This newsletter introduces a litigation regarding Opdivo. Opdivo is a drug manufactured and sold by Ono Pharmaceutical Co., Ltd. (hereinafter, “Ono Pharmaceutical”). The drug has gained increasing popularity following the Nobel Prize winning of Dr. Tasuku Honjo for the PD-1 protein targeted by Opdivo.

In recent years, development of new drugs is not limited to projects under the initiative of individual pharmaceutical companies alone. Development of new drugs is frequently achieved by productizing technological seeds derived from organizations such as universities. Thus, it is important to establish a system of academia -industry collaboration.

In academia industry collaboration, it is considered to be important for universities to support researchers in their agreements with companies so that they can devote themselves to research activities. Needless to say, it is a fact that universities in Japan have a number of cases of academia-industry collaboration accumulated and due to this, each university has been improving templates of relevant agreements in accordance with characteristics of the university. In some cases, however, universities cannot afford to support researchers. This is because there are sometimes peculiar cases and limited human resource available depending on individual cases. Consequently, researchers often take the lead and are participate in agreements. Although details are uncertain, this litigation is considered to be related to the case where a researcher takes the lead and proceeds with negotiation with a company.

As can be seen from news reports, it can be confirmed that this litigation has reached a settlement as a result of various efforts of both parties. We introduce this case as a reference for companies and other entities that are trying to achieve academia-industry collaboration in Japan.

Dr. Honjo filed this litigation against Ono Pharmaceutical with the Osaka District Court, demanding that the company pay about 22.6 billion yen[1]. He claimed that the company neglected to properly distribute compensation for his cooperation in another litigation raised by Ono Pharmaceutical against an U.S. pharmaceutical company (hereinafter, referred to as “Merk case”).

The initial contract concluded in 2006 provided that Dr. Honjo was to receive payment of license fees of (i) 0.5% of sales of Opdivo directly sold by Ono Pharmaceutical and (ii) 1% of royalty received from another company regarding Opdivo[2].

According to news reports, Dr. Honjo claimed in the litigation that “President Sagara offered me 40% of settlement money to be paid to Ono Pharmaceutical if I cooperate with them in the Merk case, but he paid me only 1% of the settlement money”[3]. President Sagara is the President of Ono Pharmaceutical.

On the other hand, Ono Pharmaceutical pointed out that “we indeed offered 40% of the settlement money, but rate negotiation itself was broken off because Dr. Honjo turned our offer down, saying “it is just a paltry sum of money”[3]. Ono Pharmaceutical rebutted that “we had distributed hundreds of millions so far based on the contract of 2006”[3].

According to press release of Ono Pharmaceutical, details of the settlement are as follows[4]:

1. ONO will continue to pay a royalty to Dr. Honjo without changing the royalty rate provided in the License Agreement.

2. ONO will pay JPY5 billion to Dr. Honjo for the following:

· Settlement fee for the complete resolution of disputes related to the License Agreement

· Rewards for Dr. Honjo’s cooperation to ONO in the third party litigations over the validity or the infringement of the three patents (JP 4409430, JP 5159730 and JP 5885764, “the Patents”) and their related patents in Japan and abroad

· Settlement fee to inventors other than Dr. Honjo of the patents covered by the License Agreement including the Patents

3. ONO will donate JPY23 billion, on our own voluntary will and as having been considered internally, to the “ONO Pharmaceutical and Dr. Honjo Honorary Research Fund”, which will be established at Kyoto University in order to expand the economic foundation for the improvement of future education and research environment and for education and research support projects at Kyoto University, and to show a new form of industry-academia collaboration in Japan.

In the settlement, no change was made to the royalty rate provided in the initial License Agreement of 2006. The President of Ono Pharmaceutical was interviewed later and commented on the reason that “we cannot guarantee predictability of business management if the contract is modified later on. We wanted to avoid leading to an atmosphere that our company can compromise and reconsider the rate. Since each and every company in the pharmaceutical industry cooperates with academia, I did not want to cause any trouble in their cooperation”[5].

The President commented, however, that in any case a series of disputes with Dr. Honjo were “finally resolved”[5] through the settlement and this outcome was “very satisfying”[5].

On the other hand, Dr. Honjo said in a comment that “we were able to reach satisfactory resolution. My aim is to support basic research through the funds that will be returned from the company”[6].

As can be seen from comments issued by both parties after the settlement, we opine that this case should deserve appreciation in that both parties reached satisfactory settlement while maintaining their dignity.

Generally speaking, there are matters to be considered by both companies and universities in order to expedite academia-industry collaboration in Japan. In our opinion, one of important matters to be considered by companies is how they should conclude license agreements whilst considering development potential of drug seeds of universities in order to reduce development risk. Furthermore, it is considered to be important for universities to properly proceed with license agreements with pharmaceutical companies while properly supporting researchers.

In this newsletter, we introduced a litigation between a Japanese researcher and a pharmaceutical company as one referential case where settlement is reached due to efforts of both parties. We hope that you find it informative in your corporate activities.

[1] (2020, June 5). “Nobel laureate Honjo’s ten years of patience finally ended” Litigation Raised against Ono Pharma demanding payment of 22.6 billion yen. Kyoto Shinbun. Retrieved from https://www.kyoto-np.co.jp/articles/-/270244

[2] (2022, January 6). Litigation over patent royalties of cancer immunotherapy drug “Opdivo”: what lessons learned from settlement with Dr. Honjo. +vision. Retrieved from https://vision00.jp/topic/1808/

[3] (2021, September 2). (1) Nobel Laureate Honjo said “No favorable outcome was possible without my cooperation in the litigation against the U.S. pharmaceutical company”. Sankei Shinbun. Retrieved from https://www.sankei.com/article/20210902-U554S5OLOJKU3PYB6ZNBFQN7Q4/

[4] (2021, November 12). Ono Pharmaceutical Co., Ltd.. ONO Announces the Settlement of Litigation Raised by Dr. Honjo. Retrieved from https://www.ono-pharma.com/news/20211112_2.html

[5] (2021, November 15). “No compromise can be made with complete settlement” The President of Ono Pharma said in the settlement with Dr. Honjo. Nikkei Shinbun.

[6] (2021, November 12). Ono Pharma to pay 28 billion yen to settle Opdivo Litigation with Dr. Honjo. Nikkei Shinbun