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NY Court Sends CSHL Suit Against One-Time Patent Counsel to Mass.

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By Doug Macron

The New York District Court hearing a lawsuit filed by Cold Spring Harbor Laboratory against its former patent counsel has found the venue improper and has declined to rule on a motion to dismiss the case.

As a result, it will be up to a new court in Massachusetts to rule on CSHL's allegations that the law firm Ropes & Gray mishandled certain RNAi-related intellectual property stemming from the work of Greg Hannon and maintained improper business relationships with RNAi drug developers.

"The court does not need to address the merits of the underlying claims [of the case] because … the court grants the defendants' motion to dismiss … for improper venue and transfers this case to the District of Massachusetts," the US District Court for the Eastern District of New York ruled last week.

The legal row began about a year ago when CSHL sued Ropes & Gray and its former attorney Matthew Vincent for allegedly improperly prosecuting US two patent applications — Nos. 20040018999, filed May 16, 2001, and 20020162126, filed May 24, 2001 — that cover the work of CSHL investigator Greg Hannon (GSN 2/25/2010).

CSHL charged that Vincent, who was handling the filings, 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 alleges.

According to CSHL, Vincent further concealed his actions and, by the time the situation came to light through an internal CSHL investigation, the applications had already been "unfairly prejudiced," leading to their rejection by the US Patent and Trademark Office.

CSHL claims that the total losses related to Vincent's alleged malpractice are as much as $82.5 million, which includes lost revenues from commercial user licenses and royalties.

For its part, Ropes & Gray contends that the patent applications were rejected based on the inventions of researchers other than Fire and Mello, including Benitec co-founder Michael Graham, and asked that the suit be dismissed.

Before the court could rule on the dismissal, CSHL sought to expand its suit to include charges that Ropes & Gray improperly represented Arrowhead Research subsidiary Insert Therapeutics, which was later merged into another Arrowhead company, Calando Pharmaceuticals, and RXi Pharmaceuticals.

Specifically, CSHL alleges that Vincent, a co-founder of Calando, included certain of Hannon's inventions into a patent application filed on behalf of Insert. He later "approached CSHL to propose a business venture [with] … Insert without disclosing his relationship with Insert or seeking a waiver of conflict from CSHL," the institute claims.

Meanwhile, in 2007, he began representing RXi, which that year non-exclusively licensed shRNA technology developed by Hannon, an RXi co-founder. CSHL says Vincent never disclosed his relationship to the company.

Further complicating matters was a company founded by Vincent called The IP Resource Company, which performed patent database searches. According to a court filing, it was alleged that Vincent prepared and submitted invoices to Ropes & Gray for payment for work done by the company without disclosing his role, then transferred the payments to his personal account.

Vincent's activities were the subject of a disciplinary investigation by the Commonwealth of Massachusetts, and he later voluntarily resigned from the practice of law, the filing notes.

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In its request to have the suit dismissed, Ropes & Gray argued that the New York District Court was not the proper venue for the case to be heard, and last week the court agreed.

"Vincent performed the majority of his work preparing the Hannon [patent] applications and responding to [patent office] actions from his office … in Massachusetts," it stated. "The telephone conversations, emails, and the draft patents exchanged between the parties served the function of providing Vincent with information to perform the actual drafting and prosecution of the patents, but his actions that allegedly constituted malpractice did not occur in the course of these communications.

"Assuming the plaintiff’s allegations are true, Vincent knew from the moment he copied the Fire [patent] text into [Hannon's patent applications] that he was performing an improper act," the court added.

However, "finding venue in the Eastern District of New York solely based on the defendants' failure to inform the plaintiff of the alleged malpractice in telephone conversations would lead to a rule where venue always existed where a plaintiff resides so long as there are any communications where the defendant had an opportunity to and failed to disclose the malpractice," it added, noting that such a rule would not comport with existing law.

"Because the defendants did not commit any of the alleged acts or omissions underlying the legal malpractice claim in the Eastern District of New York, and any relevant communications were tangential to the legal malpractice claim, venue is not proper in the Eastern District of New York," the court ruled.

As a result, the case has been transferred to Massachusetts.


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