Risk Update

Risk Revealed — IP Lawyer-to-CEO Called on Conflicts Concerns, Ernst & Young Split is On

Posted Dan Bressler

“Samsung Wants Former In-House Atty DQ’d From Patent Suit” —

  • “Samsung has asked a federal judge in Texas to disqualify its former top in-house IP attorney from participating in a suit over smart speaker technology being pursued by the lawyer’s new patent-rights venture.”
  • “The tech giant filed a disqualification motion on Thursday arguing that Dr. Seung-Ho Ahn, the founder of the Singapore-based Synergy IP Corp., should be barred from involvement in the case as he could unfairly leverage information he gained during his nearly two decades of service for Samsung.”
  • “Synergy, which Ahn founded shortly after his departure from Samsung in 2019, is suing the company alongside co-plaintiff Staton Techiya LLC for alleged patent infringement related to Samsung’s Bixby smart speaker platform.”
  • “But Samsung argued on Thursday that Ahn and another former Samsung lawyer, Sungil Cho, who joined Synergy not long after its founding, needed to be ‘walled off’ from participating in the case.”
  • “Neither Ahn nor Cho is listed as counsel for Synergy or Staton Techiya, although Samsung claims they’re providing legal guidance and information they only have because of their previous employment there.”
  • “‘Synergy’s business model is essentially legal in nature, as it makes money by acquiring patent rights with the goal of convincing counsel at target companies to take a license — and sues those companies if they refuse to pay,’ the disqualification motion said.”
  • “While the motion’s heavy redactions make murky some of the specific allegations against Ahn and Cho, it is clear Samsung wants to level a playing field it claims has been tilted by the use of its former lawyers’ deep understanding of the company’s inner workings.”
  • “‘Ahn’s actions violate his obligations under Texas and national ethical standards that prohibit attorneys from participating in matters that are both adverse to a previous client and substantially related to matters in which they previously represented that client — standards that apply to Ahn’s conduct in this case regardless of whether he chooses to enter a formal appearance,” Samsung argued. “It would severely prejudice Samsung to be forced to litigate this case against its own former in-house IP attorneys, and Samsung therefore requests that the court disqualify them and order them to refrain from any input, decision-making, or advice related to the patent infringement claims in this litigation.'”
  • “Samsung argued that Synergy can’t disguise Ahn’s alleged legal work for Synergy by giving him the title of CEO rather than general counsel or legal chief, and that Cho shouldn’t be permitted to sidestep ethical tenets either.”
  • “According to court records, Synergy and Staton Techiya have agreed to put voluntary measures in place to screen Ahn and Cho from communications regarding the patent infringement claims being raised as part of the litigation.”

[h/t to Simon Chester for noting]: “Ernst & Young splits into separate audit and advisory businesses” —

  • “Bosses at the ‘big four’ accountancy firm Ernst & Young have decided to move ahead with a radical break-up plan to separate its audit and advisory businesses, which will now be put to a vote by its 13,000 partners.”
  • “Voting at EY, which has offices in more than 150 countries and employs 312,000 people globally, is expected to begin on a country-by-country basis towards the end of this year and conclude early next year.”
  • “The industry has come under pressure for a major overhaul to tackle potential conflicts of interest to avoid future accounting scandals and business failures.”
  • “Its leaders hope the audit and advisory arms can grow faster once they have been separated, as the break-up will remove conflicts of interest and operational challenges.”
  • “EY’s chief executive, Carmine Di Sibio, has said a global split could bring in an extra $10bn a year for the consulting arm in advisory fees from big technology companies, as the firm is barred from selling advice to audit clients.”
  • “The proposed split has received support from Sir Jon Thompson, the chief executive of the Financial Reporting Council, the UK accounting regulator.”