Genentech Inc was must pay $300 million to the California-based, City of Hope National Medical Center, the California Supreme Court ruled on Thursday.

The medical center sued the company in 1999 for breach of contract and fiduciary duty. The fine to compensate for damages was originally $500 million but the court only upheld $300 million and cut $200 million charged for punitive damages.

The dispute between both groups involves a research partnership in 1976 o f two researchers from City of Hope who began to work with Genentech under contract. As a result, the researchers produced two years later human insulin known as Humulin, the first biotechnology drug.

The agreement was that Genentech would have the patents on the techniques used by the two researchers and City of Hope would receive 2 percent royalty on sales of products that resulted from patents.

However the dispute emerged when City of Hope claimed the company didn't pay all the royalties and City said it deserved 35 patent-licensing agreements between Genentech and other pharmaceutical firms.

The biotechnology group Genentech said it expects to pay the fine which totals nearly $475 million including taxes in the second quarter of 2008.

Shares of Genentech closed down 1.04 percent to $72.92 on the New York stock Exchange Thursday.