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Call it a lesson in geography. The North Carolina Department of Justice is suing a prominent law firm on behalf of the University of North Carolina for a bungled patent application in Taiwan related to flat-screen nanotechnology. Buchanan Ingersoll & Rooney has found itself on the wrong side of a lawsuit brought by the University of North Carolina at Chapel Hill and a North Carolina nanotechnology firm. The action alleges that an intellectual property boutique that merged with Buchanan Ingersoll in 2005 mistakenly dropped a plan to acquire a patent in Taiwan, instead of dropping the patent application in Thailand, as its client allegedly had directed. The university and the technology company, Xintek Inc., assert that Buchanan Ingersoll is liable by association for the alleged blunder of the former boutique, Burns, Doane, Swecker & Mathis. In addition to asserting malpractice, breach of contract and breach of fiduciary duty claims, the action serves as a cautionary tale of the mix-ups that can happen with international deals involving multiple players and copious e-mailing. Millions in lost revenue? Buchanan Ingersoll & Rooney said in a statement released through a spokeswoman that the lawsuit has “simply no validity.” The statement said that since the technology had not received a patent from the U.S. Patent and Trademark Office, the claims asserted in the lawsuit were invalid. But the university claims that the errors cost it between $15 million and $20 million in lost revenue. “We felt we had to take this step and get this suit filed,” said Mark Crowell, associate vice chancellor for economic development and technology transfer at University of North Carolina at Chapel Hill. The plaintiffs originally filed the lawsuit in Orange County Superior Court in North Carolina. Last month, the defendants filed a notice to remove it to the U.S. District Court for the Middle District of North Carolina. Board of Governors of the University of North Carolina v. Burns Doane, Swecker & Mathis, No. 1:06-CV-01058. The action stems from nanotechnology developed by University of North Carolina Professor Otto Zhou for use in flat-screen televisions and computer monitors. According to the complaint, the university in 2001 licensed the technology to Xintek, founded by Zhou. Under the agreement, Xintek was to develop the technology for commercial applications and pay royalties to the university for revenues it received. In addition, Xintek issued shares to the school and agreed to pay the expenses for seeking patent protection of the nanotechnology. Besides pursuing a patent in the United States, the university hired Burns Doane to handle the prosecution of foreign patents in Taiwan, Thailand, Malaysia and Hong Kong, the complaint alleged. About 40% of all flat-screen televisions are manufactured in Taiwan, the complaint said. A key letter After the school retained Burns Doane to pursue the patents, a breakdown in communication seems to have led to a mix-up in the patent prosecutions. At one point, Burns Doane attorney Scott Cummings apparently sent an e-mail to the school, asking whether it wanted to pursue patents in “TH” and “MA,” after an Xintek executive sent an e-mail asking if applications in Thailand and Malaysia could be stopped. However, according to the complaint, Burns Doane attorney Ronald Grudziecki later sent a letter to local counsel in Taiwan stating that the plaintiffs wanted to abandon the Taiwan patent application. The university points to a letter it said it received from Burns Doane attorney Jeffrey Killian about the status of the patent prosecutions. Killian wrote: “Unfortunately, at the time that the decision [to abandon the Malaysian application] was made, the Taiwan application was inadvertently abandoned and not the Malaysian application,” the letter stated. Killian is not a defendant in the lawsuit. Grudziecki, now a partner in the Washington office of Philadelphia-based Drinker Biddle & Reath, declined to comment on the lawsuit. Representing the defendants is Pamela Bresnahan, a partner in the Washington office of Columbus, Ohio-based Vorys, Sater, Seymour and Pease. She declined to comment on the case, saying only that the defense’s answer was due in mid-January. Crowell, at the University of North Carolina, called the situation “unfortunate.” “Errors are made all the time, but this was one with huge financial consequences,” he said. He said damages as high as $20 million were attributable to the volume of flat-screen production in Taiwan and the popularity of the technology.

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