Law360, New York (January 17, 2012, 6:47 PM ET) -- A Massachusetts federal judge refused on Friday to dismiss a suit accusing Ropes & Gray LLP and a former partner of botching patent applications for a New York research laboratory and costing the lab millions of dollars in potential licensing fees.

U.S. District Judge Richard G. Stearns said that Cold Spring Harbor Laboratory had alleged sufficient facts to sustain its claims of legal malpractice, breach of fiduciary duty, fraud and fraudulent misrepresentation and negligence against Ropes & Gray and former partner Matthew P. Vincent, denying the defendants' dismissal motions.

CSHL's suit accuses the firm and Vincent of mishandling a series of patent applications on CSHL's behalf. When preparing patent applications for CSHL scientist Gregory Hannon, Vincent copied text from an earlier patent application on a similar topic by a different scientist into the “detailed description” sections of the Hannon applications, and later compounded the problem by continuing to represent the copied text as Hannon's work, CSHL alleges.

The defendant's misconduct resulted in CSHL's being denied patents that it otherwise would have received and losing millions of dollars in potential licensing fees, CSHL claims. The suit seeks damages of no less than $37.5 million to $82.5 million, plus punitive damages.

The inventions underlying the allegedly botched patent applications relate to a cellular mechanism called RNA interference, or RNAi. Hannon developed novel methods and technologies to exploit RNAi as a research tool in mammalian cells by engineering RNA sequences called short hairpin RNA, according to CSHL. Hannon's shRNA technology lets researchers turn off the expression of genes or combinations of genes in a mammalian cell, CSHL asserts.

CSHL also accuses Ropes & Gray and Vincent of breaching their fiduciary duties by simultaneously representing two of its competitors, Insert Therapeutics and RXi Pharmaceuticals Corp., including working on a licensing agreement between CSHL and RXi concerning Hannon's technology.

Vincent was fired by Ropes & Gray in April 2009 and resigned from the practice of law in July 2009, according to Judge Stearns' order.

The defendants' dismissal motions argued that copying text in a patent application was an accepted practice, citing a do-it-yourself patent book called "Patent it Yourself." However, Judge Stearns rejected that argument.

"This citation to a popular how-to reference book, which states that copying is an accepted practice in patent drafting, is dubious at best and, at worst, an insult to the professional standards of the patent bar," Judge Stearns said.

The judge also rejected the defendants' contention that they didn't breach their fiduciary duties because CSHL didn't allege that Ropes & Gray simultaneously represented the lab and RXi in connection with their licensing agreement or that the firm had ever represented RXi in prosecuting patent applications based on information obtained for CSHL.

In prosecuting Hannon's patent applications, the defendants were necessarily made privy to confidential information about CSHL's patent licensing strategy, Judge Stearns said.

"By putting themselves in a position where they could reveal such information to potential competitors ... defendants created a direct conflict of interest," Judge Stearns said. "CSHL also plausibly alleges that [Ropes & Gray] breached its fiduciary duties by failing to request a conflict waiver at an appropriate time and by failing to provide full disclosure in requesting the waiver."

The parties were not immediately available for comment Tuesday.

CSHL is represented by Chad E. Ziegler and Peter I. Bernstein of Scully Scott Murphy & Presser PC and John O. Mirick of Mirick O’Connell DeMallie & Lougee LLP.

Ropes & Gray is represented by Sarah L. Goodstine, Philip R. Forlenza, Nicolas Commandeur and Irena Royzman of Patterson Belknap Webb & Tyler LLP.

Vincent is represented by Thomas W. Kirchofer, Robert Muldoon and R. Victoria Fuller of Sherin & Lodgen LLP.

The case is Cold Spring Harbor Laboratory v. Ropes & Gray LLP et al., case number 1:11-cv-10128, in the U.S. District Court for the District of Massachusetts.

--Additional reporting by Ben James. Editing by Cara Salvatore.