Risk Update

IP Risk Week (Part 3) — Corporate Trees in Greater Detail, Conflicts, and IP Trials

Here’s a great analysis of an always popular issue, which I missed during my blogging hiatus. (Speaking of which, we’re approaching the one year anniversary of the Bressler Risk Blog… I’d better come up with something interesting for that milestone… In the meantime, please do encourage your colleagues to join our readership rolls.)

All In The Family: The Tricky Ethics Of Corporate Affiliate Conflicts” —

  • “If you represent a corporation, do you represent all entities in the corporate family? For example, if you represent a parent company, does that mean you also represent the parent’s subsidiaries? Does it matter if a subsidiary is wholly-owned vs. partially owned? How about if you represent a subsidiary–does that mean you also represent its parent or grandparent entity in the corporate tree?”
  • “Many corporate entities are parts of families that can include parents, subsidiaries, and other affiliated or related entities. Some corporate families can be complex and include scores, or even hundreds, of related entities under the same ‘family tree.’ This arrangement can present challenges for attorneys who are asked to undertake a representation adverse to an entity that the lawyer does not consider to be her client yet is part of the same corporate family as the lawyer’s organizational client.”
  • “In a recent decision, the Federal Circuit disqualified a law firm from representing a client in a patent appeal because the adverse parties in the patent matter were corporate affiliates of one of the firm’s clients. The Court’s decision in Dr. Falk Pharma GMBH v. Generico, LLC, is instructive on how corporate affiliates can morph into unintentional clients that create a conflict of interest for a lawyer who wants to take a position adverse to a different entity within the same corporate family as the lawyer’s client.”
  • “Bausch & Lomb is both an indirect subsidiary of Valeant-CA and an affiliate of Salix. The Firm’s engagement agreement for the trademark litigation on behalf of Bausch & Lomb was executed by Valeant-CA. As is common especially when representing large entities, the client had outside counsel guidelines (OCGs), which the engagement agreement incorporated by reference. Valeant-CA’s OCGs stated in relevant part that Katten would not represent any party in matters conflicting with any Valeant entity.”
  • “In addition to that representation, Mukerjee and Soderstrom, while at Alston & Bird, represented Mylan against Salix in related, parallel proceedings before the PTAB and the district court. The Salix matter wound up in a related appeal filed in the Federal Circuit, which appeal was pending when Mukerjee and Soderstrom joined Katten. Thereafter, Salix moved to disqualify Katten from that appeal. That motion was consolidated for decision with the Valeant-CA disqualification motion.”
  • “[Applying the regional law of the Third and Fourth Circuit] The court noted that under the comments to Rule 1.7 pertaining to organizational clients ‘a lawyer for the organization is not barred from accepting representation adverse to an affiliate in an unrelated matter, unless the circumstances are such that the affiliate should also be considered a client of the lawyer…’ The court concluded that the “circumstances” were such that affiliates should be considered clients of Katten.”

See the full article for more of the story, more analysis, and Michael McCabe’s key take-aways.

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