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(Reuters) - An Ohio appeals court on Thursday said law firm Dentons cannot overturn a $32 million malpractice verdict stemming from its work in a patent case, finding the firm's U.S. arm was rightly disqualified for failing to disclose conflicts related to its Canadian counterpart.
The court rejected Dentons US's argument that it was completely separate from Dentons Canada, and affirmed that RevoLaze LLC lost millions of dollars from the firm's disqualification.
Dentons' "Swiss verein" structure, which treats branches in different countries as separate firms, is used by some of the world's largest law firms, including Baker & McKenzie, DLA Piper and Norton Rose Fulbright.
A Dentons spokesperson said that the firm had "acted properly, ethically and consistent both with our duties to our clients and with our firmwide conflicts policy," and plans to appeal.
RevoLaze and its attorneys did not immediately respond to a request for comment.
RevoLaze owns patents covering laser technology used to make new jeans look faded. It hired Dentons US in 2014 to represent it in patent-infringement cases against several clothing companies, including Gap Inc, in federal court and the U.S. International Trade Commission.
Gap asked the ITC to disqualify Dentons US in 2015 because Dentons Canada represented the apparel company in other matters. Dentons US argued that it was completely separate from Dentons Canada, and that Gap had waived potential conflicts in its agreement with the Canadian firm.
An ITC judge ruled later that year that the Dentons branches were a single firm, and disqualified Dentons US from representing RevoLaze while Gap was involved in the case. RevoLaze's case fell apart, and it sued Dentons US for malpractice in Ohio in 2016.
A jury awarded RevoLaze $32.2 million in damages, which the state appeals court upheld Thursday.
Appellate judge Emanuella Groves said Dentons' verein structure, "with a common conflicts base, that shares client confidential information throughout the organization" was "irreconcilable with Dentons US' contention that it was separate from Dentons Canada."
Groves also rejected Dentons US's argument that the risk of being disqualified was "unforeseeable," noting its attorney had told RevoLaze several times that the conflict with Gap had been cleared.
RevoLaze also likely would have won an import ban that would have led to tens of millions of dollars in licensing revenues if Dentons had not been disqualified, Groves said, citing statements by RevoLaze's Dentons attorney and others about the strength of its ITC case.
The case is RevoLaze LLC v. Dentons US LLP, Court of Appeals of Ohio, No. 022-Ohio-1392.
For RevoLaze: Benjamin Sassé of Tucker Ellis; Kristi Browne of the Patterson Law Firm; and Tom Warren of Warren Terzian
For Dentons: Yvette McGee Brown of Jones Day
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