Noninfringement Opinions Excluded Based on Attorney Conflict of Interest

AIPLATalk197Andrew Corp v. Beverly Mfg., (N.D.Ill. 2006, 04–6214:146).

Andrew sued Beverly for willful infringement of Andrew’s cable-hanger patents. Beverly then brought forth three opinion letters written by its counsel in an attempt to avoid the willfulness charge.

The opinion letters provide, for instance that Beverly’s new product “does not fall within the claims of [Andrew’s] patent.”

As it turned out, Beverly’s law firm recently merged — and the merged firm represents both Andrew and Beverly.

On motion to disqualify the opinions, the firm responded that “lawyers who represented Andrew have never discussed any Beverly matter with the [lawyers] who represented Beverly and visa versa.”

District Judge Holderman, however, found a clear conflict:

[The firm’s] attorneys took positions directly adverse to its client Andrew in the [two] opinion letters on behalf of its other client Beverly, without obtaining informed consent from both Andrew and Beverly, in violation of Local Rule 83.51.7 and 83.51.10. These opinion letters advised Beverly that its products did not infringe Andrew’s patents, attacked Andrew’s patents, provided potential litigation arguments and provided a factual basis for a potential defense against future claims by Andrew of willful infringement. [The firm] possessed sufficient information to have determined that its work for Beverly was adverse to its existing client Andrew, that it would affect its relationship with Andrew and that the [firm] as a whole was disqualified under the imputed conflict rule.

Remedy: Because of the conflict, the court determined that the opinions could not, as a matter of law, be competent.  As such, all opinion letters from the firm were excluded from the case.  


3 thoughts on “Noninfringement Opinions Excluded Based on Attorney Conflict of Interest

  1. 3

    Assuming that punitive damages are awarded, won’t this simply lead to a malpractice claim for the amount of the punitive damages?

    This means that the judge’s selection of rememdy has also punished the plaintiff as plaintiff’s current counsel would be on the hook for such a malpractice claim and therefore in direct conflict with the plaintiff on the issue of punitives.

    It seems that the judge has effectively removed the firm from the case while also putting the firm on the hook for any punitive damages. Ouch!

  2. 2

    There are several troubling aspects in this opinion.

    The first is that the court perceives that a non-infringement opinion is adverse to the party whose patents are the subject of the opinion. I question this conclusory assertion. If a non-infringement opinion is competently rendered based on the cannons of claim construction and the facts of the alleged infringing device, then how is the “adverse” to the patent owner? It simply is what it is. Something about the court’s decision intimates that such an opinion is somehow tainted by the attorney’s loyalty to his client. The court’s opinion uses the attorney’s loyalty to his client as having a negative affect on the opinion.

    The second is that the concept of a conflict of interest has been slightly modified from the Restatement 3rd definition. The Restatement 3rd states “A conflict of interest is involved if there is a substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s own interests or by the lawyer’s duties to another current client, a former client or a third person. Section 121, Rest. 3rd, The Law Governing Lawyers. The term “adverse” relates to the quality of the representation, not necessarily to the quality of the result obtained in a given case. The issue here is whether a conflict of duties arose. It is hard to see where in this case there was a conflict in the duties of the attorneys that rendered the non-infringement opinions. How were they conflicted? Were they forced to hedge their opinion because of the other party Andrew? Suppose the opinions were completed before the merger of the two firms. Would there have still been a conflict in offering the opinions in the litigation? I think the court would answer in the affirmative, because it considers the opinions themselves and not the representation to be “adverse.” Notice also that Illinois conflict rule states “A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless (1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and (2) each client consents after disclosure.” What? Affect the relationship with the client? It seems that standard of “adverse” changed in mid-sentence. First, it states that the representation will not be adversely affected, then it states, in effect, that representation includes the client relationship. In other words, if the client gets upset, then there is a conflict. Something is wrong here.

    Third, the court has a strange attitude towards the prosecution of the Beverly patent, stating that the appeal to the Board was one seeking relief adverse to Andrew. Last I checked, prosecution appeals to the Board are not adversarial proceedings. Those appeals and prosecutions in general are about determining, objectively, whether claims in a patent application are allowable over a reference, not whether a party owning a reference is adversely affected.

    Finally, it is interesting to ask how the alleged conflict found by the court here could have been avoided. Assuming that the opinion work was started before the merger and assuming the court’s characterization of the term “adverse,” the drafters of the opinions would have to have farmed them out to another firm or not merge with the new firm. I cannot imagine the affect that would have had on the client if the work were sent to another firm. Basically, all the work would have to have been junked to permit the merger of the two firms. This seems a harsh effect on the client.

  3. 1

    Excluding the opinion letters merely punishes the innocent client – that seems clearly wrong. (Excluding the merged law firm would be a more proportionate remedy.) I’d put 3:1 on reversal, if this issue is reviewed – anybody want to hold the bets?

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