Firm Secures Federal Circuit Victory for Schlumberger against Acacia

Court affirms district court ruling disqualifying all in-house and outside counsel of non-practicing entity and dismissing patent infringement case.

September 14, 2016

The Federal Circuit unanimously affirmed the dismissal by the U.S. District Court of the Western District of Texas of a patent infringement case brought by Acacia Research Corporation (“Acacia”) against Latham client, Schlumberger. The Federal Circuit affirmed the district court’s grant of Schlumberger’s motion to disqualify counsel in its entirety holding that all of Acacia’s in-house counsel and its outside counsel must be disqualified from the case because of the participation of a senior Acacia lawyer who had recently left her position as a senior IP counsel for Schlumberger in the decisions to acquire the patent in suit and to assert it against her former client Schlumberger. The Court unanimously affirmed the District Court’s finding that  Schlumberger’s former in-house counsel had communicated with other Acacia in-house counsel and outside counsel about matters that were substantially related to the legal work that she had done during her long tenure at Schlumberger.

The Court also unanimously affirmed the District Court’s ruling that the drafting of the patent infringement complaint filed by Acacia was infected by the participation of Schlumberger’s former in-house counsel and that the work was substantially related to work that she had performed during her tenure as a senior in-house counsel at Acacia.

Judge Alan Lourie wrote for a unanimous panel: “The district court affirmed the sound principle of not suborning the disloyalty of attorneys. It was inappropriate to hire a senior attorney, one intimately knowledgeable concerning a particular product, its competitors, and its associated business strategies and intellectual property, into a position in which she not only participated in but in fact played a significant role in acquiring a patent used to accuse her former employer’s product of patent infringement.”

New York partner Max Grant argued the appeal before the Federal Circuit and was assisted on the brief by New York partner Terrence Connolly, Washington, D.C. counsel Gabriel Bell and associate Thomas Humphrey. The Latham team on the district court case also included Chicago partner Ann Marie Wahls.

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