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Scientific society loses multimillion-dollar court battle

A ten-year court battle waged by the world’s largest scientific society reached a crucial juncture today when the Ohio Supreme Court handed down its long-awaited verdict in ‘ACS versus Leadscope’, a case that began in 2002 when the non-profit American Chemical Society (ACS) sued three former employees of its highly lucrative Chemical Abstracts Service, accusing them of stealing its intellectual property and using it to start Leadscope, a chemical-information company based in Columbus, Ohio.

The David-and-Goliath flavour of the case raised concern among some chemists, especially when a trial court ruled in 2008 that the ACS had filed suit baselessly and with the purpose of squelching a competitor, and that the society had further defamed Leadscope with the intent to scare off potential investors. The court awarded Leadscope a whopping US$26.5 million in damages, which threatened to hit ACS finances just as the scientific society was suffering declines in revenues owing to the economic downturn.

In 2010, an Ohio appeals court upheld the verdict, prompting the ACS to appeal to the state’s supreme court.  Today’s ruling upholds the finding of unfair competition (which was responsible for $11.5 million of the settlement) but reverses the finding of defamation, on the grounds that the ACS allegations against Leadscope were made in an internal memo that was not published, or, in the case of a quote by its attorney in a newspaper article, were simply a restatement of claims made in its legal complaint. The case has been remanded to the original trial court to vacate its conclusion of defamation.

ACS financial statements placed online and linked to on Twitter by chemical-software developer Rich Apodaca, who has summarized developments in the case, reveal that the ACS was hoping not only that the supreme court ruling might reduce or cancel the settlement but also that it might enable the society to qualify for an insurance payout. “The Society has insurance coverage which, depending on the Court’s ruling, could cover a significant portion of any remaining award,” the statement says.


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    David G. Collado said:

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    James Vaigl said:

    The only sensible logic in the entire ruling regarding defamation was in a dissent (see below). This ruling was hogwash. Pure and simple, just a gift from Justice O’Connor to her buddies on the ACS side of this case.

    Conclusion on Defamation
    {¶ 123} ACS levied the most serious accusation that can be brought
    against an inventor: you stole your invention. For the majority to determine that
    those words are not defamatory is unfathomable. This is not an instance where a
    court has been asked to determine whether a statement is simply rhetoric, satire,
    or hyperbole and thus not defamatory. There is no way to paint the comments at
    issue in this case as anything other than defamatory. There is no privilege
    extensive enough to protect ACS from liability for those statements. The
    statements were well chosen, well timed, and well placed by ACS to achieve their
    maximum effect. Leadscope and its founders were profoundly damaged. But
    ACS pays no price for its defamatory statements because they were more or less
    reflective of statements contained in its complaint. The majority excuses ACS for
    its published lies to the scientific community and financial community because it
    had first lied to a federal court. Such is the reasoning when a result goes in search
    of a justification.

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