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American Chemical Society Loses the Appeal Against the Leadscope Case

20 Jun

The American Chemical Society is going to take a pretty significant hit in its most recent iteration of the ACS vs Leadscope case…to the sum total of $40 million PLUS costs. Ow.

ACS, through CAS generally, have had a number of very high profile collisions over the past few years but this has to be the most costly.

1) In 2004 ACS went up against Google for infringement against “Scholar” as a trademark. ” The ACS complaint contends that Google’s use of the word scholar infringes on ACS’s SciFinder Scholar and Scholar trademarks and constitutes unfair competition.” No one “lost” and it was settled out of court with the statement from the ACS that “The settlement includes a confidentiality clause and as such the ACS will have no further comment.” Not sure how much it cost but I don’t personally know any cheap lawyers. And if you’re up against Google lawyers they are not going to be cheap lawyers!

2) In 2005 the ACS opposed the creation of PubChem stating “The ACS believes strongly that the Federal Government should not seek to become a taxpayer supported publisher. By collecting, organizing, and disseminating small molecule information whose creation it has not funded and which duplicates CAS services, NIH has started ominously, down the path to unfettered scientific publishing…“. This one was a very public battle with a very significant public outcry. There were discussions on multiple blogs, letters to C&E News and a number of people I know personally gave up their ACS membership in disgust. Wikipedia has some interesting reports about some of the costs involved. “The ACS has a strong financial interest in the issue since the Chemical Abstracts Service generates a large percentage of the society’s revenue. To advocate their position against the PubChem database, ACS has actively lobbied the US Congress. They are reported to have paid the lobbying firm Hicks Partners LLC at least $100,000 in 2005 to try to persuade congressional members, the NIH, and the Office of Management and Budget (OMB) against establishing a publicly funded database. They also were reported to have spent $180,000 to hire Wexler & Walker Public Policy Associates to promote the ‘use of [a] commercial database.” In the same article Wikipedia reports on the ACS stance against Open Access: “The journal Nature reported that ACS had hired a public relations firm, Dezenhall Resources, to try to halt the open access movement.[6] Scientific American later reported that ACS had spent over $200,000 to hire Wexler & Walker Public Policy Association to lobby against open access”

3) In 2002 ACS sued Leadscope and for the past eight years Leadscope and the founding scientists Paul Blower, Glenn Myatt and Wayne Johnson have been battling the charge of trade secret misappropriation. The ACS claimed that the three scientists had stolen trade secrets by patenting a software program for pharma companies that shortens the process to develop new drugs. The case was finally tried in 2008 and the jury found no evidence of misappropriation. They determined that the ACS had brought its claim in bad faith and awarded Leadscope damages on their countersuit for defamation, unfair competition and tortuous interference following an eight-week trial and assigned damages of $27 million.

In closing arguments, Leadscope’s attorney argued, that ACS “destroyed the reputations of three dedicated scientists…They have ruined the financial position of LeadScope…These scientists did their own work. They didn’t take anything from [ACS]”. Much of the case focused on expert analysis of Leadscope’s source code. Leadscope presented expert testimony that the source code of their own product was NOT copied.

The C&E News report of the result is here.

ACS appealed the result of the case and has been fighting it for the past couple of years. They lost the appeal and the costs are now up to $40 million PLUS costs. Ow.

I’ve been an ACS member for well over a decade. I’ve been an RSC (Royal Society of Chemistry) employee for just over a year. All my comments are made as an ACS member and not an RSC employee…it’s why I am making the comments here and not on the ChemSpider blog.

1) Summing up the amount of money that has gone into litigation, lawyers fees and settlements how much money has been drained from the coffers of the ACS in the past decade. With the impending $40 million damages and the other legal wranglings it has to be over $50 million? Surely that money would be put to best use subsidizing a conference, keeping membership fees down or even investing it to supply materials or support to schools and colleges with needs around chemistry? How many other legal wranglings are waiting in the wings to further draw down the coffers?

2) How many not-for-profits engage themselves in such regular legal wranglings? In 1990 a lawsuit was brought against the ACS threatening the not-for-profit status. The discussions regarding ACS/CAS having not-for-profit status continues to be a talking point in a number of circles and dinner conversations I have sat in on. As Jeffrey Rich commented “CAS is in no way related to the Boy Scouts of America or the United Way. What they do is no different from what a big computer business or publishing company does. That’s not a sign of a charitable organization, but of an intellectual business organization in business to make a bundle.” Another ACS, the American Cancer Society, has similar questions hanging over it.

3) What is the reputation cost of these legal cases for the ACS? I know a number of people who have left the ACS because of the PubChem challenges made by ACS. The blogosphere lit up when these challenges were happening and yet, as far as I can tell, no efforts are being undertaken to defuse or participate in the discussions. The statements are legal only and carry only succinct statements that hardly explain the mindset behind the challenges. A town meeting allowing a dialog would be very beneficial. I look forward to sitting in on such a discussion regarding Leadscope at the next ACS. Will it happen? Was their a town meeting at ACS/CAS regarding the latest legal conclusion and how it will impact the organization?

I enjoy ACS meetings. I read C&E News every week but admit that I find RSC’s Chemistry World a more entertaining read. I know a lot of people at CAS and ACS and they are great people.

I hope that more consideration is given before the next legal case is brought against an individual or organization. It costs reputation and money and will continue the growing concern regarding ACS’s business focus rather than acting as a nonprofit.

 
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Posted by on June 20, 2010 in Community Building, Politics

 

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