Risk Update

IP Risk Week (Part 1) — Denim IP Malpractice Move Victorious Versus Verein ($32m Verdict)

Posted Dan Bressler

“Ohio jury hits Dentons with ‘record’ $32m legal malpractice verdict” —

  • “An Ohio jury has ordered law firm Dentons to pay $32.3 million to laser technology company RevoLaze, after the firm was disqualified in a patent suit over a conflict of interest.”
    “RevoLaze sued Dentons and the chair of its patent litigation practice after the firm had been disqualified from the dispute at the US International Trade Commission (ITC).
  • “The Gap filed a motion to disqualify Dentons, arguing that the law firm’s Canadian arm had previously acted for the company in litigation.”
    “Dentons US denied that it had a conflict of interest, arguing that while Dentons US and Dentons Canada are both members of the Swiss verein Dentons Group, they are separate law firms. A verein-organised firm is a combination of law firms that share marketing and branding, but keep their profits and finances separate from one another. But, in May 2015, the ITC granted The Gap’s motion to disqualify.”
  • “In a legal malpractice suit filed subsequently against Dentons US, RevoLaze said: ‘As a result of defendants’ failures, RevoLaze was required to retain alternate counsel to replace defendants. Despite the fact that defendants had billed RevoLaze for over 81% of the agreed budget for all of the ITC litigation [and district court litigation] RevoLaze was required to duplicate many of these expenses with its alternate counsel.”
  • “Sarah Dunkley, senior associate at Patterson, added that the case is important because it shows that a ‘law firm cannot evade its duty of loyalty by organising itself as a Swiss verein.'”
  • “Dentons said: ‘We will appeal. The verdict was simply wrong. Just as our position was vindicated on appeal by the ITC, we will be vindicated on appeal in this matter. We acted properly, ethically, and consistent with our duties to our clients.'”

“Dentons Suffer $32 Million Lawsuit Loss For Malpractice” —

  • “‘The verdict did not surprise me,’ said Kristi Browne [counsel for RevoLaze], ‘but it was gratifying. The jury was particularly attentive throughout the trial, asked good questions, and thoroughly deliberated.'”
  • “RevoLaze, a small Cleveland, Ohio technology company, owns patents that have revolutionized the denim industry. In 2015, Dentons and Mr. Hogge were disqualified from representing RevoLaze in a patent enforcement case in the International Trade Commission. The disqualification occurred after a defendant in that case, The Gap, raised a conflict of interest. ‘The case is important because it shows that a law firm cannot evade its duty of loyalty by organizing itself as a Swiss verein,’ said Sarah Dunkley [counsel for RevoLaze].”