Election Section

LOS ANGELES — An attorney told a jury Thursday that biotech giant Genentech Inc. tried to avoid paying more than $400 million in royalties to City of Hope Medical Center involving drugs developed by the hospital over the past 25 years. 

The claim by attorney Morgan Chu came during closing arguments in the lawsuit filed by City of Hope in Los Angeles Superior Court. 

Chu compared the situation to a marriage gone awry in describing what he called “a string of broken promises” by Genentech involving a contract with the medical facility. 

“City of Hope fully performed,” Chu said. “They did the research and they transferred all the patent rights to Genentech.” 

Genentech has denied shortchanging City of Hope. Lawyers for the firm, which posted sales of $1.7 billion last year, will present closing arguments after Chu. The case is expected to go to the jury by early next week. 

At the heart of the $400 million legal dispute is a contract signed before anyone knew billions would be made selling bioengineered drugs. 

The 1976 agreement between South San Francisco-based Genentech and the City of Hope in Duarte provided that Genentech would fund research that eventually produced drugs used in the production of human insulin and growth hormones. 

In return, Genentech would own whatever patents would be issued and would pay the hospital a 2 percent royalty on the sales of certain drugs resulting from the research. 

Chu has contended the biotech firm concealed 27 licenses with drug companies to avoid paying $340 million in royalties. 

The hospital claims it is now owed more than $400 million, including interest charges. 

The case is indicative of growing pains within the biotech field. In the past, researchers got much of their funding from the government.  

But now that their research is seeing new uses in the growing biotech industry, they are finding themselves embroiled in more and more lawsuits over patents and royalties. 

As the billions of dollars in profits continue to grow in the industry, so will the number of lawsuits,  

City of Hope attorney Glenn Krinsky has said in an interview. 

“As the biotech industry has matured and become more of a significant impact on the national and global economy, naturally where the money is is often where the disputes are,” he said. 

A key dispute in the case is whether DNA actually made in City of Hope laboratories must be used in the creation of drugs in order to trigger royalty payments to the hospital. 

City of Hope has argued that Genentech is profiting from patents based on its discoveries and must pay royalties anytime Genentech licenses the patents to a drug company. 

Genentech countered that City of Hope was an independent contractor hired to produce strands of DNA as well as research.  

Therefore, royalties are only due on drugs made possible by the patents and the DNA produced by City of Hope, lawyers claim.