We previously discussed a California appellate decision holding that a technology licensing relationship created fiduciary duties between the inventor who disclosed confidential technology and the licensee who agreed to exploit the technology in exchange for a royalty.
The California Supreme Court has now reversed that ruling, holding that no fiduciary duty had been established and that punitive damages awarded could not stand. A $300 Million breach-of-contract judgment was, however, upheld. City of Hope Natl. Medical Ctr. v. Genentech, Inc., 75 Cal.Rptr.3d 333 (2008).
As we previously wrote, technology disclosure and licensing arrangements are commonly arms-length business deals. The City of Hope opinion provides guidance to licensing practitioners seeking to avoid creating a fiduciary relationship between the parties – a relationship that imposes heightened duties and can result in tort damages, including punitive damages.