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Legal malpractice claims brought by three former clients against New York intellectual property law firm Pennie & Edmonds can proceed in state court at the same time patent infringement claims arising from the same situation go forward in federal court, a Manhattan Supreme Court judge ruled Wednesday. G. D. Searle & Co., Pfizer Inc., and the University of Rochester all sued Pennie & Edmonds in state court in 2000 for breach of contract and breach of fiduciary duty. They alleged that the firm was conflicted when it prosecuted a patent for the university that became the basis for patent infringement suits against the pharmaceutical companies, which were also Pennie clients at the time. The patent infringement action is pending in the Western District of New York. Pennie had moved to stay the malpractice claims on the grounds that many of the issues were identical and the complicated privilege issues warranted waiting for the infringement action to be resolved. In his Jan. 27 decision in G. D. Searle & Co. Inc. v. Pennie & Edmonds, 602374/00, Supreme Court Justice Charles E. Ramos denied the law firm’s motion. He noted the complex privilege issues but found that the legal malpractice and patent infringement claims were “completely different.” “The two actions in this Court question whether Pennie & Edmonds violated its ethical obligations by representing the University and [the pharmaceutical companies] at the same time in related matters,” the judge wrote. “The infringement action, on the other hand, addresses the validity of patents. “Whether the patents are found to be valid or invalid, Pennie & Edmonds’ clients’ interests could have been adverse,” he concluded. Justice Ramos further decided that one case’s resolution would not affect the outcome of the other. “Here, while it is true that this action appears to be the tail wagging the dog, resolution of the infringement action would not result in a setoff nor does it appear that resolution of the infringement action would lead to settlement of this action,” Ramos wrote. The judge ruled in Pennie & Edmonds’ favor on a number of other motions, however. In denying the university’s request to amend its complaint to request punitive damages, Ramos found the law firm’s conduct had not been “sufficiently egregious” to merit such an award. Punitive damages, he noted, were typically awarded in malpractice claims that involved deception or gross negligence rather than conflict of interest. The judge also ruled on a number of privilege issues. He denied the university’s motions to prevent discovery by Pennie & Edmonds of documents and testimony relating to the university’s representation by Gerald P. Dodson, a partner in the Palo Alto, Calif., office of Morrison & Foerster. Dodson allegedly witnessed a meeting in which Pennie & Edmonds lawyers disclosed to the university they were representing Pfizer and Searle. Such documents largely fell under the waiver to privilege for information at issue in a suit, he said. In his decision Ramos chided the university for bringing suit, then seeking to block disclosure. “Knowing full well that litigation necessarily involves disclosure, the University filed this action while the infringement action was pending,” the judge wrote. “That was a strategic decision.” The matter is under seal, and lawyers reached in the case declined comment. Pennie & Edmonds is represented by Jay Safer of New York-based LeBoeuf, Lamb, Greene & MacRae. The University of Rochester is represented by San Francisco-based Morrison & Foerster; Searle by Sidley Austin Brown & Wood; and Pfizer by New York-based Kaye Scholer.

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