Opinion ID: 2634389
Heading Depth: 1
Heading Rank: 4

Heading: The Lawsuit in This Case

Text: On August 13, 1999, City of Hope sued Genentech for breach of fiduciary duty and for breach of contract, including breach of the implied covenant of good faith and fair dealing. At the first trial the jurors were unable to reach a verdict, voting 7 to 5 in favor of Genentech. The case was then retried. At the retrial, the parties presented conflicting extrinsic evidence concerning the meaning of various contractual provisions and the parties' intent relating to the contract. City of Hope maintained that the DNA use requirement in Article 6.01 (that the manufacture of the polypeptides use DNA synthesized and provided by City of Hope) and the patent infringement requirement of Article 6.02 (that royalties to City of Hope were to be limited to the manufacture, use, or sale that would infringe Genentech patents) did not apply to licenses granted by Genentech or monies received by Genentech in resolving Genentech's infringement claims against certain companies. City of Hope further asserted that its royalty rights did apply to products made by Genentech licensees using the genetic engineering techniques protected by the Riggs-Itakura patents. Genentech, on the other hand, argued that the DNA use requirement and the patent infringement requirement applied to Article 6.08's provision concerning licensing to third parties, as well as to Article 7.02's provision pertaining to Genentech's monetary recoveries for the infringement of patents by certain companies. The jury found that Genentech had breached the contract with City of Hope, breached its fiduciary duty to City of Hope, and acted with fraud and malice. It awarded City of Hope compensatory damages of $300,164,030 (the exact amount City of Hope had claimed as unpaid royalties it was owed by Genentech), and $200 million in punitive damages. The Court of Appeal affirmed. We granted Genentech's petition for review. Below, we discuss Genentech's contentions.