Interesting Opinion About the Ethics of Giving an Opinion of Counsel to One Client About Another Client’s Patent

by David Hricik, Mercer Law School.

There are a number of ethics opinions and a couple of cases discussing whether it is adverse to opine — infringement, design around, and invalidity — for a client about another’s patent.  This case addresses the issue in the context of consent.

In Kimberly-Clark Corp. v. Extrusion Grp., LLC, 1:18-CV-04754-SDG, 2021 WL 2291078 (N.D. Ga. June 3, 2021), two law firms were merging. Kimberly-Clark was a longstanding client of one of the firms, Foley & Lardner. A client of the other merging firm, Gardere, had asked a Gardere lawyer to provide an FTO. As part of the merger, Foley obtained the informed consent of Kimberly-Clark to provide an opinion for that unidentified client, Extrusion, and specified the technology, and promised that Foley would not provide any additional opinions or handle litigation adverse to Kimberly-Clark related to the opinions. Then the lawyer, Mr. Ward, gave Extrusion the opinion, which was 500 pages long.

Then the firms merged and Kimberly-Clark sued Extrusion. Among other patents, Kimberly-Clark asserted the ’104 Patent and asked Mr. Ward for a written non-infringement opinion specific to it, which the now-merge red firm provided.

Later, Extrusion sought to exclude from evidence both the 500 page FTO and the written noninfringement opinion specific to the ’104 Patent. The court wrote in part:

The first opinion Kimberly-Clark seeks to exclude, the FTO, falls within the waiver. The FTO was drafted before Kimberly-Clark initiated litigation, is a general survey of patent references that is nearly 500 pages long, and contains a single, brief reference to the ’104 patent as it relates to a meltblown design that is not even at issue in this litigation. It cannot fairly be said that patent litigation specifically related to the FTO was anticipated or that Ward was providing assistance in a dispute adverse to Kimberly- Clark at the time he drafted the FTO. The Court, therefore, DENIES Kimberly-Clark’s motion to disqualify and exclude the FTO opinion.

Any testimony offered by Ward in support of the FTO, or any cross-examination of Ward in this regard, is a separate matter. Such testimony may very well create a conflict, and one that does not fall within the scope of the waiver. Whether Ward will be allowed to testify at trial concerning the FTO opinion, and if so, whether any potential subject matter of his direct or cross-examination should be excluded or narrowed, is overly speculative and involves too many variables for the Court to adequately address at 51 this stage of the litigation.

The Court therefore DENIES WITHOUT PREJUDICE Kimberly-Clark’s motion to exclude Ward’s testimony related to the FTO. The parties may raise this issue again with the Court through a motion in limine in advance of trial. With regard to the ’104 Patent non-infringement opinion letter authored by Ward on November 12, 2019, the resolution is much clearer – neither the letter nor any testimony concerning it may stand. Although the letter classifies itself as an “update” to Ward’s earlier non-infringement analysis, it takes the additional step of directly applying Kimberly-Clark’s ’104 Patent to Extrusion’s meltblown die. The letter was drafted after Kimberly-Clark initiated the instant litigation and after Kimberly-Clark advised Extrusion it intended to assert infringement of the ’104 Patent. This letter was undoubtedly written with the aim of assisting Extrusion in its ongoing litigation against Kimberly-Clark and therefore falls outside the scope of the waiver. Accordingly, the Court finds that an un-waived conflict of interest exists as to Ward’s ’104 Patent noninfringement opinion.

Because Foley has not filed an appearance in this case there is no one to disqualify. Still, the Court finds the disqualification analysis helpful. In determining whether disqualification is appropriate, the court may consider: (1) whether the conflict might affect the pending litigation; (2) at what stage of litigation the disqualification issue was raised; (3) whether other counsel can handle the matter; (4) the appearance of impropriety; (5) and the costs of disqualification. Here, the negative effect of the conflict on the pending litigation and the appearance of impropriety outweigh the cost of exclusion. The Court finds it significant that Ward stated a legal opinion explicitly adverse to his own firm’s client, Kimberly-Clark, and did so to assist a party adverse to that client in an active lawsuit. Thus, the Court finds that exclusion of the letter and related testimony is the proper remedy. Kimberly-Clark’s motion to disqualify and exclude the ‘104 Opinion and testimony related thereto is GRANTED

Kimberly-Clark Corp. v. Extrusion Grp., LLC, 1:18-CV-04754-SDG, 2021 WL 2291078, at *5– 6 (N.D. Ga. June 3, 2021) (cleaned up).