must fully disclose the invention in an application before the United States Patent and Trademark
Office (USPTO). The USPTO will grant a utility patent for an invention that performs a useful function, including certain
business methods. Other types of patents include patents on designs used for purely aesthetic reasons and patents for asexually
reproducing plants. Because patent law is the main vehicle by which biopharmaceutical companies protect their intellectual
property, the following text discusses key aspects of patent law in greater detail.
While patents protect inventions and useful items, copyrights protect original works of authorship such as books and articles,
music, and computer software.5 No application or other action is required to obtain a copyright for a creative work. Registration of a copyright before
the United States Copyright Office, however, provides substantial benefits to the owner, including the ability to file suit
to protect the work from infringement.
While patent and copyright protection create limited term monopolies for inventions and creative works respectively, trademark
law provides protection for a mark as long as that mark is used in commerce to identify a good or service.6 The USPTO handles applications for trademarks. Trademark protection can also be established in a limited geographical area
through extended use under state common law or by application to a relevant state agency.
While all of the forms of intellectual property described earlier require some kind of disclosure or public access, trade
secret protection rests solely on the intellectual property remaining a secret. State common law typically provides protection
for any formula, pattern, program, or compilation of information that derives economic value from not being generally known
and that is the subject of efforts to maintain its secrecy.7 No government filing is necessary to obtain trade secret protection; however, trade secret protection is available only as
long as the trade secret remains confidential.