December 10, 2018In a November 26, 2018 order, the U.S. District Court for the District of Delaware ordered the Wisconsin Alumni Research Fund (WARF) to pay The Washington University – St. Louis (Wash. U.) $31.6 million for breach of contract (The Washington University v. Wisconsin Alumni Research Foundation, Civ. No. 13-2091-JFB). The case originated when Wash. U. filed suit against WARF for breach of contract, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and equitable accounting, relating to a 1995 agreement between the parties entitled “Inter-Institutional Agreement for Prevention of Hyperphosphatemia in Kidney Disorder Patients” (the “IIA”), and particularly relating to the drug paracalcitol. The IIA covered certain patent rights for US Patent 5,597,815, jointly owned by Wash. U. and WARF. In the IIA, Wash. U. granted to WARF “the exclusive right to negotiate, execute, administer, and enforce License Agreement(s), and WARF shall have sole discretion to make decisions with respect thereto.” The IIA further stated that “WARF shall have the authority to assign relative values to Patent Rights and/or Property Rights, and other patent and/or other proprietary rights as are included in any such license”. In the late 1990’s, WARF ultimately licensed the ‘815 patent as part of a group of patents to Abbott. In the license to Abbott, WARF included a number of its own patents, and allocated 70% of the value to certain “compound” patents not related to the IIA. The remaining 30% of the value was allocated by WARF to 31 other patents, which included the ‘815 patent, and were labeled as “Ancillary patents”. As a result of the Abbott license and later enforcement actions against infringers which included enforcement of the ‘815 patent, WARF received over $300 million, paying approximately $1 million to Wash. U. based upon the relative value allocation in the IIA.