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March 28, 2015

The Regents of the University of California v. Monsanto

This case concerned a biotechnology patent covering the production of bovine somatotropin which is a bovine growth hormone used to increase milk production in cows. This case was unusual in that the plaintiff’s patent was alleged to cover an established product that had been on the market for over 10 years–Monsanto’s Posilac.

Econ One was retained by counsel for the plaintiff to analyze reasonable royalty. Econ One first determined a bargaining range by analyzing the combined benefits available to the parties in reaching an agreement over their alternatives and then employed the Nash Bargaining Solution to predict the size of the reasonable royalty within that range. Econ One then established that a paid-up license would be preferred by both parties as opposed to an agreement with a running royalty. Dr. Jeffrey Leitzinger submitted an expert report and provided deposition testimony. The parties settled on the eve of trial. Monsanto agreed to pay a $100 million up-front royalty along with an ongoing royalty of 15 cents per dose of Posilac (with a minimum annual royalty of $5 million) through the 2023 expiration of the University’s patent.

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