Risk Update

IP Conflicts Considered — Trademark Matter Extracts Attorney, Carefully Constructed NDA Avoids Conflict Relationship in Patent Fight

Posted Dan Bressler

“NJ Atty Booted From Pharma Co.’s Herbal Extract TM Row” —

  • “A New Jersey magistrate judge has recommended disqualification of counsel for pharmaceutical company HP Ingredients in its trademark suit against rival Sabinsa over a similarly named herbal extract, finding that HP’s counsel had a prior relationship with Sabinsa that poses a conflict of interest.”
  • “U.S. Magistrate Judge Rukhsanah Singh said in a Wednesday order that J. Mark Pohl of Pharmaceutical Patent Attorneys LLC can’t represent HP Ingredients Corp. in its infringement litigation against Sabinsa Corp. over the name for a competing anti-inflammation extract. Judge Singh found Pohl’s previous attorney-client relationship with Sabinsa exposed him to confidential information — including revenue and pricing data — that is relevant to HP’s ‘potential monetary recovery.'”
  • “‘Because Pohl received confidential information relating to Sabinsa’s intellectual property, litigation, and pricing strategies, it is not unreasonable to believe that such information can be used against Sabinsa in this matter,’ Judge Singh said.”
  • “HP Ingredients filed suit in September 2021 and contended that Sabinsa’s ‘Panicin’ extract — which reduces inflammation while also supporting immune and liver health — infringed HP Ingredients’ brand name trademark on rival extract ‘Paractin.'”
  • “But Sabinsa said in a March motion that HP Ingredients’ counsel must be disqualified from the litigation, contending that Pohl was conspiring to infringe on trade secrets that’d he’d become privy to when previously representing Sabinsa for about six months in 2009 and 2010.”

“Non-Disclosure Agreement in a Transactional Negotiation Did Not Create a Fiduciary Relationship or Obligation that Could Be Imputed to an Adversary’s Counsel in Future Actions Related to Infringement or Validity of Patents” —

  • “A non-disclosure agreement in a financing transaction did not create a conflict of interest stemming from a fiduciary relationship or obligation for a law firm with respect to a party to that non-disclosure agreement that it did not represent.”
  • “Centripetal Networks sued Palo Alto Networks for patent infringement. During the litigation, Centripetal Networks moved to disqualify counsel for Palo Alto Networks, Ropes & Gray LLP, in view of its prior involvement in a potential financing transaction between Centripetal Networks and third-party Silver Point Finance. The negotiations between Centripetal Networks with Silver Point Finance dealt with specialized financing to provide Centripetal Networks with general purpose funds and funds to pay an insurance premium on a policy covering a judgment from a prior patent litigation.”
  • “After Centripetal Networks sued Palo Alto Networks for patent infringement, the same Ropes & Gray attorneys that represented Silver Point Financial in the earlier transaction appeared on behalf of Palo Alto Networks. Centripetal Networks requested that Ropes & Gray withdraw, but Ropes & Gray refused.”
  • “Centripetal Networks then filed a motion to disqualify counsel alleging that Ropes & Gray’s representation of Palo Alto Networks created a conflict of interest.”
  • “In its motion to disqualify Ropes & Gray, Centripetal Networks alleged it was either ‘a former client’ based on an ‘implied attorney-client relationship’ theory under Rules 1.7 and 1.9 or ‘a third person’ to whom the Ropes & Gray attorneys would owe responsibilities under Rule 1.7. Under Virginia law, an attorney-client relationship may be implied from the actions of the parties.”
  • “In this case, however, the wording of the NDA made it clear that no attorney-client relationship existed between Centripetal Networks and Ropes & Gray. The NDA specifically referenced Ropes & Gray as Silver Point Finance’s attorneys ‘and not the transaction’s attorneys, the joint venture’s attorneys, or any other term or syntax denoting collective representation.'”
  • “Having found no violations of Rules 1.7 and 1.9, there were no conflicts of interest to impute onto Ropes & Gray and the court denied Centripetal Networks’s motion to disqualify.”
  • “The wording of an NDA in a transactional financial negotiation is relevant to determining implied attorney-client relationships as well as obligations of outside counsel to parties to the agreement. The same is true for confidential information shared during negotiations.”