ACS v. Leadscope: Why Chemists Should be Disturbed

September 19th, 2012

The efficient operation of any democracy depends on the participation of an informed electorate. The Founding Fathers of our country believed so strongly in this point that they felt compelled to begin the Bill of Rights by protecting the freedom of the press. A few citizens in power must never be allowed to control the flow of information to the greater citizenry.

The American Chemical Society is a democratic organization: its members elect a Board of Directors that, in turn, operates the society on behalf of the membership. Unfortunately, members of the ACS are woefully uninformed regarding even the most simple matters of society governance. A big part of this problem is that the pool of journalists who cover the ACS is either incapable or unwilling to provide anything more than superficial coverage of matters relating to the administration of our professional society.

You can start by blaming me. I am one of the few journalists outside of the ACS to cover the society, but I write stories sporadically and do not have time to cover issues in as much depth as I’d like to. I am one person; blogging is not my primary occupation; I don’t get paid a dime for it; and I’ve got a ton of other things on my plate. I wish I could do more, but I can’t. Sorry.

For better or for worse, most of the reporting associated with the ACS is paid for by the organization itself. The journalists at Chemical & Engineering News are employees of the society, and C&EN is the “official organ” of the ACS. Part and parcel with this relationship is that the bylaws and policies of the ACS limit what the magazine can cover. That is why coverage of the ACS elections is so superficial. Wouldn’t you like to see more than those vapid statements written by each candidate and published as a wall of text in the magazine? Where is the reporting? Where is the analysis? Where is the monitoring of accountability for campaign promises? It’s nowhere to be found. The result is that members of the ACS are uninformed about important issues that should be central to each ACS election, and voter participation is consistently atrocious (~15%). That’s right, only 15% of eligible members bother voting!!

Unfortunately, the coverage of ACS elections is not the only thing that has suffered from neglect by chemical journalists. One of the reasons behind the birth of ChemBark was the media’s dreadful lack of coverage of the Sames-Sezen misconduct scandal. You will recall that I began reporting the story three months prior to the first set of retractions in JACS, and that C&EN did not issue its first story until two weeks after the retractions—only a few hours before the New York Times was set to publish a story. I was forced to conclude that the decision to avoid coverage of the scandal was intentional—not simply an oversight—because JACS and C&EN are managed by the same division of the society, and C&EN reporters read JACS (so someone at the magazine had to have seen the retractions when they were published).

The latest important story to suffer consistent neglect from the chemical media is the ACS v. Leadscope legal case. My guess is that the vast majority of you have no idea what this case is about, because it has received only perfunctory coverage from C&EN. Unlike the Sheri Sangji story, which has been the focus of several detailed articles (1 2 3 all), the Leadscope case has received little attention in comparison. C&EN‘s reporting has been limited to short news stories announcing milestone events in the case (1 2 3 4 5).

The latest milestone event occurred yesterday—the Supreme Court of the State of Ohio issued a decision on the latest appeal by the ACS—but C&EN did not post a single item on its site or in its Twitter feed. The slip opinion weighed in at a whopping 75 pages of densely written legalese. Chemists cannot be expected to wade through such a document; we need the services of an informed journalist to provide us with the bottom line, paying special attention to the decision’s impact on the operations of the ACS.

Enter the blogosphere! Rich Apodaca has written several good primers on the case, including a summary of the IP at the heart of the dispute and a rough sketch of the history of litigation. Another good place for a concise summary of the case can be found in a news story written by the Office of Public Information for the Ohio Supreme Court:

The case involved a lawsuit filed by ACS in the Franklin County Court of Common Pleas alleging that the former employees who helped start Leadscope had breached employee agreements and misappropriated ACS’s intellectual property by using proprietary information they obtained while employed at ACS to develop a new software product for Leadscope that would compete with products marketed by ACS.

Leadscope and its principals denied all of ACS’s claims, and filed counterclaims seeking damages from ACS for unfair competition, tortious interference with business relations and defamation.  As the basis for its unfair competition counterclaim, Leadscope alleged that ACS knew that it had no valid legal basis for its intellectual property claims, and had filed its lawsuit for the purpose of impairing or eliminating Leadscope as a competitor by scaring away venture capital investors the new company needed to successfully launch its business.

Following an eight-week jury trial, the jury returned verdicts against ACS on all of its claims against Leadscope. The jury also returned verdicts in favor of Leadscope on its counterclaims against ACS for unfair competition and defamation. The jury awarded Leadscope and its principals compensatory and punitive damages totaling more than $26 million. ACS appealed. On review, the Tenth District Court of Appeals affirmed the trial court’s judgment and damage awards. ACS sought and was granted Supreme Court review of the case, asserting in its briefs and oral argument that the Tenth District made multiple incorrect rulings in affirming the trial court’s decision.

A summary of some of the (heavy) costs associated with the case, including the damages, the legal fees for Leadscope, and the interest ACS is/was being charged on the damages and legal fees, can be found in a recent ACS financial statement (pointed out by Apodaca and a Nature News blog post):

In 2002, ACS brought suit against three former employees and the company they founded in a case styled, American Chemical Society v. Leadscope, Inc., et al., Case No. 02-CVC-07-7653 (Franklin County, Ohio Court of Common Pleas). Leadscope, Inc., and the individual defendants counterclaimed, seeking damages in excess of $50 million. Trial in this matter commenced on February 4, 2008. The jury rendered its verdict on March 27, 2008, rejecting the Society’s claims of breach of employment agreements and misappropriation of trade secrets, and finding against the Society on three separate counts: defamation, tortious interference with business relations, and unfair competition. The jury’s award to Leadscope, Inc. and the three individual defendants/counterclaim plaintiffs (referred to collectively as “Leadscope”) totaled $26.5 million.

Following the jury verdict, Leadscope filed motions seeking prejudgment interest, attorneys’ fees, and expenses. Subsequently, Leadscope withdrew the motion for prejudgment interest. Through the attorneys’ fees motion, Leadscope sought an additional $11 million. On February 6, 2009, the Trial Court awarded Leadscope fees and expenses of $7.9 million. Post-judgment interest on the $26.5 million judgment accrues at the rate of 8%. Postjudgment interest on the $7.9 million award of fees and expenses accrues at the rate of 5%. Both rates are “simple interest” and cumulatively, total approximately $ 9.0 million as of December 31, 2011.

The Society filed an appeal on November 20, 2008 to the Ohio Court of Appeals, Tenth District (the “Appeals Court”). On June 15, 2010, the Appeals Court issued its opinion affirming the trial court’s judgment, i.e., the Court did not grant any of the relief ACS had sought in its appeal. See American Chemical Society v. Leadscope, Inc., Slip Op., 2010 WL 2396544 (Ohio. App, June 15, 2010). ACS filed a Notice of Appeal and Memorandum in Support of Jurisdiction with the Ohio Supreme Court on July 30, 2010. On October 27, 2010, the Ohio Supreme Court, exercising its discretion as to whether to hear the appeal, granted the Society’s request to hear the case. See American Chemical Society v. Leadscope, Inc., 126 Ohio St. 3d 1615, 935 N.E. 2d 854 (2010) (Table). Accordingly, the full seven-member Ohio Supreme Court is reviewing all of the issues raised by ACS. All of the briefing has been completed and the Court conducted oral arguments on September 7, 2011. It is not known when the Court will render its decision.

In yesterday’s decision, the Ohio Supreme Court overturned the verdict against the ACS for defamation, but upheld the ruling against the ACS for unfair competition against Leadscope. The bottom line is that the ACS is still on the hook for $26.5 million in civil damages.

That’s MILLIONS, folks, and it doesn’t include the legal fees, either.

So, here is your American Chemical Society at work: some underappreciated employees from the Chemical Abstracts division go off and start a successful company, someone at the ACS haphazardly launches an overreaching lawsuit to vigorously defend the society’s intellectual property, the company countersues and wins a multi-million-dollar judgment, ACS loses two appeals in a row and half of the latest appeal and is now on the hook for $26.5M. Great =/

Of course, we know where this money comes from: the fees our schools and companies pay ACS Publications in exorbitant subscription rates to access the journal articles that we write, fund, and referee for free. Don’t get me wrong…I’m not one of those open-access crusaders that C&EN hates—I believe the ACS should make a profit off of its journals—but the situation has gotten ridiculous.

A Tweet yesterday by Apodaca puts the money issue in perspective. (See also: “Why ACS Must Come Clean on Journal Publication Costs”)

For the record, the Chairman of the Board of Directors of the ACS issued a statement on the matter, including a note that:

Today’s ruling will not impact ACS member dues; ACS products, programs or services; ACS staffing levels; or the ability of ACS to achieve its mission.

The statement is posted on the ACS Web site, where few people will bother to notice it. Such placement is consistent with what we’ve already seen: due to a lack of quality journalism regarding the Leadscope trial, ACS members are not informed sufficiently to appreciate the implications of this case, which would seem to have important financial repercussions for the society.

Beyond a detailed, multi-page story on the events that transpired to precipitate this case, I would like to see the following questions answered:

1. What is the total cost of this case to the society? Beyond the civil damages awarded to Leadscope, how much has the ACS paid in legal fees?

2. What are the costs associated with continued litigation of this case? What information went into the decision of making continued appeals versus simply paying the Leadscope people after each verdict?

3. Does the board of directors consider $26M (+ legal fees) to be a significant sum of money? Where does this money come from? How can this much money not “impact ACS member dues; ACS products, programs or services; ACS staffing levels; or the ability of ACS to achieve its mission”?

4. Has the person responsible for pursuing the malicious litigation been disciplined by the ACS? Who made this decision and what is his/her annual compensation from the society?

5. Has the ACS changed any internal policies regarding the public dissemination of potentially defamatory statements? What is preventing the ACS and its employees from making similar costly errors in the future?

6. Does the Board of Directors believe it is appropriate for a non-profit, scientific organization to protect its intellectual property this aggressively/haphazardly? Isn’t part of our society’s charted mission the “promotion of research in…industry”, increasing the “diffusion of chemical knowledge”, and “aiding the development of our country’s industries”?

While I love C&EN dearly, in matters like Leadscope and ACS elections, the magazine appears hamstrung. If any of you want to don a reporter’s hat and tackle some of these items, I will promote the hell out of you and your blog. If you want to post your efforts as original reporting here, we can do that too. But somebody has got to get to the bottom of these important issues, because sadly, we can’t count on C&EN to do it for us.

20 Responses to “ACS v. Leadscope: Why Chemists Should be Disturbed”

  1. Paraffinbrain Says:

    At the end of the slip opinion, the split of the awarded damages is given between Leadscope and its employees: $11.5 million for unfair competition, and $15 million for defamation. If the defamation award is struck out from this judgement, that leaves $11.5m damages + $7.9m fees and expenses, with the additional interest at 8% and 5% respectively since 2008. Which on my pocket calculator roughly adds up to something in the $25m area, not counting any ACS costs or subsequent additional expense claims from Leadscope.

  2. mevans Says:

    The summary on the Ohio Supreme Court’s website is a nice overview for those without the time to read the slip opinion:

    You hit the nail on the head Paul; this story is very disturbing. The time is right for a splinter society of chemists to emerge. As crazy as that sounds, I would support a second professional society for chemists…and enjoy watching the ACS pointlessly attempt to litigate us off the face of the earth!

    In all seriousness, thanks for this courageous post. Hopefully we’ll get some answers!

  3. Rhenium Says:

    How is this that this has been going on for TEN years, and yet this is the first I’ve ever heard of it?

  4. Chemjobber Says:

    It has been gently covered in C&EN, but you have to be a page-by-page reader…

  5. Rhenium Says:

    Thanks, I should have re-read the post, and a page-by-page reader of CEN I am not.
    I know people from CEN frequent here, perhaps they will give it the mokusatsu treatment…

  6. James Says:

    I love the line “this ain’t a bake sale they’re protecting”.

  7. Paul Says:

    @mevans: I would totally be up for joining a chemist’s guild or other professional organization to advance our field. I hope that one of the major goals of the guild would be to promote chemistry to the public, through positive ad campaigns, community educational events organized by the guild but run by volunteer chemists, and by strengthening ties between chemists and the media. Count me among the people who believe that the ACS has “lost its way” regarding the promotion of chemistry to the public.

  8. unnamed librarian Says:

    In libraryland there are a couple examples of grassroots organizing outside the professional organization:
    * Library Society of the World:
    * ALA Think Tank:

    They were started by people who felt, as several people have stated in the comments above, that the main professional organization wasn’t addressing their concerns or was too focused on being the association and not focused enough on advancing the field.

    As a founding member of one and participating member of the other, if you are willing to *join* an alternate organization, why not *start* one? With social media (Friendfeed, LinkedIn, Facebook, Twitter, others) an organization, even only loosely defined (LSW has no leadership, just involved people speaking their minds, for example), does not need money – it just needs people with opinions, opining and others willing to engage with those opinions.

    PLoS Chemistry?
    Start it informally, we’ll all be glad (you) chemists did it!

  9. Jeff Says:

    @Paul: “Lost its way?” Look at the numbers. ACS is little more than a publishing company masquerading as a professional society. (I won’t even take credit for that opinion since it has been expressed to me several times.)

  10. Paul Says:

    I see advantages to both the top-down and bottom-up approach.

    The ACS has the brand and the money to get a lot accomplished. If you try to stage an ACS coup via the annual elections, it will take at least two years. The first year you can take the system by surprise. By the second year, the leadership will be ready for you and it will be much much harder.

    If you start a second organization, you begin with nothing but guts. But as Sgt. Hartman says in Full Metal Jacket, “guts is enough.” It’ll be a lot of work for the people that step forward. Don’t get too excited that I registered two days ago.

  11. Paul Says:

    Latest headline in C&EN:

    “A Qualified Victory For ACS” (article)

  12. Alec Says:

    The impartial news article I read on the subject described it as a victory for the american chemical society.

  13. rudy balm Says:

    I see you are on the C&EN advisory board–can you tell us a bit about being on the board and to what extent you have tried to privately advise the editorial staff about their coverage of this particular story?

  14. Paul Says:

    @fake rudy: Excellent question. My private conversations with staff at C&EN parallel the ideas that I’ve voiced on this blog. I don’t think anyone has provided more public criticism (or praise) of C&EN than I have, and that holds true for both before and after they asked me to join their ad board.

    When I have had conversations with people at the magazine regarding Leadscope, it has been in the context of how the magazine deals with “negative” stories. IMO, historically, C&EN has downplayed negative stories like accidents, poor employment markets, scientific misconduct, crap research, and bizarre ACS management decisions. The situation has gotten better—particularly with regard to safety, employment, and misconduct, but there is a ways to go. It would be nice if the magazine spent more time covering meaningful disputes/debates over society governance (like Leadscope) and in discussing/analyzing the value of certain lines of research.

    I put most of my criticism on the blog or Twitter—where I know the editors will see it—so other readers can comment or push back. In my private conversations, I can get a little bit more specific and discuss facts that I’m not so certain about (e.g., “I’ve heard that…., is that really what goes on behind the scenes?”) It’s also nice to debate the merits of a point in person, without having to worry about hurting someone’s feelings in public.

    At the end of the day, the editors get to “take it or leave it”, which is exactly how it should be. They are the stewards of our magazine. I will say that I have been surprised by how much meaningful interaction I’ve had with the staff at C&EN. Aside from the public interaction on the blog and Twitter, I’ve had several exchanges over the phone, e-mail, and in person (on campus and at ACS meetings). This has all been outside of the annual ad board meeting, which is an intense day of introspection for the magazine. I have always been very impressed by the staff at C&EN. They are great people—intelligent, professional, friendly, and open to criticism/suggestions. They take their chemistry and journalism very seriously, and they provide a valuable service to our profession.

  15. carmen drawl Says:

    Thanks for the response. I’m glad to hear there is a healthy amount of communication between the advisory group and the staff.

  16. Rebecca Says:

    Thank you for this story. Your focus on the ACS Publications juggernaut is timely for me, vide infra. I spent 12 years in technical division governance for ACS and even my rather narrow exposure (I was never a Councilor) taught me the cold hard fact that ACS is a bureaucracy of considerable complexity, whose primary purpose is – of course – its own perpetuation. The Society is really obsessed with seeking opportunities to get bigger… not better.

    Perhaps Leadscope would be interested in putting a portion of the $26M toward establishing a permanent endowment for a new Chemistry Guild. Hmmm.

    Anyway, journals. The chemists at my large government laboratory recently received a missive from our central library, begging us to be more judicious in our downloading of ACS full text articles. It seems that ACS, alone out of all publishers, charges our library a per-download fee instead of a flat-fee subscription to its journals. That per-item fee has tripled in the past few years, and our library is sweating the fact that they are completely unable to predict the costs of ACS journal subscriptions from year to year. The usual threats of dropping ACS journals ensued. But here’s the rub… ACS clearly has a pre-determined profit they need from the Publications division. So as we all download fewer articles, the cost per article will continue to rise. You can’t win, and you can’t even break even.

    Is PLoS chemistry an option for us? Will Chemical Abstracts be willing to index an open-access journal that directly undermines ACS Publications revenue? Seems unlikely.

  17. C Says:

    Dear Chembark,

    This story confirms what I’ve seen at a European level. It is very, very regrettable, but the problem with national chemistry societies is they start to develop the worst monopolistic behaviours. I am sure that no one in ACS gives a tinker’s curse that turnout for elections is around 15%, in fact, am sure there is a great sense of relief. I think all societies should have a cold hard look at their governance structures, some things that could be done include making sure that there is more representation from the young chemist societies, more involvement from chemists working in the private sector and also government – god forbid, maybe someone who isn’t a qualified chemist but who could give a different perspective. Directors, or their equivalents, also need administrative talents to question their administrators – and stop them from the madness that appears to have afflicted ACS. Nevertheless, what makes me sad is that the members and users of ACS journals will be the people who pay the price of the idiocy, no wonder ACS are reluctant to publish their mistakes.

    Anyways, I hope the outcome for american chemists is a better society, or if necessary a new one. It would be a very good red flag for other countries who are complacent about their membership.


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  20. Senyawa Organik Says:

    The latest important story to suffer consistent neglect from the chemical media is the ACS v. Leadscope legal case. My guess is that the vast majority of you have no idea what this case is about, because it has received only perfunctory coverage from C&EN. Unlike the Sheri Sangji story, which has been the focus of several detailed articles (1 2 3 all), the Leadscope case has received little attention in comparison

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