Monday, November 7, 2011

Update: Imputation Risk and Joint Defense Agreements

Eighteen months ago we noted Nintendo's move to disqualify plaintiff's counsel in a patent suit, arguing that a lawyer at the firm was exposed Nintendo's confidential information through participation in a previous,  unrelated joint-defense matter.

At the time, the plaintiff's firm's managing partner noted that if Nintendo prevails it would be: "extremely risky for a company entering into an joint defense agreement in that all knowledge is imputed to everyone in your organization. Companies often enter into joint defense agreements with their own competitors."

Now comes an update from a few turns later:
  • World 2-1: The district court did indeed disqualify the firm, agreeing that the joint defense agreement provision in which the parties agreed not to seek future disqualifications did not apply once the lawyer in question moved from AMD to another organization. (A second judge dissented.)
  • World 3-1: The U.S. Court of Appeals for the Federal Circuit overturned. No Disqualification Where Disclosure of Confidential Information Controlled by Joint Defense Agreement: "Considering the joint defense agreement as a whole and its use of the term “respective counsel” throughout, the Court rejected Nintendo’s argument, reasoning that Nintendo should have had the expectation that Cooper was a “respective counsel” who would be bound by the agreement’s confidentiality provisions. By analogy, the Court ruled that Cooper was also a “respective counsel” for purposes of the agreement’s waiver provision. Having so ruled, the Court granted the petition for writ and vacated the district court’s decision disqualifying F&B." (A second judge also dissented in this instance.)
[8/11: See also good discussion on this at the Legal Ethics Forum.]

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