Thursday, April 7, 2016

Disqualifications (Attempted), Patents (Pursued), Conflicts (Contested) & Malpractice (Alleged)

Several interesting updates to share today. First: "Skadden Hit With Malpractice Suit By Evergreen Creditors" --
  • "Lenders who are owed $90 million by bankrupt Evergreen International Aviation Inc. on Thursday made good on their vow to sue Skadden Arps Slate Meagher & Flom LLP, claiming the firm’s conflicted representation cost Evergreen $35 million in damages."
  • "The creditors accuse the law firm of having an “incestuous relationship” in which it represented multiple Evergreen entities and their late founder, Delford Smith, turning a blind eye to 'impermissibly conflicting and divided loyalties' that arose as a result of Skadden’s multiple representations."
  • "'Defendants cannot and should not be able to retain substantial legal fees drained from the debtors’ estates as Skadden disloyally and simultaneously represented other Smith-owned entities with conflicting interests,' the lenders said."
  • "U.S. Bankruptcy Judge Mary F. Walrath on March 23 granted standing and authority to the prepetition lenders to sue Skadden over its representation of the Evergreen entities, after Chapter 7 trustee Alfred Giuliano refused to pursue claims against the firm."
Next, costs avoided (hat tip to Bill Freivogel for flagging) commentary via David Hricik: "Baker Botts Dodges $42 million Verdict in Patent Conflict Case" --
  • "This is a fascinating case on several levels, Axcess International, Inc. v. Baker Botts LLP (Tex. App. Dallas March 2016).  Baker Botts was representing one client, Axcess International, Inc. (“Axcess”) in prosecuting patent applications involving certain radio frequency identification technology. After it had filed those applications, it began to represent another client, Savi Technologies, Inc. (“Savi”) in prosecuting applications on similar technology. There is a lot going on in the case, but essentially Axcess sued Baker Botts and alleged two breaches of duty."
  • "First, that, but for a conflict of interest between Savi and Axcess, Baker Botts would have broadened claims the firm had been pursuing for Axcess. The opinion is hard to follow but there seem to be two, related, claims made by Axcess."
  • "Axcess argued that had it broadened its claims, the USPTO would have declared an interference with a then-pending Savi application, and Axcess would have prevailed. Put the other way, Baker Botts “pulled its punches” – had a material limitation in terms of 37 C.F.R. 11.107, I presume — on its ability to represent Axcess – because of its representation of Savi. Had it prevailed in the interference, Axcess would have claims to subject matter that turned out to be the lucrative technology. That leads to the second basis, which is that the broadened claims would have issued to Axcess and would have covered the lucrative terrain."
  • "The case went to trial and the jury awarded $42 million dollars to Axcess. However, Baker Botts moved that judgment be entered in its favor, and raised four grounds. The trial court granted the motion without saying why."
Next, another patent matter: "Fish & Richardson Ducks DQ Bid Over Patent Judge Hire" --
  • "Fish & Richardson PC, which represents the last five among scores of retailers and travel companies Parallel Networks LLC targeted in a data processing patent case, on Thursday survived a disqualification bid over the firm's hire of a onetime federal judge who previously oversaw the litigation."
  • "In an order denying the patent-holding company's June disqualification request, U.S. District Judge Robert W. Schroeder III of the Eastern District of Texas said the firm’s notification to Parallel Networks and the court about the hire of former federal Judge Leonard Davis was timely."

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