Wednesday, October 15, 2014

IP Conflict Allegation Causes Firm Withdrawal

In September we published an article on IP conflicts (and associated webinar recording): "IP Matters: Navigating a Complex Conflicts Landscape," Now comes an interesting cast of IP conflicts allegation in the news: "Mega Firm Withdraws From Patent Infringement Suit After Former Client Alleges Conflict of Interest" --
  • "On September 29, 2014, K&L Gates voluntarily withdrew as defendant’s counsel in a patent infringement action after the plaintiff asked a California federal district court to disqualify the Am Law 100 firm for a conflict of interest because the firm had previously represented the plaintiff regarding the same patents at issue in the litigation. See Cyber Switching Patents, LLC v. Eaton Corp., No. 4:14-cv-02862 (N.D. Cal.)"
  • "The complaint accused Eaton of infringing three patents relating to power distribution technologies for data centers. On August 18, 2014, Eaton’s counsel, K&L Gates, filed an answer denying infringement and asserting counterclaims of non-infringement and invalidity. Cyber alleged that it engaged K&L Gates in November 2013 about representing Cyber in enforcing the very same patents that were the subject of the lawsuit."
  • "Notwithstanding its denial of wrongdoing, K&L Gates agreed to withdraw as counsel for Eaton. The firm stated the reason for its decision was that, “it would be fundamentally unfair to subject Eaton to a protracted distraction” in litigating the disqualification motion. Substitute counsel will be replacing K&L Gates to represent Eaton."
  • "Consequently, many large firms have adopted the practice of including advance conflict waivers in their engagement agreements. Whether such advance waivers are enforceable is far from certain. The difficulty with most advanced waivers lies in the fact that an effective waiver requires “informed” consent. Informed consent requires sufficient disclosure by the lawyer, who “must explain the risks and advantages, if any, of representation burdened with a conflict of interest, as well as reasonably available alternatives. . . .” Model Rule 1.7, comment [20]. But in many advanced waiver cases, the potentially conflicting representation has not yet arisen, thus “informed” consent may not be possible under such circumstances."
More detail and commentary on the IPethics & INsights blog and Law360. And for those interested in managing these risks with technology, see more about Intapp IP conflicts management software.

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