Risk Update

IP Risk Week (Part 2) — Patent Conflict, Corporate Affiliates Results in Disqualification

Federal Circuit Disqualifies Litigation Counsel Who Prosecutes Patents for Subsidiary Company” —

  • “In an unusual decision, the Federal Circuit has disqualified PerDiem’s appellate counsel – the firm of Davidson Berquist Jackson & Gowdey, LLP – based upon a current client conflict.”
  • “The particular problem here stems from Davidson’s simultaneous performance of patent prosecution work for Trimble Transportation Enterprise Solutions, Inc.. Trimble Transport is a wholly owned subsidiary of appellant Trimble Inc (TRMB).”
  • “Although Davidson has now withdrawn its representation of Trimble, the court judges current-client conflicts as of the filing of the motion to disqualify. At that time Davidson was representing both Trimble Transportation and PerDiem. Also, because the district court case was litigated in California, California professional responsibility rules control conflict situations.”
  • “Software Engineering, LLC (who is also a party to the lawsuit). Trimble (TRMB) has a valuation of $10 billion, 8,000+ employees, and more than a dozen major subsidiary companies. The formal corporate structure was specifically and particularly designed to take advantage of various laws — creating protections against a variety of potential liabilities and allowing differentiation between the various companies. Now, however, when it is advantageous to the company, it argues that the corporate walls are illusory.”
  • “…the biggest factor in this case is Aaron Brodsky — in-house patent counsel at Trimble Inc. Although Brodsky works for the parent, he advises on patent prosecution work for a number of the subsidiaries that do not have their own patent counsel — including Trimble Transport. In particular, Broadsky advised the Davidson firm on its prosecution work and, at the same time, manages the present litigation. That intermingling of relevant legal matters starts to make the concurrent representation look bad.”