New England Biz Law Update
A law firm representing the plaintiffs in a patent infringement suit was not subject to disqualification based on the fact that two of its partners, while associated with a different firm in 2004, had a one-day meeting with the defendant on a related matter, a U.S. District Court judge in Boston has ruled.
The defendant argued that the plaintiffs’ Boston firm, Goodwin Procter, should be disqualified because the two attorneys had received information in that meeting that was directly relevant to whether its own technology, a pregnancy test, infringed on the plaintiffs’ patent.
But Judge Douglas P. Woodlock disagreed, finding that the two lawyers never obtained “substantial material information” relating to the patent at issue and thus the plaintiffs’ firm fell within the “safe harbor” provision of the Massachusetts Rules of Professional Conduct.
Additionally, Woodlock noted, any such information had been disclosed by the defendant during discovery anyway.
“The October 2004 discussion was not concerned with the patents at issue,” Woodlock wrote in denying the defendant’s motion to disqualify. “Rather, it concerned [the defendant’s] technology, which is not confidential information, and how to incorporate it into a separate patent application.”
The 20-page decision is Alere, Inc., et al. v. Church & Dwight Company, Inc.
‘Typhoid Marys’
Henry C. Dinger of Goodwin Procter in Boston, who argued against the disqualification motion on behalf of the plaintiffs, said the case highlights the difficulties law firms face in taking on lateral hires in an environment in which lawyers are increasingly mobile.
“At any given time, many lawyers are looking to move,” he said. “It’s in the interest of the profession and, in the long run, in the interests of clients and the public, that we not unnecessarily create ‘Typhoid Marys’ who will have difficulty finding a new place to land because they carry so much baggage. And firms need the ability to use screens to manage those risks rather than saying, ‘I’m sorry, we can’t take you on.’”
Fortunately, Dinger said, Woodlock took the “pragmatic approach” characteristic of the federal District Court in disqualification cases. Under that approach, federal judges tend not to disqualify law firms unless they perceive a genuine and serious risk to the party seeking disqualification, he said.
Shannon Liss-Riordan of Boston, whose firm Lichten & Liss-Riordan was disqualified in 2009 from representing plaintiffs in a class-action suit when it was discovered that a new associate had previously worked for the firm representing the defense, agreed.
“Hopefully, courts will look closely at the actual considerations behind the rules so that these types of motions are not allowed to be used for strategic litigation gamesmanship,” said Liss-Riordan, who was not involved in Alere. “Respectfully, in our case, we really believe it was gamesmanship” as opposed to a real concern about confidentiality.
Douglas S. Brooks of LibbyHoopes in Boston said the decision is important because it sets forth parameters on how the safe harbor provisions under the imputed disqualification rule should apply.
“Certain previous decisions concerning this rule resulted in some ambiguity,” Brooks said. “[This ruling] will hopefully permit practitioners to better understand whether a firm’s representation is proper at the early stages of litigation.”
J. Charles Mokriski of Proskauer Rose in Boston, who represented the defendant in the disqualification matter, could not be reached for comment prior to deadline.
Potential conflict?
In January 2010, plaintiff Alere Inc. sued defendant Church & Dwight Co., Inc., alleging that the defendant had infringed three patents related to technology used in home pregnancy tests.
During the litigation, the defendant moved to disqualify Goodwin Procter over concerns regarding two of the firm’s partners, Duncan A. Greenhalgh and Douglas J. Kline. Both had been affiliated with the now-defunct Boston firm Testa, Hurwitz & Thibeault before joining Goodwin in 2005. While at Testa, the two attorneys had apparently represented the defendant on certain intellectual property matters.
The defendant’s specific concerns stemmed from an October 2004 meeting at which Kline and Greenhalgh apparently met with two employees of the defendant as well as its in-house counsel. One of the employees, Dr. Albert Nazareth, claimed he described to the two lawyers the features of a software algorithm to be employed in a digital pregnancy test kit the company was developing. The features described during that meeting were allegedly used in the digital pregnancy test that the plaintiffs claimed infringed their patents.
Nazareth also claimed that at the time of the meeting, the defendant already had a patent application pending for a digital pregnancy test and that he discussed with Kline and Greenhalgh whether the pending application could be improved and whether the features of the software algorithm — as well as additional technology — could be covered by the application’s claims.
Kline and Greenhalgh never disputed that the meeting took place but said they had no recollection of it. They also allegedly never discussed the meeting or the content of any of the conversations that might have occurred during the meeting with anyone at Goodwin other than Dinger, who chairs the firm’s ethics advisory committee.
The two attorneys did recall, however, working on patent-related matters for the defendant, and Greenhalgh remembered reviewing a patent related to digital pregnancy tests that had been prepared by another law firm.
Meanwhile, in 2006, the U.S. Patent Office published the patent application that the defendant and the two lawyers apparently discussed at the 2004 meeting. Additionally, during the course of discovery in the case, the defendant produced the algorithm used in the pregnancy kit that was the subject of the litigation.
Also during discovery, the defendant disclosed some aspects of the algorithms used in the accused device without designating the documents as confidential.
No risk of compromise
Woodlock noted that under the “imputed disqualification rule,” Rule 1.10(d) of the Massachusetts Rules of Professional Conduct, a firm cannot continue to represent a client in a matter that is the same or “substantially related” to a matter in which a newly associated attorney had previously represented a client with materially adverse interests.
However, the judge continued, the rule also has two “safe harbor” provisions in which the firm is not disqualified.
The first provision applies when the new hire has no information that is material to the matter in question. The second provision applies when the new lawyer had neither “substantial involvement” nor “substantial material information” relating to the matter and was screened by the new firm from participating in the matter.
In Alere, Woodlock found that the first safe harbor provision did not apply because the matter discussed in the 2004 meeting was indeed “substantially related” to the matter in the case.
“The 2004 conversation concerned the patenting of technology which is now incorporated into the accused product,” the judge said. “The factual cores of the two matters overlap significantly, raising the prospect that an attorney involved in both matters would be tempted to use confidential information on behalf of his current client to the detriment of the former client.”
Nonetheless, the second safe harbor provision did apply, Woodlock said.
First, the judge found, the two attorneys did not have “substantial involvement” in the matter involved in the case while at Testa Hurwitz.
“Although the conversations in general may have been extensive [at the 2004 meeting], the involvement of Kline and Greenhalgh regarding the issues in this case can hardly be described as ‘substantial,’” the judge said. “The general discussions only lasted for one day. Even when the discussions have been more focused on the matter at issue, a day’s engagement has been found insubstantial [in other decisions in the district].”
The judge also found that Kline and Greenhalgh did not obtain “substantial material information” — in other words, confidential information — relating to the matter.
In doing so, Woodlock rejected the defendant’s argument that because the algorithm allegedly disclosed by Nazareth in the 2004 meeting was not “generally known,” it remained confidential even though it subsequently was disclosed during discovery in the case.
“[The defendant’s] interpretation would make little sense,” the judge said. “There is no practical reason to disqualify a firm out of concern that one of its members can be said to share information improperly with the other members where the other members already know the information.”
Woodlock said discovery does not, as a general principle, obviate the need to follow ethical rules created to protect client confidentiality. Nonetheless, in situations like in Alere — where the relevant discovery was conducted before Goodwin Procter entered the case and the only substantial confidential information known to the Goodwin lawyers was produced in that discovery — there was no basis to disqualify the firm, he said.
Finally, because the defendant did not challenge the sufficiency of Goodwin Procter’s screening processes, its motion to disqualify should be denied, Woodlock concluded.
