Monsanto Co. agreed to pay the University of California more than $100 million to settle the school's claim that the biotechnology company infringed on a patent related to a hormone that makes cows produce more milk.
The university's Board of Regents and Monsanto announced the settlement Monday as the bovine growth hormone case was scheduled to go to trial. The suit was filed in 2004.
Under the accord, St. Louis-based Monsanto will pay the school $100 million upfront plus 15 cents a dose, or at least $5 million annually, to license the patented technology. The university's patent rights expire in 2023.
At issue is the genetically engineered bovine somatotropin hormone, sold under the brand name Posilac. Monsanto says injections of the hormone help dairy cows produce 10% to 15% more milk.
The university alleged that three researchers at UC San Francisco first isolated the DNA used to make the hormone. The lawsuit said Monsanto knew about the research as early as 1985, but sold the product anyway.
Although university researchers might have developed the technology decades ago, the school did not win a patent until 2004, UC spokesman Trey Davis said. The school filed its lawsuit that year.
Monsanto spokesman Andrew Burchett said that the company was the first to produce the product commercially and that it patented the production process.
Monsanto said the agreement with the university would give it an exclusive commercial license to use the university's patented hormone. The university will have the right to use the hormone in noncommercial research, and the U.S. government will retain some rights because federal funding was used to develop the technology.
The company said the settlement would not hurt its performance this year. Burchett said Monsanto would not disclose annual sales of Posilac.
The three scientists at UC San Francisco who first developed the hormone are Walter L. Miller, Joseph A. Martial and John D. Baxter, according to the school.
Miller said he was happy with the settlement. He published his first paper on the hormone technology in 1980.
"It's been 26 years, and it's nice to have it done," Miller said.
Miller said he and his fellow researchers were denied a patent for decades mainly because of technicalities with the patent process, not problems with their scientific work.
The hormone has stirred debate since it was approved for commercial use by the Food and Drug Administration in 1993. Consumer groups worry that the hormone could affect human health, and many milk brands carry labels advertising that they are Posilac-free.
Shares of Monsanto rose 55 cents Monday to $85.19.