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CSHL Settles Patent Malpractice Dispute with Former IP Counsel

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NEW YORK (GenomeWeb) – Marking the end of years of litigation, Cold Spring Harbor Laboratory (CSHL) announced this week that it has settled its patent malpractice lawsuit against its former patent counsel just days before the case was set to go to jury trial.

The specific terms of the settlement are not being made public, a CSHL spokesperson told Gene Silencing News. However, the spokesperson said that CSHL will receive a cash payout "in the millions" and that the institution is pleased with the outcome.

The legal wrangling began in 2010 when CSHL sued law firm Ropes & Gray, as well as one of its former lawyers, in a New York district court for allegedly mishandling the prosecution of two US patent applications — Nos. 20040018999, filed May 16, 2001, and 20020162126, filed May 24, 2001 — that related to shRNA inventions by CSHL researcher Gregory Hannon.

CSHL claimed in its lawsuit that attorney Matthew Vincent, who was handling the patent 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, Vincent created the impression that Hannon's work was "either 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," the suit said.

CSHL also alleged that Ropes & Gray also inappropriately represented two companies in the RNAi drugs space — Arrowhead Research and RXi Pharmaceuticals — resulting in a conflict of interest. The institution added that Vincent — a co-founder of Arrowhead subsidiary Calando Pharmaceuticals — also included certain of Hannon's inventions on a patent application he filed on behalf of another Arrowhead subsidiary called Insert Therapeutics.

CSHL stated that by the time it had discovered the situation through an internal investigation, the Hannon patent applications had been prejudiced, leading to their rejection by the US Patent and Trademark Office. As a result, the institution said it lost out on as much as $82.5 million in licensing revenues and royalties.

Ropes & Gray argued that the patent applications were rejected based on prior art stemming from the work of various RNAi researchers including Fire, Mello, and Michael Graham, a co-founder of Benitec Biopharma and investigator at the Commonwealth Scientific and Industrial Research Organization.

It also asked the court to dismiss the case because New York court was not the proper venue for the litigation since Vincent was based in Massachusetts.

In early 2011, the New York court granted Ropes & Gray's request, sending the case to a Massachusetts district court. At the time, the court said that it was not making a ruling on the merits of the case but that it was, indeed, the wrong venue for the dispute.

In early 2013, the Massachusetts court also dismissed CSHL's case, stating that it, too, did not have jurisdiction over the litigation, citing a recent US Supreme Court ruling that a statute giving district courts jurisdiction over civil actions relating to patents did not include cases involving allegations of legal malpractice in the handling of a patent matter.

Moreover, since both CSHL and Ropes & Gray are based in New York, a legal standard that gives district courts authority to hear civil cases between parties from different states does not apply, the court found.

Undeterred, CSHL then sued Ropes & Gray and Vincent in a Massachusetts state court. According to the research institution, the case was poised to go to trial this month when the settlement was reached.

Meanwhile, CSHL was able to withdraw the Hannon patent applications that were prosecuted by Vincent and successfully refile them. In 2012, the USPTO granted two of the patents — No. 8,202,846 and No. 8,153,776, both entitled "Methods and Compositions for RNA Interference" — and this year issued a notice of allowance on a third. CSHL has also received allowances from the European Patent Office for related applications.

The CSHL spokesperson said that the institution has since licensed the intellectual property to a number of companies already. Teri Willey, vice president for business development and technology transfer at CSHL, added in a statement that "we believe many other companies are actively using the technology in drug development and we look forward to working with them to put appropriate licenses in place.”

The spokesperson noted that because CSHL was able to eventually secure patents on Hannon's inventions, the institution's losses related to Ropes & Gray's activities were less than the $82.5 million stated in previous court filings, which was an estimate that assumed the patents would never be granted.

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