Washington University is suing the Wisconsin Alumni Research Foundation, which manages licensing for the University of Wisconsin-Madison, for more than $38 million of revenue the foundation generated from the sale of AbbVie Inc., a drug which treats kidney disease over “breach of contract, breach of implied covenant of good faith and fair dealing, and breach of fiduciary duty.”

In 1995, the two institutions applied for a joint patent and signed a contract over the co-owned invention. The University of Wisconsin-Madison would be the lead contact in obtaining and managing the patent in exchange for a greater share of the royalties earned.

The University asserts that the Wisconsin Alumni Research Foundation (WARF) violated the terms of their patent agreement by misrepresenting the value of the patent when it was first licensed to the pharmaceutical company, Abbott Laboratories, leading the University to believe that the perceived value of the patent was artificially less than its actual value.

“After Washington University learned through publicly available information that this patent had a very significant value, the University reached out to WARF to try to negotiate a resolution and WARF just refused to give the University the information it needed; so, we had to file suit,” lead counsel the University Michael Jacobs said.

The University’s legal counsel first filed the suit in 2013, citing “shabby treatment” by WARF because the appraised estimation of the patent’s worth couldn’t be accessed by the University.

WARF lawyer Robert Shaffer argued that the University wanted to revise “unambiguous” portions of the contract.

“A deal is a deal,” Shaffer said in a press statement, referencing the University’s complaint that they were not told how the patent was determined. “They didn’t ask [for a method reasoning] during the course of negotiations.”

According to a report prepared by Bloomberg News, $409 million was made in sales of the drug in 2011. The University referenced a lawsuit in 2012 wherein WARF and Abbott Laboratories, who received licensing for the patent, identified the patent as valuable.

“It’s a really interesting case. It’s very unusual for universities to get in litigation with each other over this kind of thing,” Jacobs said. “Usually, these issues are worked out via negotiation, but for this particular case, it just didn’t happen.”

According to court documents, WARF receives 15 percent of the drug’s revenue as an administrative fee and the remaining royalties are split, with Wisconsin receiving two-thirds and Washington University one-third. According to Shaffer, the University would receive $1.2 million and, because WARF has paid $1.5 million, the University is “not entitled to any more.”

“The University filed this lawsuit because we concluded that WARF had not paid the University a fair share of the royalties it received from Abbott,” Jacobs said. “It is important to the University, of course, that we and out researchers are fairly compensated under our agreements. We look forward to a favorable result in the case.”

The ruling of the case has not been decided by the U.S. District Court for the District of Delaware. An update will be provided to reflect the decision of the court.

Additional reporting by Jessica Bigley.