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TRANSCRIPT
4/3/2017
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ABA IPL SPRING MEETING(APRIL 2017)
Michelle Galloway (Cooley)William Griffin (USPTO)Stephen G. Kunin (Obl0n)Michael E. McCabe (McCabe Law)John Steele (Attorney at Law)
Written materials by John Steele, Attorney at Law, and Richard Bone
© John Steele 2011‐16 and
© Richard Bone 2015
With additional contributions by Michelle Greer Galloway (Cooley),
Stephen G. Kunin (Obl0n), and
Michael E. McCabe (McCabe Law)
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For additional discussion of IP Ethics issues, please see the blog authored by panelist Michael E. McCabe, Jr.:
IPethics and INsights at https://www.ipethicslaw.com/
1(a)
Maling v. Finnegan, 2015 WL 9307162
(Mass. Dec. 23, 2015)
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Ethics Rules
MR 1.7, 1.9
PTO § 11.107, 11.109
2015 Mass. LEXIS 898 (Mass. Dec. 23, 2015) 2015 Mass. LEXIS 898
Maling v. Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Technology conflict alleged
No misuse of confidences proven
Plaintiff did get his four patents
What is “adversity” in prosecution practice?
What disclosures should be made?
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Maling v. Finnegan (news accounts)
Allegations:
Firm represented competitors in eye glass hinge space;
Client spent $100,000 in fees;
Client invested millions in development
Call for Amicus
Whether, under Mass. R. Prof. C. 1.7, an actionable conflict of interest arose when, according to the allegations in the complaint, attorneys in different offices of the same law firm simultaneously represented the plaintiffs and a competitor in prosecuting patents on similar inventions, without informing the plaintiffs or obtaining their consent to the simultaneous representation.
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Maling
Maling Supplemental Brief
An Act of Negligence is sufficient to overcome a dismissal
Finnegan Supplemental Brief
What does “similar” mean in the patent law?
Inventions may be patentable over one another even if they are similar.
Similarity does not imply direct adversity
There was no material limitation on representation (of either client)
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Maling
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Maling Masunaga
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Maling
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Maling Maling admitted prior art
MalingSimilar inventions?
Maling:
Frame for securely holding a lens without the need for screws, pins or bolts
Masunaga:
Eyeglasses having screwless hinges which can avoid deflection of temples in vertical directions
Does substantially similar mean identical or only obvious differences in claimed invention?
Here there was no interference and both claimed inventions were patentable over the prior art.
One client’s published patent application was not used as prior art to reject the other client’s claims.
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MalingSimilar inventions?
Maling:
More durable, less likely to be permanently damaged, and easily repaired
Masunaga:
Prevent deformation of parts or breakage of lens when an excessive external force acts
These characteristics were properties of the inventions, but not equivalent structurally. Both claimed inventions were patentable over the prior art. One client’s published patent application was not used as prior art against the other client’s claims.
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MalingSimilar inventions?
Maling:
Temple arm length can be adjusted without use of special tools
Masunaga:
Simply adjusted
Was temple arm length adjustment already known in the prior art? Does the similarity have to go to patentably significant claim limitations?
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Key Holdings
1. Simultaneous representation of two prosecution clients competing in the same technology area for similar inventions is not a conflict per se
2. A conflict did not arise because here the two clients obtained the patents they sought and they were not competing for “the same patent”
3. Plaintiff failed to allege that the lawyers should have foreseen the potential for an interference
4. A conflict presumably arose when plaintiff asked the lawyers for an opinion about the competitor’s patent (One cannot give an opinion of counsel to one client on another client’s patent. Va. Op. No. 1774 (Feb. 13, 2003). A law firm is asked by client A to render a validity opinion on a patent owned by B. B is a patent client of the firm, but on other types of products. The Virginia committee opined that to render the opinion is direct adversity under Va. Rule 1.7(a), and that the firm can only do so with the consent of A and B. More recently, a court made a similar holding regarding a non‐infringement opinion, Andrew Corp. v. Beverly Mfg. Co., 415 F. Supp. 2d 919 (N.D. Ill. 2006).)
5. Lawyers’ representation of the competitor was not a “material limitation” conflict
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1(b)
Substantial Similarity in the
Former Client Context
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2016 Mass. Super. LEXIS 40, 33 Mass. L. Rep. 327, 2016 WL 2610677 (Mass. Super. Ct. 2016)
Gillette Co.v. Provost
Patent prosecutor formerly did patent work for Gillette
Moved to technological competitor as in‐house counsel
Founders touted lawyer’s ability to compete against Gillette
Claims against lawyer dismissed
DISQUALIFICATION: In re Certain Dynamic Random Access Memory and NAND Flash Memory Devices and Products Containing Same, Inv. No. 337‐TA‐803, Order No. 40 at 6‐7 (U.S.I.T.C. April 18, 2012)
Denying motion to disqualify law firm that previously represented Hynix as trial counsel in four Section 337 Investigations over 18 years involving DRAM and NAND Flash Memory technology, which was the same general field of technology at issue in the present investigation
In the NAND Flash ITC investigation, Hynix (the former client) offered only “conclusory allegations” regarding substantial similarity without providing specific descriptions of the technology at issue with respect to those devices.
In contrast, the complainant’s counsel rebutted Hynix’s disqualification motion with a detailed analysis of the previous investigations which demonstrated that the specific aspects of the technology at issue were different.
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COURTS HAVE FOUND NO SUBSTANTIAL RELATIONSHIP IN SUBSEQUENT PATENT REPRESENTATIONS EVEN WHERE THE TWO REPRESENTATIONS ARE IN THE SAME GENERAL FIELD OF TECHNOLOGY BASED UPON A DETAILED ANALYSIS OF THE TECHNOLOGIES
Soverain Software LLC v. CDW Corp., No. 6:07 CV 511, 2010 U.S. Dist. LEXIS 26162 (E.D. Tex. March 18, 2010) (denying motion to disqualify and holding that, “‘the sole presence of related subject matter does not establish a substantial relationship’”);
Biax Corp. v. Fujitsu Computer Sys. Corp., 2:06 CV 364, 2007 U.S. Dist. LEXIS 35770 (E.D. Tex. May 16, 2007) (denying motion to disqualify where former representation regarding server interrupt architecture patents was not substantially related to that of the present case, which involved the inner workings of a processor, i.e., the performance of condition code registers and parallel instruction processing, notwithstanding that the subject of the later representation was present in the servers of the prior engagement);
Ciba‐Geigy Corp. v. AlzaCorp., 795 F. Supp. 711, 715‐16 (D.N.J. 1992) (denying motion to disqualify where prior and later patent cases involving transdermal substance delivery systems not substantially related in light of specific differences in patented technologies).
THE FACT THAT THE PTO ISSUED PATENTS THAT WERE ASSIGNED TO THE SAME PTO CLASSIFICATION PROVES THAT THE PATENTS ARE NOT SUBSTANTIALLY RELATED
Civco Med. Instruments Co., Inc. v. Protek Med. Prod., Inc., 4:03‐CV‐40722, 2004 WL 1326474, at *6‐7 (S.D. Iowa June 4, 2004) (denying disqualification motion and holding that the fact that patents issued to attorney’s new client which cited as prior art patents issued to attorney’s former client confirmed that the two sets of patents were not substantially related, and explaining that “the USPTO considered the differences between the CIVCO patents in suit and the Wedel patents significant enough to warrant the issuance of new patents.”
The fact the PTO issued patents it classified in the same technology class is evidence that the PTO considered them not to be “substantially related” and, on the contrary, concluded they were separately patentable
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THE UNITED STATES PATENT AND TRADEMARK OFFICE HAS ADOPTED A NARROW STANDARD FOR SUBSTANTIAL SIMILARITY
Under the PTO standard, a patent involved in a prior representation must be either the “same” or “substantially identical” to the patent in a later representation in order to satisfy the “substantial relationship” test warranting disqualification. See Anderson v. Eppstein, No. 98‐1, 2001 Pat. App. LEXIS 1, at *16, 59 U.S.P.Q.2d 1280 (Bd. Pat. App. & Interf. May 11, 2001).
The Board adopted the “identical or essentially the same” standard and held that: “In our view, [the junior party] must demonstrate that (1) the subject matter of the 567 application is identical or essentially the same as the subject matter in the Anderson patent involved in Interference 103,708; and (2) the relationship between [the attorney] and Anderson is a prior representation within the meaning of the substantial relationship test.” Id.at *16.
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Client Identity
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Ethics Rules
MR 1.13
MR 1.7
PTO 11.107
2015 IL App (1st) 131883, 31 N.E.3d 451, 2015 Ill. App. LEXIS 314
MeriturnPartners, LLC
IP lawyer interacted with all the investors; emails., conf. calls, etc.
Advised all investors that patents were owned by deal participant; they weren’t!
Jury found lawyer had lots of clients
Court upheld $6m jury verdict
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2013 U.S. Dist. LEXIS 106375 (D. Mass. July 30, 2013)
Geils v. Geils UnlimitedResearch, LLC
DQ denied. (Correct?)
Complicated: owners of old company and new company dispute
Lawyer repped old company, new company and (allegedly) owners
Attorney as witness
541 Fed. Appx. 386, 2013 U.S. App. LEXIS 19552 (5th Cir. Tex. 2013)
USPPS, Ltd. v. Avery Dennison Corp.
Licensee’s lawyer took over prosecution; disclosed prior art to PTO; app rejected
Licensee to exploit idea without royalties
Person (no ACR; Holding Co. (yes ACR)
Claim barred: SoL
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965 F. Supp. 2d 1411,2013 U.S. Dist. LEXIS 126845 (S.D. Fla. 2013)
Picaziov. Melvin K. Silverman & Assocs., P.C.
Dispute between inventor and investor
Allegation: law firm favored investor, failed to name inventor as inventor
Claim dismissed as not ripe for adjudication
Eighth Circuit (March 29, 2011)
Joycev.Teasdale Armstrong
H’s technology
Firm filed patent for H; formed company; transferred rights to company
Firm: H didn’t need separate counsel, because H & W owned company
H & W divorced
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Case: 1:11‐cv‐08540 Document #: 793 Filed: 04/23/12 (Judge Posner)
Apple
v.
Motorola
Client Identity; 2009 U.S. Dist. LEXIS 109641 (N.D. Cal. November 9, 2010)
Skyy Spirits
v.
Rubyy
(no DQ)
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Definition – D.C. Bar Ethics Op. 309 (2001) 9/22/11)
A conflict waiver “that is granted before the conflict arises and generally before its precise parameters (e.g., specific adverse client, specific matter) are known.”
Advance waiver not “per se improper” but will be “sustained only where the client can be said to have given informed consent.”
D.C. Bar Ethics Op. 309 (2001)
A conflict waiver granted before conflict arises and before precise parameters known.
Permissible if provides information sufficient to permit client to “appreciate the significance of the matter in question” and allows client to make fully informed decision “with awareness of possible extra expense, inconvenience, and other disadvantages” if actual conflict should arise.
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D.C. Bar Ethics Op. 309 (2001) (cont’d)
Normally requires either:
consent specific to types of potentially adverse representations and types of adverse clients; or
“the waiving client has available in‐house counsel or other current counsel independent of the lawyer soliciting the waiver.”
Lawyer seeking advance waiver must disclose facts of which she is aware and “cannot seek general waiver when she knows of a specific impending adversity” unless disclosed.
2011 US App LEXIS 19414 (Fed. Cir. 9/22/11)
In re Shared Memory Graphics LLC
In‐house lawyer covered by JDA
Advance waivers are ok, even beneficial
DQ motion denied
Dissent: would ignore advance waiver
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2013 US Dist LEXIS 24171; N.D. Tex. (2/21/2013)
Galdermav.Actavis
Upholds open‐ended advance waiver at to unrelated matters
Advance waiver held enforceable
Client: sophisticated purchaser of legal services
Client reppred by sophisticated GC
Macy's Inc. v. J.C. Penny Corp., 2013 NY Slip Op 04891 (App Div, 1st Dept June 27, 2013) [2013 BL 170689]
Macy’sv. J.C. Penny Corporation
Upholds open‐ended advance waiver at to unrelated matters
Was not signed by client!
If you accept our work, you agree to these terms
In‐house lawyer “subliminally rejected” clause
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Advanced Waivers Struck Down
Unduly general and unsophisticated clients (no informed consent & not represented by in‐house counsel)
Lack of complete explanation of advanced waiver clause
Consent to litigate against client may require identification of that possibility, including names of parties, circumstances and other relevant information
Sheppard Mullin v. J‐M Mfg. Co., Inc. 244 Cal. App 4th 590 (2016)
Firm failed to advise J‐M about its prior relationship with South Tahoe and failed to advise South Tahoe about the J‐M matter
Broad consent to future conflicts of interest clause
Appeals court denied SH any portion of $3.8M in fees billed for the Qui Tam action applying C.R. 3‐310 re violation of fiduciary obligation
Firm failed to obtain informed consent when it resumed work for South Tahoe from either J‐M or South Tahoe
There was no knowing waiver following full disclosure of actual conflict
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Sheppard Mullin v. J‐M Mfg. Co., Inc. 244 Cal. App 4th 590 (2016) (cont’d)
Issues for S. Ct. of California Appeal:
May court rely on non‐legislative expressions of public policy to overturn an arbitration award?
Can a sophisticated consumer of legal services, represented by counsel, give informed consent to “open‐ended” advanced waiver of conflicts?
Even if conflict not waived, is disgorgement of all paid fees and preclude recovery of reasonable value of unpaid work proper where conflict caused no client damage and no bad faith found?
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In‐House Counsel
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2015 U.S. Dist. LEXIS 67353 (W.D. Tex. Mar. 31, 2015); Appeal Nos. 15‐1628; 15‐1629 (Fed. Cir. Sept. 12, 2016)
Dynamic 3D Geosolutions, LLCv. Schlumberger Ltd.
In‐house lawyer for patent enforcement entity was disqualified under former client rule
Entire in‐house legal staff was disqualified
Outside counsel was disqualified
Affirmed by Federal Circuit
Nexus Display Technologies LLC v. Sony Electronics Inc., No. 2:14‐cv‐05693 (C.D. Cal. July 2014).
Nexus Display v. Sony Electronics
Motion to disqualify in‐house lawyer for parent of patent enforcement entity
In‐house lawyer for parent of patent enforcement entity former in‐house attorney for parent of accused infringer
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Terraphase Engineering v. Arcadis, U.S., Case No. 3:2010‐cv‐04647 (N.D. Cal. Dec. 17, 2010)
TerraphaseEngineering v. Arcadis
Plaintiffs’ counsel sent emails to individual plaintiffs suing Arcadis at client’s former Arcadis email address which was being monitored by Arcadis in‐house counsel
Disqualified Arcadis in‐house counsel who reviewed the privileged communication
Ordered removal of General Counsel from “day‐to‐day” management of the case
Disqualified outside counsel
John SteeleAttorney at Law
www.johnsteelelaw.com
650‐320‐7662 (USA)
© John Steele 2011‐14