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In a high-stakes trade secrets battle, Pennsylvania-based biotech firm Renmatix Inc. suffered a major setback Monday when a Delaware vice chancellor refused to overturn a nearly $4 million arbitration award in favor of Finnish conglomerate UPM-Kymmene Corp. The court dismissed Renmatix’s claims that the arbitrator had undisclosed ties to UPM’s counsel, ruling that any connection was “at most, an attenuated one.”

Renmatix Fails to Prove Arbitrator Bias

Vice Chancellor Paul A. Fioravanti Jr. rejected Renmatix’s argument that arbitrator Frederick H. Colen’s firm, Pittsburgh-based Webb Law Firm, had a conflict of interest due to its past collaboration with DLA Piper, the law firm representing UPM.

“Renmatix's allegations do not show 'evident partiality or corruption' in the arbitrator,” Fioravanti wrote, emphasizing that the supposed link between Colen’s firm and DLA Piper was weak at best. He pointed to precedent from a 1999 Delaware Chancery Court ruling, noting that the situation did not involve a "substantial relationship" suggestive of bias.

Renmatix had attempted to highlight a prior legal matter where Webb Law Firm and DLA Piper both represented Nordstrom Inc. in a trademark dispute. However, the judge found no actual overlap in personnel between that case and the arbitration in question.

During oral arguments in November, Renmatix even speculated that Colen might have casually discussed the unrelated case “over lunch” with a colleague. Fioravanti dismissed this assertion as “pure conjecture,” stating that such speculation was insufficient to undermine the integrity of the arbitration.

Arbitrator’s Ruling: Bad Faith and Costly Consequences

Renmatix’s woes stem from a 2017 arbitration initiated against UPM over alleged misuse of trade secrets related to the biotech company’s proprietary Plantrose process—a technology designed to produce sugars for the renewable chemical and fuel industries.

The companies had signed a joint development agreement in 2013 to explore commercialization of the Plantrose process. A second agreement, signed later that year, sought to improve specific steps of the technology. Under the terms, Renmatix retained ownership of any inventions stemming from the collaboration and had exclusive rights to patent applications.

However, the company later discovered that UPM had filed multiple patents it claimed were based on its confidential trade secrets. Renmatix accused UPM of intellectual property theft and pursued arbitration before the American Arbitration Association (AAA).

The ruling, however, turned the tables. Arbitrator Colen found that Renmatix had brought its claims in bad faith, ultimately ordering the company to pay nearly $4 million in attorney fees to UPM. The award was meant to compensate UPM for “the extensive time, effort, and work that UPM’s counsel was required to undertake” in response to Renmatix’s claims.

Legal Teams Stay Silent Amid Fallout

Neither side’s legal representatives immediately responded to requests for comment on Tuesday.

UPM is represented by attorneys from DLA Piper, including John L. Reed, Daniel P. Klusman, Abigail T. Reardon, and Nathan K. Carpenter, as well as Daniel J. Burnham of Nixon Peabody LLP.

Renmatix’s legal team includes Stephen B. Brauerman and Emily L. Skaug of Bayard PA, along with attorneys from ND Galli Law LLC and Judy L. Woods Law LLC.

With the Delaware Chancery Court’s ruling effectively sealing Renmatix’s fate in this legal clash, the company now faces the weight of a multi-million-dollar penalty—an expensive cautionary tale for firms wading into intellectual property disputes without rock-solid claims.