Ethics – Patently-O https://patentlyo.com America's leading patent law blog Mon, 15 Oct 2018 15:05:26 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.8 McDonnell Boehnen Hulbert & Berghoff LLP https://patentlyo.com/media/2014/01/mbhb-3b.gif https://www.mbhb.com/ 480 150 Intellectual Property Law Portus’s suit against Kenyon & Kenyon Dodges Dismissal on Pleadings https://patentlyo.com/hricik/2018/10/portuss-dismissal-pleadings.html https://patentlyo.com/hricik/2018/10/portuss-dismissal-pleadings.html#comments Tue, 09 Oct 2018 06:58:04 +0000 https://patentlyo.com/?p=25049 Portus filed suit against the now defunct (I think) firm of Kenyon & Kenyon. The complaint has morphed but now alleges, basically, that the firm failed to timely seek PTA and at the time it did so, had a conflict of interest by representing another company in the same “domain.”  The amended complaint is here.  The denial of the motion for judgment on the pleadings is here, from June.

It is not clear to me what, if anything, the impact of the alleged conflict is.  The case looks, in some respects, similar to Vaxxion v. Foley & Lardner (which does not appear to be on line besides pay sites), where, basically, the plaintiff took the position that a firm could only have one client in any particular “space,” but never pointed to anything concrete besides that fact.

Continue reading Portus’s suit against Kenyon & Kenyon Dodges Dismissal on Pleadings at Patently-O.

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Portus filed suit against the now defunct (I think) firm of Kenyon & Kenyon. The complaint has morphed but now alleges, basically, that the firm failed to timely seek PTA and at the time it did so, had a conflict of interest by representing another company in the same “domain.”  The amended complaint is here.  The denial of the motion for judgment on the pleadings is here, from June.

It is not clear to me what, if anything, the impact of the alleged conflict is.  The case looks, in some respects, similar to Vaxxion v. Foley & Lardner (which does not appear to be on line besides pay sites), where, basically, the plaintiff took the position that a firm could only have one client in any particular “space,” but never pointed to anything concrete besides that fact.

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A 2012 Connecticut Informal Ethics Opinion that is a Doozy! https://patentlyo.com/hricik/2018/10/connecticut-informal-opinion.html https://patentlyo.com/hricik/2018/10/connecticut-informal-opinion.html#comments Mon, 08 Oct 2018 21:47:41 +0000 https://patentlyo.com/?p=25041 Here’s the fact pattern:

Company A and Company B each have its own lawyers. They form an agreement whereby Company A is in charge of prosecution, subject to input from Company B.  In a perfect world, the agreement says that Company A gets to pick the lawyers and they only represent Company A (or it says the lawyers represent both Company A and Company B, but it’s clear.  Clarity is good).

Assume it says Company A’s lawyers only represent it, but to further a common interest privilege communications between Company A’s lawyers and Company B to prosecute the applications are privileged. Great. Should be fine — if the agreement makes it clear that Company A’s lawyers do not represent Company B, then if a dispute arises Company A can rely on its lawyers against Company B.

But, when it’s not clear: I’ve written about this issue a few times, and there are six or so cases where lawyers have been sued, disqualified, or a privilege has been lost.  (Search for DePuy on patentlyo and you’ll find the last of these).

So, that brings me to Connecticut Informal Ethics Opinion 2012-02, here.  It says that even if the agreement says “Company A’s lawyers don’t represent Company B, or its employees” in-house lawyer for Company A has an attorney client relationship with Company B and its employee-inventors.  

Continue reading A 2012 Connecticut Informal Ethics Opinion that is a Doozy! at Patently-O.

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Here’s the fact pattern:

Company A and Company B each have its own lawyers. They form an agreement whereby Company A is in charge of prosecution, subject to input from Company B.  In a perfect world, the agreement says that Company A gets to pick the lawyers and they only represent Company A (or it says the lawyers represent both Company A and Company B, but it’s clear.  Clarity is good).

Assume it says Company A’s lawyers only represent it, but to further a common interest privilege communications between Company A’s lawyers and Company B to prosecute the applications are privileged. Great. Should be fine — if the agreement makes it clear that Company A’s lawyers do not represent Company B, then if a dispute arises Company A can rely on its lawyers against Company B.

But, when it’s not clear: I’ve written about this issue a few times, and there are six or so cases where lawyers have been sued, disqualified, or a privilege has been lost.  (Search for DePuy on patentlyo and you’ll find the last of these).

So, that brings me to Connecticut Informal Ethics Opinion 2012-02, here.  It says that even if the agreement says “Company A’s lawyers don’t represent Company B, or its employees” in-house lawyer for Company A has an attorney client relationship with Company B and its employee-inventors.  Company A’s lawyer can never be adverse to Company B in the same/related matter.

I see no reason why the logic of the opinion wouldn’t apply to outside counsel in the same position.

So, if you’re in Connecticut, be careful. It’s only an informal opinion but it’s wrong, in my humble opinion.

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Texas Ethics Committee: Unethical to Consult with Potential Expert When Purpose is not to Hire but to Disqualify https://patentlyo.com/hricik/2018/10/committee-unethical-disqualify.html https://patentlyo.com/hricik/2018/10/committee-unethical-disqualify.html#respond Fri, 05 Oct 2018 12:58:12 +0000 https://patentlyo.com/?p=25006 The committee was asked if a lawyer could disclose confidential information to a person where there was no substantial purpose other than to preclude the other side from hiring the expert, and held “no.”  Tex. St. B. Prof. Eth. Comm. Op. 676 (Aug. 2018) (here).

I’ve had lawyers do this to me, or at least that’s how it seemed, and it’s an irritating but understandable tactic when there’s only a few people in a field who know what they’re doing.

But don’t do it!

 

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The committee was asked if a lawyer could disclose confidential information to a person where there was no substantial purpose other than to preclude the other side from hiring the expert, and held “no.”  Tex. St. B. Prof. Eth. Comm. Op. 676 (Aug. 2018) (here).

I’ve had lawyers do this to me, or at least that’s how it seemed, and it’s an irritating but understandable tactic when there’s only a few people in a field who know what they’re doing.

But don’t do it!

 

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Should Your Engagement Letters Require Indemnification for 285-Fee Shifting? https://patentlyo.com/hricik/2018/10/engagement-indemnification-shifting.html https://patentlyo.com/hricik/2018/10/engagement-indemnification-shifting.html#comments Mon, 01 Oct 2018 10:28:10 +0000 https://patentlyo.com/?p=24927 As I’ve written, district courts are beginning to hold that if a case is exceptional under 285, fees can be imposed on, not just the losing patentee or infringer, but its lawyers (and principals).  I’ve written before that I have grave doubts this is permitted by the statutory text, and some courts so hold, but others are interpreting 285 to allow for it. (If an opposing party seeks to shift fees onto you under 285 consider the conflicts that it creates, as discussed in my prior posts.)

The Utah Bar Association issued an opinion, Utah Ethics Advisory Opinion Committee No. 18-04 (Sept. 11, 2018) (here), that you should consider. It addresses an issue that only a few opinions have, which is whether a lawyer can include in an engagement letter a provision that requires the prospective client to indemnify the lawyer for claims that arise from the client’s behavior or negligence — not the lawyer’s behavior or negligence (without jumping through the hoops of Rule 1.8(h).  (It also states that a lawyer may require a prospective client, in the engagement letter, to state that if the client sues the lawyer for legal malpractice and loses, the client must then reimburse the lawyer for the deductible in the malpractice insurance, if the client is advised to obtain independent counsel.)

The opinion provides an interesting possible way to, perhaps, deal with the chilling effect that Octane Fitness creates on lawyer advocacy while reasonably allocating liability.  

Continue reading Should Your Engagement Letters Require Indemnification for 285-Fee Shifting? at Patently-O.

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As I’ve written, district courts are beginning to hold that if a case is exceptional under 285, fees can be imposed on, not just the losing patentee or infringer, but its lawyers (and principals).  I’ve written before that I have grave doubts this is permitted by the statutory text, and some courts so hold, but others are interpreting 285 to allow for it. (If an opposing party seeks to shift fees onto you under 285 consider the conflicts that it creates, as discussed in my prior posts.)

The Utah Bar Association issued an opinion, Utah Ethics Advisory Opinion Committee No. 18-04 (Sept. 11, 2018) (here), that you should consider. It addresses an issue that only a few opinions have, which is whether a lawyer can include in an engagement letter a provision that requires the prospective client to indemnify the lawyer for claims that arise from the client’s behavior or negligence — not the lawyer’s behavior or negligence (without jumping through the hoops of Rule 1.8(h).  (It also states that a lawyer may require a prospective client, in the engagement letter, to state that if the client sues the lawyer for legal malpractice and loses, the client must then reimburse the lawyer for the deductible in the malpractice insurance, if the client is advised to obtain independent counsel.)

The opinion provides an interesting possible way to, perhaps, deal with the chilling effect that Octane Fitness creates on lawyer advocacy while reasonably allocating liability.  These clauses will be scrutinized closely, and I’m not certain they would be accepted in every jurisdiction.

(August 15 post, below, has links to earlier article.)

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McKool Smith Prosecution Bar Saga Continues… a year later… https://patentlyo.com/hricik/2018/09/mckool-prosecution-continues.html https://patentlyo.com/hricik/2018/09/mckool-prosecution-continues.html#respond Tue, 25 Sep 2018 12:44:59 +0000 https://patentlyo.com/?p=24625 Almost exactly one year ago (here), I explained that McKool Smith had been accused of violating a prosecution bar based upon a disagreement, or misunderstanding, about when the bar-dated ended.  While we do not yet have, “the rest of the story,” (you old folks will get the Paul Harvey reference), in an order dated September 18, 2018, Judge Corley in Eolast Tech., Inc. v. Amazon.com, Inc. (here) shows the matter is still on-going. In it, apparently after McKool and its client produced documents in redacted form, the judge ordered them produced without the redactions.

Continue reading McKool Smith Prosecution Bar Saga Continues… a year later… at Patently-O.

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Almost exactly one year ago (here), I explained that McKool Smith had been accused of violating a prosecution bar based upon a disagreement, or misunderstanding, about when the bar-dated ended.  While we do not yet have, “the rest of the story,” (you old folks will get the Paul Harvey reference), in an order dated September 18, 2018, Judge Corley in Eolast Tech., Inc. v. Amazon.com, Inc. (here) shows the matter is still on-going. In it, apparently after McKool and its client produced documents in redacted form, the judge ordered them produced without the redactions.

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Read Legal Service Web Page Terms of Use https://patentlyo.com/hricik/2018/09/legal-service-terms.html https://patentlyo.com/hricik/2018/09/legal-service-terms.html#comments Wed, 12 Sep 2018 21:50:27 +0000 https://patentlyo.com/?p=24454 I co-authored an article describing some of the ethical issues to watch for, here. https://scholarship.law.tamu.edu/cgi/viewcontent.cgi?article=1080&context=journal-of-property-law

Continue reading Read Legal Service Web Page Terms of Use at Patently-O.

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I co-authored an article describing some of the ethical issues to watch for, here. https://scholarship.law.tamu.edu/cgi/viewcontent.cgi?article=1080&context=journal-of-property-law

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Webinar on Ethics in Patent Practice https://patentlyo.com/hricik/2018/09/webinar-ethics-practice.html https://patentlyo.com/hricik/2018/09/webinar-ethics-practice.html#respond Sat, 08 Sep 2018 16:11:16 +0000 https://patentlyo.com/?p=24404 I’ll be doing it for the AIPLA. You can read more here.

Continue reading Webinar on Ethics in Patent Practice at Patently-O.

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I’ll be doing it for the AIPLA. You can read more here.

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Undisclosed Conflict of Interest Causes Unenforceable Arbitration Clause, Disgorgement of Some Fees https://patentlyo.com/hricik/2018/08/undisclosed-unenforceable-disgorgement.html https://patentlyo.com/hricik/2018/08/undisclosed-unenforceable-disgorgement.html#comments Thu, 30 Aug 2018 22:34:32 +0000 https://patentlyo.com/?p=24316 by David Hricik

Sheppard, Mullin, Richter & Hampton, LLP v. J-M Mfg. Co. __ P.3d __ (Cal. Aug. 30, 2018) has been on a lot of people’s radar for while.  Boiled down, the firm represented a J-M Mfg., in a qui tam action against a number of public entities while representing one of the public entities in an unrelated and small matter.  The firm billed 10,000 hours in the qui tam action and 12 to the public entity, South Tahoe.

South Tahoe moved to disqualify the firm, and that motion was granted over the firm’s argument that South Tahoe had agreed to a broad waiver of conflicts long before the matter for J-M had even existed.

Later, J-M refused to pay the final $1 million of the $3 million the firm had billed it.  The firm sought arbitration in accordance with its fee agreement  with J-M, which also contained a broad waiver clause. In response, opposed arbitration and J-M sought disgorgement of the $2 million it had paid, since the firm had earned it while having a conflict of interest.

J-M was forced to arbitrate and the arbitrators found in the firm’s favor, though stating the firm should have disclosed the conflict.  

Continue reading Undisclosed Conflict of Interest Causes Unenforceable Arbitration Clause, Disgorgement of Some Fees at Patently-O.

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by David Hricik

Sheppard, Mullin, Richter & Hampton, LLP v. J-M Mfg. Co. __ P.3d __ (Cal. Aug. 30, 2018) has been on a lot of people’s radar for while.  Boiled down, the firm represented a J-M Mfg., in a qui tam action against a number of public entities while representing one of the public entities in an unrelated and small matter.  The firm billed 10,000 hours in the qui tam action and 12 to the public entity, South Tahoe.

South Tahoe moved to disqualify the firm, and that motion was granted over the firm’s argument that South Tahoe had agreed to a broad waiver of conflicts long before the matter for J-M had even existed.

Later, J-M refused to pay the final $1 million of the $3 million the firm had billed it.  The firm sought arbitration in accordance with its fee agreement  with J-M, which also contained a broad waiver clause. In response, opposed arbitration and J-M sought disgorgement of the $2 million it had paid, since the firm had earned it while having a conflict of interest.

J-M was forced to arbitrate and the arbitrators found in the firm’s favor, though stating the firm should have disclosed the conflict.  When the firm moved to confirm the award, J-M opposed it. J-M prevailed in the California high court.

The Court concluded that it could set aside an arbitral award based upon an illegal contract, and that the ethical rules provided a basis for so finding.  It rejected the idea that a broad blanket waiver permitted the firm to represent J-M while representing South Tahoe without informing both clients of the conflict.  Thus, the arbitral award was vacated.

The court held, however, that the firm would be entitled to pursue relief under a quantum meruit theory and not have to disgorge all of the $2 million it had received, nor lose any claim to the $1 million it was still owed.  In the regard, the court wrote:

When a law firm seeks compensation in quantum meruit for legal services performed under the cloud of an unwaived (or improperly waived) conflict, the firm may, in some circumstances, be able to show that the conduct was not willful, and its departure from ethical rules was not so severe or harmful as to render its legal services of little or no value to the client. Where some value remains, the attorney or law firm may attempt to show what that value is in light of the harm done to the client and to the relationship of trust between attorney and client. Apprised of these facts, the trial court must then exercise its discretion to fashion a remedy that awards the attorney as much, or as little, as equity warrants, while preserving incentives to scrupulously adhere to the Rules of Professional Conduct.

The difficult issues this creates for patent lawyers, and others, should be clear.  Spotting conflicts of interest is difficult enough, but this case substantially increases the price of not doing.

The opinion just issued, and I’m doing a webinar for the AIPLA on conflicts in patent practice on 9/11, and so will think on this more, and discuss it then.

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Joinder of Inventor/Principal of Patentee to Assertion of Fees for Exceptional Case Liability https://patentlyo.com/hricik/2018/08/principal-assertion-exceptional.html Wed, 15 Aug 2018 12:29:23 +0000 https://patentlyo.com/?p=24126 A while back, I suggested here that defendants start thinking, early on, about joining sole-shareholders (and the like) of asset-less patentees if 285 liability was an issue.  In a recent case, the district court allowed joinder of such a person, finding he was a necessary party under Rule 19. (I seriously doubt that is correct (what is the claim against the person being joined?), but Genentech managed to convince a judge to join such a person in Phigenix, Inc. v. Genentech, Inc., (N.D. Cal. Aug. 13, 2018) (here).  (I’ve also written about counsel’s liability under 285, and the conflicts it can create, here.)

It discusses another case where this motion was held to be untimely, and there are serious questions about subject matter jurisdiction the court side-steps.  Lawyers faced with 285 motions have a lot to think about: plan ahead.

Continue reading Joinder of Inventor/Principal of Patentee to Assertion of Fees for Exceptional Case Liability at Patently-O.

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A while back, I suggested here that defendants start thinking, early on, about joining sole-shareholders (and the like) of asset-less patentees if 285 liability was an issue.  In a recent case, the district court allowed joinder of such a person, finding he was a necessary party under Rule 19. (I seriously doubt that is correct (what is the claim against the person being joined?), but Genentech managed to convince a judge to join such a person in Phigenix, Inc. v. Genentech, Inc., (N.D. Cal. Aug. 13, 2018) (here).  (I’ve also written about counsel’s liability under 285, and the conflicts it can create, here.)

It discusses another case where this motion was held to be untimely, and there are serious questions about subject matter jurisdiction the court side-steps.  Lawyers faced with 285 motions have a lot to think about: plan ahead.

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Ex Parte Contact that Plaintiff Failed to do Adequate Pre-Suit Investigation Part of Failed Fee Shifting Motion https://patentlyo.com/hricik/2018/08/plaintiff-adequate-investigation.html https://patentlyo.com/hricik/2018/08/plaintiff-adequate-investigation.html#comments Fri, 03 Aug 2018 15:24:19 +0000 https://patentlyo.com/?p=24038 When I do CLE talks, I often tell people that if you’re going to raise ethical-related issues, be very honest and clear when you do.  In a recent case where Google sought to shift fees onto a patentee who lost his patent in an IPR, Google relied on the fact that a former employee of the patentee told Google’s counsel that the pre-suit investigation had been inadequate.  The judge wrote in part:

Defendants offer two reasons why the case should be considered exceptional, but neither is persuasive. First, they say that Fujinomaki himself didn’t do enough research before he filed his lawsuit pro se.  That is not at all supported by the record or by the law. Defendants concededly do not challenge the adequacy of Bumgardner’s testing and research once the case was brought to his attention. Dkt. No. 276 at 1. And defendants have virtually no evidence to back up their claim that Fujinomaki unreasonably filed suit. They rely only on the rather bizarre fact that Fujinomaki’s pre-suit patent consultant, Amani Bey, apparently contacted defendants after the lawsuit was filed to inform them about “Plaintiff’s failure to comply with Rule 11.”  How Bey did this without breaching a duty or at the very least a contractual obligation to Fujinomaki is not clear, but in any event, this purported incident is just a sideshow.

Continue reading Ex Parte Contact that Plaintiff Failed to do Adequate Pre-Suit Investigation Part of Failed Fee Shifting Motion at Patently-O.

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When I do CLE talks, I often tell people that if you’re going to raise ethical-related issues, be very honest and clear when you do.  In a recent case where Google sought to shift fees onto a patentee who lost his patent in an IPR, Google relied on the fact that a former employee of the patentee told Google’s counsel that the pre-suit investigation had been inadequate.  The judge wrote in part:

Defendants offer two reasons why the case should be considered exceptional, but neither is persuasive. First, they say that Fujinomaki himself didn’t do enough research before he filed his lawsuit pro se.  That is not at all supported by the record or by the law. Defendants concededly do not challenge the adequacy of Bumgardner’s testing and research once the case was brought to his attention. Dkt. No. 276 at 1. And defendants have virtually no evidence to back up their claim that Fujinomaki unreasonably filed suit. They rely only on the rather bizarre fact that Fujinomaki’s pre-suit patent consultant, Amani Bey, apparently contacted defendants after the lawsuit was filed to inform them about “Plaintiff’s failure to comply with Rule 11.”  How Bey did this without breaching a duty or at the very least a contractual obligation to Fujinomaki is not clear, but in any event, this purported incident is just a sideshow. Defendants present the incident mainly with hearsay evidence, and offer no documents to support Bey’s accusation. Other evidence strongly suggests that Bey was hardly an unbiased or trustworthy source. He reached out to defendants only after Fujinomaki sued him in Japan for failure to provide promised services. In addition, Bey’s allegations are contradicted by the declaration of Tatsuya Ichinomiya….

The opinion is Fujinomaki v. Google, LLC (Case No. 3:16-cv-03137-JD, N.D.Cal. July 31, 2018) (denying fee shifting).

 

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