By Matthew Willett
Jurors awarded Caliper Technologies Inc. more than $52 million with a decision against Aclara BioSciences Inc. in a case of trade secret misappropriation stemming from the 1995 representation of both companies by a Palo Alto, Calif., patent attorney.
Aclara, of Mountain View, Calif., promised to appeal the ruling, and expects to see the damages dropped by $12 million to $17 million. Caliper, also of Mountain View, called the decision a victory in the ongoing dispute.
Aclara CEO Joseph Limber said the microfluidics technology at issue in the suit was key to the jury's understanding of the case, and added his company considers the case appealable on several fronts.
"You should understand that this lawsuit involves a highly specialized field of technology and some legal rulings that limited the evidence provided to the jury. Their theory of liability we felt was flawed, as were the speculative arguments about damages. We think Caliper's claims of damages were simply incredulous," Limber told BioWorld Today.
The suit sprang from the alleged dual representation by patent attorney Bert Rowland of both Aclara and Caliper in late 1995 and early 1996. According to Aclara, Rowland began representing Aclara in 1994 and performed limited legal services for Caliper beginning in December 1995.
Caliper alleged Rowland used information he gained from his work with Caliper in pursuing a similar patent for Aclara. Caliper's Ramsey patents, or Aclara's '015 patent, cover in silico experiment technology.
The technology at issue, microfluidic techniques to perform experiments on chips - the lab-on-a-chip technology - allows scientists to conduct research using a computer chip small enough to fit in the palm of a child's hand rather than using a fully furnished laboratory.
In September, a separate suit alleging breach of fiduciary duty and trade secret misappropriation against Rowland and his firm - Flehr, Hohbach, Albritton, Test and Herbert, also of Palo Alto - won Caliper $12 million in damages.
Jane Green, Caliper senior director of corporate communications, told BioWorld Today that the decision represents a significant victory for Caliper, but that the issue is far from over.
"This is part of an ongoing set of cases and disputes between Caliper and Aclara," Green said. "We've done very well in this dispute so far, but it's a long and complicated issue, and it would be unwise to think it's over yet. We're certainly prepared for [further dispute]; nevertheless, it's a significant victory for Caliper."
Limber maintained the issue is far from dead. In terms of liability and damages, he said, his company will mount a vigorous appeal.
"Caliper hired witnesses to testify that Caliper was damaged by the litigation, and that Caliper would have raised tens of millions more in IPO proceeds had it not been for the litigation with Aclara," Limber said. "Not a single Caliper employee made that allegation under oath. Their head of investor relations testified that the Caliper IPO was highly successful. We believe these claims of damage were highly speculative and would not stand up on appeal."
Caliper priced its initial public offering of 4.5 million shares in December 1999 at $16 per share, raising about $72 million.
Green said the suit represents a validation of Caliper's allegations.
"I think it demonstrates that there were, in fact, trade secrets misappropriated by Aclara," Green said. "Certainly there is going to be a significant amount of legal action going forward in this issue - that's to be expected. There'll be a lot of motions before the judge both on their side and ours, and the judge has some discretionary power, and it's hard to predict what the outcome will be."
Beyond an appeal of the Friday decision, further patent litigation remains between the companies. A Markman hearing, a procedural step for framing claims at issue in patent litigation, is scheduled for Nov. 20. A Markman hearing in June produced claims by both companies of a favorable ruling.
Despite what appears to be a setback for Aclara's position, Limber said the company is in good shape.
"I think that not only for Aclara, but for a lot of the tech community, the litigation issue is becoming more the norm than the exception," Limber said. "Our belief from the beginning was that this would be a long process evaluating some very complex legal issues, but we feel, as we did at the beginning, that Aclara should be in fine shape. What's important is being able to continue to develop our products and bring them to market, and from that perspective we don't believe this should have any impact."