BioVeris

(BIOV)

seems bent on showing that David can beat Goliath not once, but twice.

The tiny Gaithersburg, Md., health care diagnostics company appears headed for a legal showdown with Swiss medical titan Roche. But if the odds seem to be stacked against BioVeris, consider how a similar dispute played out three years ago.

Back then, Roche paid $1.4 billion to a BioVeris predecessor company for the rights to keep using the company's technology. The hefty payout came after Roche supposedly violated terms of a licensing agreement.

Now, comments in regulatory filings suggest BioVeris believes Roche is breaching its contract all over again. BioVeris fans say that could mean a windfall for holders of the

Nasdaq

-listed micro-cap, which rose a penny Friday to $8.74.

Roche has the right to use BioVeris' technology for diagnostic equipment supplied to hospitals and central laboratories. But Roche cannot sell machines that will be used for clinical drug trials. If it does, Roche must pay BioVeris 65% of the money it collected for those sales.

"We believe that the potential payment to us for out-of-field sales may be material to our financial position, results of operation and cash flows," BioVeris has stated in its last two financial reports. "For each 1% of Roche's total sales that were out-of-field during 2005, as determined by the field monitor, there would be approximately a $5.3 million positive impact on our financial position."

BioVeris hasn't offered any estimates of what it believes Roche's out-of-field sales were. But for a company that posted revenue of just $4.1 million last quarter, any payoff could have a huge effect.

Roche didn't comment this week on the BioVeris contract. But shortly before BioVeris alerted shareholders to possible violations, Roche started warning customers.

In a December form letter signed by Andy Thomson, senior vice president of centralized diagnostics, Roche reminds customers that they cannot use the company's diagnostic machines for drug research or development.

BioVeris didn't respond to calls seeking comment. But filings make clear that the company suspects foul play.

"We and Roche have engaged a field monitor to review placements and sales of products and services by Roche in 2005," BioVeris states in its latest quarterly report. "Although a field monitor has not been engaged to address 2004, we believe that we are entitled to payment for out-of-field sales during 2004" as well.

In essence, then, BioVeris has suggested that Roche started violating its current contract the very year it was inked. A BioVeris shareholder who followed the previous Roche courtroom fight believes Roche could have to pay up.

"If they're being used out of field, it's not an accident," says Mark Hardcastle, a Maryland-based attorney.

Faceoffs with Roche are nothing new for BioVeris CEO Samuel Wohlstadter.

Wohlstadter made a name for himself as a founder of

Amgen

(AMGN) - Get Report

. But he has spent the last decade focusing primarily on Igen and the company it has since become.

His victory over Roche is the stuff of legends.

Wohlstadter spent years -- and tons of shareholder money -- trying to prove that Roche had underpaid Igen and violated its contract in the process. He won a $505 million judgment, which a judge later slashed to $18.6 million while upholding Igen's right to restrict Roche's access to its technology. Igen, in turn, threatened to do just that.

With thousands of its machines about to be rendered useless, inviting competition from

Abbott Laboratories

(ABT) - Get Report

and others, Roche finally caved in and agreed to pay $1.4 billion for part of Igen. Roche walked away with the rights to use Igen's technology in diagnostic machines for hospitals and central labs, then gave most of the company back to its shareholders.

The surviving company, with CEO Wohlstadter still at the helm, has since become known as BioVeris.

The

Washington Post

reports that BioVeris found itself embroiled in another legal fight -- and plenty of controversy -- shortly after changing its name. In mid-2004, BioVeris sued the CEO's son for allegedly funneling money out of a company-sponsored joint venture to pay for a fancy New York City apartment and a fleet of luxury cars.

The younger Wohlstadter, portrayed as a genius who graduated from the Massachusetts Institute of Technology at the age of 19, responded by withholding the joint venture's financial reports so long that BioVeris almost wound up delisted. When the dust finally settled, the younger Wohlstadter had walked away with a $5 million payment from BioVeris and full ownership of the joint venture -- which had blown through $115 million in shareholder money.

"It's hard to understand how come money is falling that way," Chicago-based analyst Daniel Owczarski told

The Daily Record

following news of the 2004 settlement. "Unless it's out of sheer frustration."

By now, the older Wohlstadter has sparked some resentment -- mixed with grudging respect -- for all that he has pulled off.

"In that fight with Roche, he was like a dog that was holding on to a pant leg and was just not going to let go," says Hardcastle. "He borrowed all of this money for legal fees to take on one of the largest drug companies in the world -- and he won."