Plaintiffs Searle and Pfizer's (Pfizer) motion for partial summary judgment turns on the meaning of "adversity" in simultaneous representations and on the consequences of a violation of the Code of Professional Responsibility, DR 5-105. The complaint pleads one cause of action for both a breach of fiduciary duties and a breach of DR 5-105. Although there is no private right of action to enforce the disciplinary rules, a violation of the disciplinary rules may constitute evidence of malpractice. William Kaufman Organization, Ltd. v Graham & James LLP, 269 AD2d 171 (1st Dept 2000).

Some jurisdictions proscribe multiple representations in situations where there is "actual adversity" between clients. However, New York's prohibition against multiple conflicting representations is intended to avoid even "the appearance of impropriety." Matter of Hof, 102 AD2d 591, 596 (2d Dept 1984). Thus, the DR 5-105 refers to a client who is, or is likely to be, adversely affected by a multiple representation. DR 5-105(A), (B). See American Employers Ins. Co. v Goble Aircraft Specialties, 205 Misc 1066 (Sup. Ct. NY County 1954)(attorney cannot represent insurer and insured where interests are likely to become diverse).

Doubts as to the existence of a conflict of interest should be resolved in favor of disqualification. Seeley v Seeley, 129 AD2d 625, 626 (2nd Dept 1987) (protection extends to preliminary consultation by a prospective client even though actual employment does not occur).

Even where a lawyer believes that he or she can competently represent multiple clients, that multiple representation should be after full disclosure is made of the potential risks involved, and after both clients consent. DR 5-105(C).

The complaint alleges the following relevant facts. Pennie & Edmonds (P&E) began representing Pfizer in 1980 and Searle and Monsanto in 1992. Searle and Pfizer have been instrumental in bringing a new class of drugs, called COX-2 inhibitors to the market. These drugs are claimed to have potent anti-inflammatory activity with fewer unwanted side-effects than other non-steroidal anti-inflammatory drugs. Celecoxib is one such drug that has been brought to market, under the trademark Celebrex . Pfizer has entered co-promotion agreements with Searle and Monsanto, giving it a direct interest in the sales of Celebrex The press has reported on Searle's development of COX-2 inhibitors since 1994.

The complaint further alleges that P&E knew of Pfizer's co-promotion agreement with Searle for COX-2 inhibitors through its representation of Searle and Pfizer on COX-2 related matters, but did not disclose its conflicting representation of UR, or ask Searle or Pfizer to waive any conflict of interest. P&E was retained to represent Searle and Pfizer at the Merck Interference before the Patent and Trademark Office (PTO), involving Merck's "Vioxx," in March 1998. P&E then represented Searle in the U.S. District Court for the District of Columbia in connection with Merck's appeal of the PTO's decision (the DC lawsuit). P&E also represented Searle in the 1998 "Celebra" action, by Searle, against Nutrapharm, Inc.

Plaintiffs claim that P&E began representing the University of Rochester (UR) on its '850 patent application before the PTO as early as 1995, without their knowledge or consent. [*2]Plaintiffs also claim that on June 7, 1995, P&E filed the patent application that became the '850 patent, with new disclosure and new claims directed specifically to the use of COX-2 inhibitors. The complaint further alleges that P&E and UR representatives discussed UR's purpose in seeking the '850 patent, namely, to assert the patent in litigation or licensing negotiations with Searle and Pfizer. To this end, P&E is claimed to have specifically identified the use of celecoxib in submissions to the PTO on behalf of UR.

Other aggravating circumstances include the allegation that P&E was aware of a PTO issued "Notice of Allowance" regarding the '850 patent in September 1999; and, that lawyers for Searle and Pfizer, and lawyers for UR, worked in the same Manhattan offices, in the same practice group.

Plaintiffs claim that UR commenced a lawsuit against P&E in 2000, which contained allegations that P&E represented UR on at least two other COX-2 related patents, domestically and internationally; that P&E represented UR concerning licensing and/or litigation strategy with respect to Searle and Pfizer; that Searle and Pfizer were to be targets of the licensing negotiations; that P&E undertook to negotiate with Searle and Pfizer on behalf of UR; and that P&E represented UR in a patent interference action with Merck, concerning an application for a COX-2 gene patent, beginning in October 1999.

Pfizer claims that P&E circulated an internal "conflicts" memo in March 1998, regarding the firm's retention by Searle in COX-2 patent matters, and that DeStefano and Coruzzi (the "UR partners") failed to respond. Pfizer claims that the adversity of P&E's multiple representation arose quickly, as evidenced by a UR inventor's alleged advice to P&E that Pfizer was to launch Celebrex on the market. Pfizer further alleges that P&E tailored UR's patent application to cover Celecoxib; that P&E took adverse positions at the PTO; that in December 1998, P&E told the PTO that UR's application covered Celebrex, which statement was against Pfizer's interest in any subsequent infringement litigation between UR and Pfizer; that in 1999, P&E repeatedly discussed UR's litigation and licensing strategies regarding Pfizer; and, that P&E sought to be retained as UR's litigation counsel to enforce the `850 patent once issued.

P&E's opposition to Pfizer's motion for partial summary judgment rests on the implied assumption that a conflict in representing multiple defendants only arises after there is "actual adversity" between the two parties. Thus, P&E's arguments emphasize, over and over again, that no litigation had commenced between UR and Searle or Pfizer, and no licensing negotiations had taken place, during the time that P&E represented both Searle and Pfizer and UR; that a memo prepared in anticipation of licensing negotiations was just that, preparations, only; that references in deposition testimony to a particular partner's knowledge of a conflict inherent in the multiple representation was hypothetical, only, and couched in terms of possible conflicts should UR attempt to negotiate a license with Pfizer.

P&E claims that it has not had discovery on several issues, among them the claim that it tailored UR's patent application to cover Celecoxib , and that UR is asserting privilege to prevent P&E from defending on this point, and that there is no evidence of this alleged conduct. Further, P&E argues that the drug at issue in the Merck Interference before the PTO was Merck's Vioxx, not Searle's Celebrex , and thus there was no adversity created by P&E's representation of Searle and Pfizer in that proceeding. P&E also claims that the UR patent was published in Europe in 1996, 1.5 years before Pfizer obtained an interest in Celebrex , and that P&E did no patent prosecution work for Celebrex .

With respect to the claim that P&E repeatedly discussed UR's litigation and licensing strategies regarding Pfizer, P&E argues that DeStefano's communications with UR were only general licensing discussions which did not concern the specifics of the '850 patent, COX-2, or targeting of a specific entity, and that the strategy of approaching Pfizer about a license was only a "possibility."

P&E rightly objects to Pfizer building its case using redacted exhibits, their assertion of privilege around the Merck Interference representation and conversations held on April 11, 2000, and the failure to allege damages. [*3]

P&E claims that Pfizer is attempting to blur the distinctions and differences in the legal work involved in prosecuting the '850 patent and the Searle-Merck Interference by trying to lump them together under the category "COX-2." P&E also claims that the February 10, 1999 amendment to UR's '744 patent application did not change the scope of the claims with regard to inhibiting "activity" of the COX-2 gene products, that is, that P&E did not engage in tailoring UR's application or claims to cover Celebrex or celecoxib.

P&E claims that it did not provide litigation or licensing advice regarding Pfizer, that it was not involved in any targeting of Pfizer by UR; that it did not audition to be adverse litigation counsel for a potential infringement action against Pfizer; that it only sought to be a litigation counsel against companies other than Pfizer.

However, Pfizer insists that P&E must have known that upon issuance of its patent, UR would assert its patent, either to block Pfizer from making or selling Celebrex , or to demand royalties.

No cases have been found which mirror the facts or the legal issue presented here: whether the law firm violated DR 5-105, and breached its fiduciary duty to plaintiffs, by representing two different patent clients in connection with related, though not necessarily identical, applications pending before the PTO, with knowledge of the likelihood that one client would sue, or attempt to license the other. The issue usually arises in the context of an ongoing litigation, where adversity is inarguable. See, i.e., Greene v Green, 47 NY2d 447, 451 (1979): "Perhaps the clearest instance of impermissible conflict occurs when a lawyer represents two adverse parties in a legal proceeding."

The policy behind the rule against multiple representation is addressed, not only to the harm to the particular client who has not waived or consented to it, but to the harm to the public, as well. Id.

P&E denies knowing that the UR intended to sue Pfizer once it obtained the '850 Patent. However, P&E concedes that it knew that UR intended to obtain licenses from any potential infringers, including Pfizer.

There is also evidence that P&E was contemplating representation of UR in its attempt to license Pfizer's use of the '850 Patent.

P&E's Abrams admits that once he became aware of the dual representation, he knew that a conflict existed. P&E now argues that this is only an admission to the extent that a conflict would have existed if UR decided to sue Pfizer for infringement. P&E was dismissed as counsel for Pfizer the day the '850 patent was issued to UR.

P&E claims that no conflict arose since P&E was not counsel when UR decided to sue Pfizer.

The court is empowered to grant summary judgment "on such terms as may be just". Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3212:32. It has been said that "the partial summary judgment procedure should be fully utilized". Siegel, supra, C3212:30. (Citation omitted).

More significant still in CPLR 3212(e) is the authority to grant summary judgment as to part of but a single cause of action. That will not often be feasible, but when it is the authority is there. See, Tow v Moore, 24 AD2d 648 (2d Dept 1965). Feasibility should be the sole test.

Id., C3212:30.

There is no authority for granting summary judgment on that portion of plaintiffs' claim which seeks relief based on the violation of the disciplinary rules. Plaintiffs cannot be said to have established liability to entitle them to summary judgment on the claim for breach of a fiduciary duty. Triable issues of fact remain, not only the issue of damages. The factual issues raised by P&E regarding the issue of actual adversity, e.g., whether litigation had actually been [*4]commenced while P&E was counsel to UR, whether licensing negotiations had commenced, whether the Merck Interference involved Celebrex or Vioxx, whether P&E attempted to amend UR's '850 application to cover celecoxib are not dispositive of the disciplinary issues. With each of these arguments, P&E skirts the disciplinary issue: whether its representation of UR in connection with COX-2 inhibitor proceedings at the PTO, had the appearance of impropriety. Plaintiffs have alleged that P&E knew of Pfizer's co-promotion agreement with Searle for COX-2 inhibitors through its representation of Searle and Pfizer during the Searle-Merck interference, but did not disclose its conflicting representation of UR, or ask Searle or Pfizer to waive any potential conflict of interest. By March 1998, claim plaintiffs, P&E knew that plaintiffs owned Celebrex ; that P&E chose to continue representing UR even after it knew that it was likely that UR would assert its patent against plaintiffs; and that from sometime in 1999 until the spring of 2000, P&E attorneys continued to advise UR on licensing and litigation strategies that could have an adverse impact on plaintiffs.

P&E argues that plaintiffs have not shown how the Searle-Merck interference was a conflict of interest but fail to refute the existence of the appearance of impropriety. P&E claims it did not tailor the claims of the '850 patent to cover Celebrex ; and, that P&E did not provide litigation or licensing advice targeting plaintiffs. However, P&E has not raised a question of fact regarding the allegations offered in support of plaintiffs' claim that P&E had knowledge of a potential conflict and failed to inform plaintiffs. Rather, P&E argues that plaintiffs' interests never actually became adverse while P&E was representing both parties, and that, therefore, there was no breach of fiduciary duty, or violation of the disciplinary rules. The parties dispute whether P&E narrowed UR's '850 patent application to focus specifically on plaintiffs' COX-2 inhibitor, and whether P&E's reliance on a UR scientist's findings were sufficient to support a claim for breach of fiduciary duty. As to the disciplinary rules, these arguments seem to be mooted by P&E's decision to continue representing plaintiffs and UR, after the Searle-Merck interference, without informing plaintiffs of the potential for a conflict.

In keeping with the policy of prohibiting multiple conflicting representations without the clients' consent, P&E's representation of both plaintiffs and UR on related patent issues, without informing plaintiffs, without obtaining plaintiffs' waiver or consent, constitutes a breach of DR 5-105.

Snow Becker & Krauss, P.C. v ISG Solid Capital Mrkts., LLC, 298 AD2d 210 (1st Dept 2002), cited by defendants, does not require a different result. In Snow, defendant/client's motion to dismiss an attorney's action for fees based on the attorney's alleged conflicting multiple representation was denied: the conflict issue raised questions of fact; and the client had been informed of the attorney's prior representation of the other client. Neither of these factors is present here.

The absence of a claim for consequential damages is itself not a bar to recovery, since plaintiffs' injury may be measured in the substantial attorneys' fees allegedly expended by plaintiffs if P&E was engaged in conflicting multiple representations.

Summary judgment is therefore denied and this matter will be set down for trial after full disclosure of the allegedly privileged documents.

However, this Court has concluded that a violation of DR 105 has occurred and by a copy of this order will report its findings to the Disciplinary Committee.

Dated: January 14, 2004

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J.S.C.