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Sigma-Aldrich Ordered to Provide Sales Data in CSHL Suit Against Former Patent Counsel


As Cold Spring Harbor Laboratory's protracted legal battle with its former intellectual property counsel continues, Sigma-Aldrich has been pulled into the mix, with the court hearing the case ordering the life sciences company last week to hand over to the institute sales information for certain of its RNAi-related reagents to assist in the calculation of potential damages in the suit.

According to court filings, CSHL had filed a subpoena requesting the financial data “to discover information relevant to prove damages” in its suit against law firm Ropes & Gray, which has been charged with mishandling some of the institute's patent applications covering shRNA-related inventions.

“Sigma-Aldrich has advertised itself as a major supplier of the biotechnology products relevant to CSHL’s lawsuit,” the institute added. Since it has no other source for information related to the sales of these products other than hundreds of Sigma-Aldrich customers, it asked the company to provide it.

In November, Sigma-Aldrich told CSHL that it intended to file a motion with the court to quash the subpoena on the basis that providing the sales data represented an undue burden on the company, according to the filing. In response, CSHL's counsel agreed to allow the company to submit the information “in the form of summary data [that] may be aggregated and sorted by means of standard commercial software.”

“Sigma Aldrich never responded, despite numerous follow-ups,” CSHL said in the filing. Representatives for the two later spoke on the telephone about the matter, “but the parties were unable to reach agreement,” it added.

Last week, the court issued an order compelling Sigma-Aldrich to “produce documents and a corporate representative to authenticate the documents produced, in connection with the case.”

The legal row between CSHL and Ropes & Gray extends back to early 2010, when the institute filed a lawsuit in a New York District Court claiming that one of the law firm's former attorneys, Matthew Vincent, had improperly prosecuted two US patent applications covering work by CSHL researcher Greg Hannon (GSN 2/25/2010).

The applications — Nos. 20040018999, filed May 16, 2001, and 20020162126, filed May 24, 2001 — claim "methods for attenuating gene expression in a cell using gene-targeted double-stranded RNA," namely an shRNA, according to their abstracts. "The dsRNA contains a nucleotide sequence that hybridizes under physiologic conditions of the cell to the nucleotide sequence of at least a portion of the gene to be inhibited."

CSHL alleges that Vincent, who handled the applications, did not provide "an original, complete description of … Hannon's work … [but instead] relied upon copying extensive portions of text — essentially verbatim — from a prior patent application" published by RNAi pioneers Andrew Fire, of the Carnegie Institution of Washington, and Craig Mello, of the University of Massachusetts Medical School.

In doing so, Hannon's inventions were made to seem like "something that Fire invented or was suggested by the Fire application," rather than a novel invention that "represented a considerable advance over the prior art," CSHL charged.

By the time CSHL became aware of the situation, the applications were “unfairly prejudiced” and ultimately rejected by the US Patent and Trademark Office, it said. As such, the institute said it was denied opportunities to license Hannon's inventions, and estimated that at least $22.5 million in annual commercial user license income and $9 million in annual royalty income had been lost.

The patent applications were eventually prosecuted successfully by CSHL and issued in 2012 with claims directed to tools and methods that allow the stable suppression of gene expression in mammalian cells using shRNAs.

As part of its legal defense, Ropes & Gray argued that Hannon's patent applications were rejected because of prior art, including inventions from Benitec Biopharma co-founder Michael Graham, not Vincent's actions, and therefore the case should be dismissed. It also claimed that the New York District Court was not the proper venue for the case since Vincent — who later relinquished his license to practice law amid other allegations of wrongdoing — conducted the majority of his work for CSHL in Massachusetts.

In early 2011, the court agreed that it was not the proper venue for the case, and the dispute was moved to a Massachusetts District Court (GSN 1/27/2011). A year later, the Massachusetts court shot down Ropes & Gray's request for a dismissal of the suit (GSN 1/19/2012).

Facing a Dec. 21 deadline for completing discovery in the case, CSHL in October asked Sigma-Aldrich to provide sales information related to its Mission line of vector- and viral-based RNAi products.

According to the institute, had the applications not been prejudiced by Vincent's actions and issued earlier, Sigma-Aldrich would have taken a commercial license to them, paying an upfront fee and running royalties. As such, it is seeking the sales data in order to calculate the “amount of lost licensing revenue it could have generated absent the malpractice” by Vincent.

“The sales and revenue data sought by the subpoena are typically aggregated on a daily basis as part of a corporation’s internal reporting function using standard or customized accounting software,” CSHL said in a motion to compel Sigma-Aldrich to comply with its subpoena. “These data are typically sorted, at a minimum, into quarterly reports as part of a corporation’s reporting obligations or even on a daily basis in daily sales reports.

“Sigma-Aldrich undoubtedly carries out these reporting functions as part of its normal business activities,” it said. “And CSHL’s subpoena imposes no greater burden than the burdens imposed on Sigma-Aldrich in carrying out these functions.”

Last week, the New York District Court agreed, ordering the company to provide the information by Dec. 12.