Tuesday, July 27, 2004

Bio-Rad sues law firm Townsend and Townsend

On Thursday, July 22, 2004, Bio-Rad of Hercules, Calif. filed a complaint in San Francisco Superior Court accusing Townsend and Townsend of legal malpractice, breach of fiduciary duty and breach of contract for services spanning one decade and two pieces of patent litigation. Bio-Rad wants about $35.5 million in damages, including $5.5 million for Townsend's attorney fees. In response, Guy Calladine, a defense attorney for the firm and its partners, stated the dispute is "ancient," and as much about attorney fees as anything else.

The suit illustrates the difficulties arising for an attorney who serve multiple roles for a client. Townsend and Townsend partner Albert Hillman (now retired) had distinct functions as to Bio-Rad Laboratories Inc.: working as one of its IP lawyers, sitting on its board of directors, and testifying in its patent litigation. Needless to say when patent litigation ensued, the opposing side was able to attack his credibility because of this. The opposing side won.

Now Bio-Rad is raising Hillman's three roles in a legal malpractice suit against Townsend and two of its partners, Roger Cook and Theodore Brown III.

In defense, Townsend argues that Bio-Rad knew of the arrangement. "Bio-Rad was fully informed as to everything," said Calladine, of Carlson, Calladine & Peterson, which defends Townsend. He also noted that although the dispute arose about nine years ago, Townsend "has continued to do substantial work for Bio-Rad."

The malpractice suit involves two patent litigations.

An issue in the first litigation is the credibility of the multi-function partner. Suing Pharmacia AB for infringement, Bio-Rad says they were "subject to significant impeachment due to Hillman's position on the Bio-Rad board of directors and the fact that Bio-Rad had paid and continued to pay Townsend significant sums for representation." Another issue is bad advice. Bio-Rad noted that Pharmacia tried to resolve the dispute, but Townsend discouraged settlement by "incorrectly" advising that Bio-Rad would prevail. The case went to trial in 1992, and Bio-Rad lost on both infringement and invalidity grounds.

Referencing California Rule of Professional Conduct 3-310, Bio-Rad now complains that Townsend had an interest in the suit and should have obtained informed written consent from its client but didn't. The firm was litigating the validity of a patent it had filed, the complaint says, and Townsend should have seen "the foreseeable consequences of Hillman testifying."

In the second case, Bio-Rad similarly alleges that the firm gave bad advice when Pharmacia sued it in federal court in New Jersey in 1991, alleging Bio-Rad had willfully infringed on a patent. After a jury found for Pharmacia, Bio-Rad resolved the case for $5.5 million before reaching the trial's damages phase, the complaint says.

[post based on story in The Recorder, July 27, 2004]


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