The Trustees Of The University Of Pennsylvania vs. Biontech Se et al

Case Background

On August 5, 2024, Plaintiff The Trustees of the University of Pennsylvania filed a COVID-19 vaccine royalty lawsuit in the United States District Court, Pennsylvania Eastern, Philadelphia(Case number: 2:24cv3801). District Judge Kai N. Scott presided over this case.

Cause

The Trustees of the University of Pennsylvania (Penn) filed a lawsuit against BioNTech SE and BioNTech RNA Pharmaceuticals GmbH, accusing them of breaching a patent sublicense agreement. This agreement allowed BioNTech to use Penn’s Nobel Prize-winning mRNA technology, developed by Drs. Katalin Karikó and Drew Weissman, to create the COVID vaccine, Comirnaty®. Penn alleged that BioNTech failed to comply with its royalty obligations under the contract. Specifically, BioNTech manufactured the COVID vaccine in countries where Penn held patents but only paid royalties for sales in countries where those patents were enforced.

Penn asserted that the agreement required BioNTech to pay royalties on all global sales of the COVID vaccine, regardless of where the vaccine was administered, if it was manufactured using Penn’s patented technology. Furthermore, Penn claimed that BioNTech deducted payments for third-party royalties, such as those made to Acuitas, TRON, and NIH, without meeting the conditions outlined in the agreement. Penn also contended that BioNTech failed to provide complete royalty reports or conduct required independent audits, violating its contractual obligations.

Injuries

Penn experienced significant financial harm due to BioNTech’s actions. BioNTech withheld full royalty payments, limiting Penn’s share of global sales from the COVID vaccine, Comirnaty®. By failing to include all eligible sales in their royalty calculations, BioNTech significantly reduced Penn’s income. The unauthorized deductions for third-party royalties exacerbated these losses, as Penn argued that BioNTech did not meet the criteria to claim such reductions. Additionally, BioNTech’s failure to provide detailed royalty reports or perform mandatory independent audits deprived Penn of transparency, preventing it from assessing the full extent of the royalties owed. These omissions disrupted Penn’s financial planning and undermined its ability to fund ongoing scientific research.

Damages

Penn suffered considerable financial damages as a result of BioNTech’s alleged contractual breaches. By underreporting and underpaying royalties, BioNTech deprived Penn of substantial funds that it intended to reinvest in innovative research and development, including advancements in mRNA technology and therapeutic solutions. The improper deductions for third-party royalties further compounded the financial shortfall, resulting in millions of dollars in unpaid royalties. This lack of payment hindered Penn’s ability to support groundbreaking research and develop life-saving technologies. Penn also incurred additional legal and administrative costs in pursuing the lawsuit and addressing BioNTech’s alleged failures to meet its auditing and reporting obligations.

Key Arguments and Proceedings

Legal representation

  • Plaintiff(s): The Trustees of the University of Pennsylvania
    • Counsel for Plaintiff: Joe H. Tucker, Jr. | Christopher A. Pinahs | Jake M. Holdreith | Manleen Singh | Patrick Griffin | Leslie Miller Greenspan
  • Defendant(s): BioNTech SE | BioNTech RNA Pharmaceuticals GMBH
    • Counsel for Defendants: Keith R. Hummel | Sharonmoyee Goswami | John S. Summers | Mark A. Aronchick | Timothy G. Cameron

Claims

Penn filed claims for breach of contract, focusing on three key areas: failure to pay full royalties, unauthorized deductions for third-party royalties, and non-compliance with accounting and auditing duties. Penn asserted that BioNTech’s actions violated the terms of the sublicense agreement, causing direct financial harm. Additionally, Penn filed an alternative claim for unjust enrichment, arguing that BioNTech unfairly benefited from Penn’s mRNA technology while failing to fully compensate the university. Penn sought compensatory damages exceeding $75,000. Additionally, the university requested reimbursement for legal expenses and interest on unpaid amounts.

Penn also sought a court order requiring BioNTech to comply with all contractual obligations. Through the lawsuit, Penn aimed to recoup lost royalties. The university sought to hold BioNTech accountable for its actions. Penn emphasized the importance of fair licensing practices in promoting innovation and ethical business conduct.

Defense

BioNTech denied Penn’s allegations, asserting full compliance with the sublicense agreement. The company argued that it calculated royalties correctly, paying them only for sales in countries where Penn held enforceable patents. They maintained that its manufacturing and distribution practices followed the agreement’s terms, which did not require worldwide royalty payments.

BioNTech also justified deductions for third-party royalties, stating that payments to entities like Acuitas, TRON, and NIH were necessary to avoid patent infringement disputes and were in line with the sublicense agreement. Further, BioNTech claimed it had provided adequate documentation to support these deductions, and that the royalty reductions were lawful and reasonable under the contract.

Regarding reporting and auditing issues, BioNTech contended that it had provided detailed royalty reports in compliance with the agreement, and any discrepancies were due to Penn’s misinterpretations. BioNTech emphasized that it acted in good faith and made substantial royalty payments for Comirnaty® sales.

BioNTech argued that Penn’s claims for damages were speculative and overstated. The company maintained that its royalty payments were accurate and any shortfall was a result of differing interpretations of the contract, not intentional non-compliance. BioNTech insisted that it respected its contractual obligations and sought to resolve disputes amicably before the lawsuit was filed.

In its defense, BioNTech sought to dismiss Penn’s claims, asserting that it had adhered to the sublicense agreement and refuting allegations of breach or unjust enrichment. The company also highlighted Comirnaty®’s significant contributions to global health during the COVID-19 pandemic, underscoring its commitment to ethical business practices.

Settlement

On December 27, 2024, BioNTech agreed to pay $467 million to the University of Pennsylvania (Penn) to settle the lawsuit. Penn had accused the vaccine maker of underpaying royalties, and as part of the settlement, the university agreed to dismiss the COVID-19 vaccine royalty lawsuit.

Court Documents:

Documents Available for Purchase upon Request