Issue Preclusion and Disqualification

As a general rule, unless the former client consent, a lawyer cannot represent a client in a matter that is materially adverse to a former client if it is the same matter he had represented the former client in, or if the adverse matter is “substantially related” to his prior work.  So, for example, ordinarily, if I represent Client A in a suit asserting the ‘123 Patent, I can’t later represent a defendant against whom Client A asserts the ‘123 Patent; that would be the “same” matter, and obviously representing a defendant against a plaintiff is materially adverse.

Figuring out what is “substantially related” to the ‘123 Patent, however, is a complicated problem.  The starting point obviously is the ‘123 Patent and what it discloses.  But how broad technologically speaking do we go?  Does it include patents issued off of continuations?  Probably.  Issued off of CIPs?  Maybe.  What about information I learned in litigation by reason of representing Client A that wasn’t really technologically related?  For example, what if I learned of its financial situation? While the vast majority of courts recognize that the fact that I might have learned how Client A litigated patent cases doesn’t “count” in this context, a few do.  So where do I draw the line(s)?

That uncertainty is underneath a decision from the divided Colorado Supreme Court, in a non-patent case but one worth noting because patents are often asserted serially, or concurrently, against multiple parties.  (There are several cases where Law Firm 1 represents a “Client A” against non-clients, while other firms assert the same patent for Client A against a client of Law Firm 1, which creates related issues.)

Because of the nature of patent litigation, whether a representation against a former client is ethical, or not, could come up more than once. Suppose it’s fully litigated the first time.  Does the fact that in the first motion to disqualify, a court holds there is no “substantial relationship” mean that, in a subsequent very similar later case, there also won’t be one?

In Villas of Highland Park Homeowners Ass’n. v. Villas at Highland Park, LLC, (Yolo. May 22, 2017), a law firm defeated a motion to disqualify brought by its former client.  It showed up again in another suit, very similar. The former client again moved to disqualify.  The trial court in the second case, at least in the 4-judge majority’s view, reasoned that because the first suit was not substantially related to the lawyer’s work for his former client, neither was the very similar second suit.

The majority held that the trial court abused its discretion and emphasized that determining whether there is a substantial relationship is fact-intensive.  Three judges dissented, and bemoaned the fact that this could lead to seriatim disqualification motions.

So, for patent lawyers, this case means to always carefully assess a potential representation.  Perhaps you avoided disqualification earlier: that doesn’t mean you are free and clear this time.

About David

Professor of Law, Mercer University School of Law. Formerly Of Counsel, Taylor English Duma, LLP and in 2012-13, judicial clerk to Chief Judge Rader.