Real estate tycoon’s investment trust sues his son — and he responds in kind
Happy families are all alike; unhappy families sue one another from California to New York.
So might Tolstoy begin the saga of the family of Joel S. Marcus, the real estate tycoon credited with helping to turn Cambridge into one of the world’s biggest biotech hubs.
Marcus, 71, cofounded Alexandria Real Estate Equities, a publicly traded real estate investment trust that builds commercial properties and leases them to life science companies. It owns and manages more than 22 million square feet of lab and office space across the country, including 4.8 million in Cambridge.
He’s also embroiled in a spectacular legal battle with his 40-year-old son. The eldest of three children, Steven Marcus lives in London and has started a rival British real estate company that also plans to house life science firms.
Alexandria Real Estate sued Steven Marcus and his startup, RUNLABS, in December for alleged trademark infringement and unfair competition. The suit says he misused Alexandria’s name and logo, an image of the Alexandria lighthouse in ancient Egypt, in fund-raising pitches to venture capitalists.
Steven Marcus also falsely claimed the startup evolved from Alexandria, according to the suit.
“Steven Marcus has never been an employee or had any formal business relationship with Alexandria, nor has he had any other interest in Alexandria aside from his familial relationship with Joel Marcus,” says the complaint filed in US District Court in San Francisco. Joel Marcus lives in Beverly Hills, Calif., not far from his Pasadena-based company.
The younger Marcus is firing back with legal salvos of his own. He has asked the US Trademark Trial and Appeal Board to take Alexandria’s registered trademarks off the books. He says he came up with the Alexandria name and logo as an undergraduate student at the University of Pennsylvania’s Wharton School and that they belong to him.
On Thursday, he sued his father and Alexandria in New York state court. The suit alleges Alexandria owes him more than $12 million for devising a new financing strategy for the company in 2013, work he says his father took credit for.
“I didn’t believe that you sue your family, but when he sued me, we decided to pursue this vigorously,” Steven Marcus said in an interview. He contends his father is waging a personal crusade against him and wants to torpedo an up-and-coming rival. Of the family feud, he says, “I recognize it has a Shakespearean touch.”
In another twist, a cousin of Steven Marcus’s appears to be siding with Joel Marcus.
The ugly disagreement came up during a conference call Tuesday when Joel Marcus, executive chairman of Alexandria, spoke with investment analysts about the firm’s fourth-quarter performance.
“Can you comment a little bit about what’s happening with your eldest son?” an analyst asked.
Joel Marcus replied, “If you look at anyone who is trying to bring any discredit or any cloud to the company, I think you can assume that that is a meaningless approach.”
Without naming his son, he said, “The kinds of things that are going on are clearly illegal and they’re immoral and they will be dealt with in a very severe fashion.”
Joel Marcus declined to discuss the controversy with the Globe. But lawyers for Alexandria said Thursday that the company is doing what any firm would do if someone infringed on its trademarks.
“This was a business dispute, pure and simple,” said Patrick Gunn, a San Francisco lawyer.
Trademark disagreements are common in the corporate world. But this dispute is unusual because it’s so personal, exposing a bitter rift in the family of Joel Marcus, a prominent developer who helped found Alexandria and has run the company since 1997.
With a market value of about $14 billion, Alexandria has played a key role in the sprouting of biotech clusters from San Diego to New York to Cambridge. The company first started leasing properties to biotechs in California in the 1990s. Joel Marcus, a lawyer, had been representing firms that wanted laboratory space near major academic institutions.
In the early 2000s, Alexandria turned its focus to Cambridge, especially the then-gritty neighborhood of Kendall Square near MIT. Today, after spending millions to construct gleaming buildings for biotech startups and Big Pharma firms, Alexandria says it’s the biggest owner of lab space in Cambridge.
Steven Marcus said he grew up in Southern California and earned a master’s degree in business administration at Columbia University in New York in 2004. He was never close to his father, he said in an interview.
“We didn’t have an adversarial relationship, but it’s hard for me to recall having a good relationship either,” he said.
Nonetheless, he says he played a pivotal role in his father’s business.
In 1997, the company was called Health Science Properties, a name his father wanted to dump, according to Steven Marcus’s filing with the trademark board. Steven Marcus said he came up with the Alexandria name and symbol as a freshman at Penn. He said he was inspired by a goblet-shaped doumbek drum from Alexandria owned by a college chum.
Joel Marcus credited his son for the concept in a 2014 interview with The New York Times.
“My oldest son, who was at Wharton, came up with the name,” he said.
More than two decades later, in November, Alexandria executives learned that RUNLABS was using the trademarks in written fund-raising pitches, according to Alexandria’s suit. The pitches said RUNLABS had evolved from Alexandria, featured photographs of Alexandria properties, and mentioned the startup’s “pedigree from Alexandria,” according to the suit.
RUNLABS plans to provide offices and shared laboratory space to life science firms, and is starting in Europe, with a 150,000-square-foot building that will open in Paris late this year, said Steven Marcus.
After Alexandria executives saw RUNLAB’S pitches, the company complained to Steven Marcus. On Dec. 12, he wrote to Alexandria’s board of director that RUNLABS would stop using the name and logo to “remove any further unwanted confusion.”
But Alexandria sued him the next day. Gunn, the lawyer for Alexandria, said Steven Marcus’s letter was a “transparent dodge” that contained none of the legal assurances his client had sought.
In late January, Steven Marcus asked the trademark board to cancel the trademarks, saying they belong to him.
In his suit filed Thursday in New York State Supreme Court in Manhattan, Steven Marcus says that although he was never a paid Alexandria employee, he and an investment firm he founded, Bugsby Property LLC, played a pivotal role in 2013 by helping to develop a new financing strategy for his father’s firm.
Rather than issue more common stock, he said, he recommended Alexandria fund growth through a joint venture, ultimately with TIAA, the financial services organization. The new approach lifted Alexandria’s sagging stock price and saved his father’s job, Steven Marcus said, but he says the elder Marcus took credit for it and “cheated” his son out of payment.
One of Alexandria’s lawyers, Randy Mastro, said Steven Marcus signed an agreement in 2013 that said he would not receive money from the firm for the financing plan.
Steven Marcus’s effort to get paid now is a “publicity stunt to try to pressure parties to give him something to go away,” Mastro said.
Steven Marcus says the agreement was obtained under fraudulent circumstances.
At least one family member appears to side with the elder Marcus.
Brandon Werber, a 33-year-old Los Angeles entrepreneur and cousin of Steve Marcus’s, said he knows both men well. He isn’t surprised by what’s happened.
“I had my own professional experience with Steven that ultimately unfolded into what, in my opinion, is quite similar to what Joel and Alexandria are facing with Steven now,” Werber said.
He declined to elaborate, but said his uncle is a “genuine role model” with an “unwavering moral compass.”
Steven Marcus, for his part, said his cousin is a “complete liar” who has spent little or no time alone with Joel Marcus. The younger Marcus also said he introduced Werber to a high school friend with whom Werber started Lootsie, a loyalty platform for mobile apps.
“He never once thanked me,” said Steven Marcus.