Re: This latest Pacer to strike deposition of Willis Higgins
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Mosaic ImmunoEngineering is a nanotechnology-based immunotherapy company developing therapeutics and vaccines to positively impact the lives of patients and their families.
Message: Re: This latest Pacer to strike deposition of Willis Higgins
After Beatie & Osborn and Bramson Plutzik were disqualified, Patriot and the
defendants settled the lawsuit between them. Pursuant to the terms of the settlement,
the district court entered a stipulated judgment dismissing Patriot’s claims with prejudice
and declaring that Moore is at least a co-inventor and TPL is at least a co-owner of all
seven of the patents in suit. As part of the settlement, Patriot waived its right to appeal.
Beatie & Osborn and Bramson Plutzik, however, took the instant appeal, challenging
the district court’s order disqualifying them and precluding Higgins from testifying.
II
We first address the question of the appellants’ standing to appeal. The question
of standing to appeal an order disqualifying counsel or excluding testimony is a
procedural matter not unique to patent law, the disposition of which is not “affected by
05-1452
5
the special circumstances of the patent law setting in which [the] issue arise[s].”
Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1360 (Fed. Cir. 1999) (en
banc). We therefore apply the law of the Ninth Circuit.
The Ninth Circuit has held that not every disqualification order gives the
disqualified attorney standing to appeal. In re Grand Jury Subpoena Issued to
Chesnoff, 62 F.3d 1144, 1145 (9th Cir. 1995). When, however, a disqualification order
rests on grounds that could harm the attorney’s professional reputation, and that order
is in the form of a sanction, the attorney may file an appeal independent of his client’s
right to appeal. See United States v. Talao, 222 F.3d 1133, 1137-38 (9th Cir. 2000).
Harsh criticism of an attorney in a written opinion is not an appealable sanction,
Weissman v. Quail Lodge, 179 F.3d 1194, 1200 (9th Cir. 1999), but an explicit finding
that an attorney violated a specific ethical rule “per se constitutes a sanction” under the
law of the Ninth Circuit. Talao, 222 F.3d at 1138. Such an order is appealable
regardless of whether the parties have settled the underlying action. See Lasar v. Ford
Motor Co., 399 F.3d 1101, 1109 (9th Cir. 2005). In this case, the district court’s
disqualification order was based on a finding that Beatie & Osborn had violated
California Rule of Professional Conduct 1-120 and that Bramson Plutzik was
presumably privy to the disclosures that flowed from that violation. Under Ninth Circuit
law, the part of the order disqualifying the appellants as Patriot’s counsel is based on
the kind of sanction as to which the appellants have standing to appeal.
The portion of the district court’s order denying Patriot’s motion to allow Higgins’s
testimony, on the other hand, was not a sanction against the appellants and did not
otherwise injure them. “Counsel have standing to appeal from orders issued directly
05-1452
6
against them, but not from orders applicable only to their clients.” Uselton v.
Commercial Lovelace Motor Freight, 9 F.3d 849, 854-55 (10th Cir. 1993) (citing cases);
see also Kapco Mfg. Co. v. C & O Enter., 886 F.2d 1485, 1494 (7th Cir. 1989); Warner
Bros., Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1127 (2d Cir. 1989). Patriot, not its
counsel, is the party aggrieved by the loss of Higgins’s testimony. We therefore hold
that the appellants do not have standing to appeal the portion of the district court’s order
denying Patriot’s motion to allow Higgins’s testimony.
III
We apply Ninth Circuit law in reviewing the merits of the district court’s decision
to disqualify the appellants. Sun Studs, Inc. v. Applied Theory Assocs., 772 F.2d 1557,
1566 (Fed. Cir. 1985). In the Ninth Circuit, the standards adopted by the district court to
govern the conduct of members of its bar are controlling. Id. (citing United Sewerage
Agency v. Jelco, Inc., 646 F.2d 1339 (9th Cir. 1981)). The district court’s rules require
attorneys who are admitted to practice before it to comply with the standards of practice
applicable to California attorneys. N.D. Cal. Civ. Local Rule 11-4(a)(1). The district
court’s basis for disqualifying Beatie & Osborn was that the firm’s attorneys had violated
California Rule of Professional Conduct 1-120 by inducing and assisting Higgins in
breaching his fiduciary duty to Moore as a former client through his disclosures of
Moore’s confidential information and through the assistance he provided to Patriot in its
litigation against Moore. The appellants do not dispute the historical facts of this case,
but argue instead that Higgins’s conduct was permissible. Under Ninth Circuit law, we
review that issue de novo, United States v. Lopez, 989 F.2d 1032, 1036 (9th Cir. 1993),
and if we sustain the district court’s conclusion that an ethical violation occurred, we
05-1452
7
review the court’s choice of sanction for an abuse of discretion. Golden Eagle Distrib.
Corp. v. Burroughs Corp., 801 F.2d 1531, 1538 (9th Cir. 1986).
A
Rule 3-310 (E) of the California Rules of Professional Conduct states that “[a]
member shall not, without the informed written consent of the client or former client,
accept employment adverse to the client or former client where, by reason of the
representation of the client or former client, the member has obtained confidential
information material to the employment.” The appellants do not dispute that Higgins’s
employment as a consultant to Patriot in its suit against Moore was “employment
adverse to” Moore, or that Higgins’s conduct otherwise fell within the scope of what the
rule prohibits. Under California law, it does not matter that Higgins was acting as a
litigation consultant, rather than Patriot’s attorney. See Am. Airlines, Inc. v. Sheppard,
Mullin, Richter & Hamilton, 96 Cal. App. 4th 1017, 1039 (Cal. App. 2002).
The appellants argue that this court should make federal common law to the
effect that the attorney-client privilege does not apply “when former joint clients in the
invention and patent prosecution process and their successors in interest litigate to
determine inventorship and ownership.” That argument is beside the point, because the
district court’s order disqualifying the appellants was not based on the attorney-client
privilege, but rather on a finding that the attorneys induced Higgins to violate his duty of
loyalty and confidentiality to a former client. The attorney-client privilege is relevant in
this case only to the question whether Higgins should have been permitted to testify,
which as we have stated is not an issue that the appellants have standing to appeal.
05-1452
8
In Zador Corp. v. Kwan, 37 Cal. Rptr. 2d 754 (Cal. App. 1995), the California
court explained that in the context of litigation between former clients, the propriety of
disqualifying an attorney “turns upon the scope of the clients’ consent.” Id. at 759. In
Zador, an attorney had previously represented both Zador and Kwan. The court
declined to disqualify the attorney in subsequent litigation between Zador and Kwan,
because Kwan had signed a waiver before obtaining the attorney’s services. Kwan was
advised that if any conflicts arose between Kwan and Zador, the attorney would
continue to represent Zador, and Kwan agreed not to seek to disqualify the attorney
“notwithstanding any adversity that may develop.” Id. at 762-63. The court held that the
consent was necessary for the attorney to be permitted to represent Zador. Id. In this
case, because there was no such consent we uphold the district court’s conclusion that
Higgins violated Rule 3-310 (E) of the California Rules of Professional Conduct, and that
Beatie & Osborn violated Rule 1-120 by assisting Higgins in doing so.
B
Turning to the question of the appropriateness of the district court’s
disqualification order, we hold that it was not an abuse of discretion for the district court
to disqualify both law firms. As the court noted, Higgins’s disclosures were crucial to the
disputed issue in the case, and both law firms were deemed to be privy to those
disclosures. Moreover, the district court considered the potential hardship to Patriot
Scientific and declined to disqualify Patriot’s Georgia counsel on that ground. Under the
circumstances, we find no abuse of discretion. Cf. Metro-Goldwyn-Mayer, Inc. v.
Tracinda Corp., 43 Cal. Rptr. 2d 327, 332 (Cal. App. 1995) (“Where the duty of loyalty
applies, it requires a per se, or automatic disqualification, in all but a few instances.”).
05-1452
9
We therefore uphold the district court’s order disqualifying the appellants as Patriot’s
counsel.
After Beatie & Osborn and Bramson Plutzik were disqualified, Patriot and the
defendants settled the lawsuit between them. Pursuant to the terms of the settlement,
the district court entered a stipulated judgment dismissing Patriot’s claims with prejudice
and declaring that Moore is at least a co-inventor and TPL is at least a co-owner of all
seven of the patents in suit. As part of the settlement, Patriot waived its right to appeal.
Beatie & Osborn and Bramson Plutzik, however, took the instant appeal, challenging
the district court’s order disqualifying them and precluding Higgins from testifying.
II
We first address the question of the appellants’ standing to appeal. The question
of standing to appeal an order disqualifying counsel or excluding testimony is a
procedural matter not unique to patent law, the disposition of which is not “affected by
05-1452
5
the special circumstances of the patent law setting in which [the] issue arise[s].”
Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1360 (Fed. Cir. 1999) (en
banc). We therefore apply the law of the Ninth Circuit.
The Ninth Circuit has held that not every disqualification order gives the
disqualified attorney standing to appeal. In re Grand Jury Subpoena Issued to
Chesnoff, 62 F.3d 1144, 1145 (9th Cir. 1995). When, however, a disqualification order
rests on grounds that could harm the attorney’s professional reputation, and that order
is in the form of a sanction, the attorney may file an appeal independent of his client’s
right to appeal. See United States v. Talao, 222 F.3d 1133, 1137-38 (9th Cir. 2000).
Harsh criticism of an attorney in a written opinion is not an appealable sanction,
Weissman v. Quail Lodge, 179 F.3d 1194, 1200 (9th Cir. 1999), but an explicit finding
that an attorney violated a specific ethical rule “per se constitutes a sanction” under the
law of the Ninth Circuit. Talao, 222 F.3d at 1138. Such an order is appealable
regardless of whether the parties have settled the underlying action. See Lasar v. Ford
Motor Co., 399 F.3d 1101, 1109 (9th Cir. 2005). In this case, the district court’s
disqualification order was based on a finding that Beatie & Osborn had violated
California Rule of Professional Conduct 1-120 and that Bramson Plutzik was
presumably privy to the disclosures that flowed from that violation. Under Ninth Circuit
law, the part of the order disqualifying the appellants as Patriot’s counsel is based on
the kind of sanction as to which the appellants have standing to appeal.
The portion of the district court’s order denying Patriot’s motion to allow Higgins’s
testimony, on the other hand, was not a sanction against the appellants and did not
otherwise injure them. “Counsel have standing to appeal from orders issued directly
05-1452
6
against them, but not from orders applicable only to their clients.” Uselton v.
Commercial Lovelace Motor Freight, 9 F.3d 849, 854-55 (10th Cir. 1993) (citing cases);
see also Kapco Mfg. Co. v. C & O Enter., 886 F.2d 1485, 1494 (7th Cir. 1989); Warner
Bros., Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1127 (2d Cir. 1989). Patriot, not its
counsel, is the party aggrieved by the loss of Higgins’s testimony. We therefore hold
that the appellants do not have standing to appeal the portion of the district court’s order
denying Patriot’s motion to allow Higgins’s testimony.
III
We apply Ninth Circuit law in reviewing the merits of the district court’s decision
to disqualify the appellants. Sun Studs, Inc. v. Applied Theory Assocs., 772 F.2d 1557,
1566 (Fed. Cir. 1985). In the Ninth Circuit, the standards adopted by the district court to
govern the conduct of members of its bar are controlling. Id. (citing United Sewerage
Agency v. Jelco, Inc., 646 F.2d 1339 (9th Cir. 1981)). The district court’s rules require
attorneys who are admitted to practice before it to comply with the standards of practice
applicable to California attorneys. N.D. Cal. Civ. Local Rule 11-4(a)(1). The district
court’s basis for disqualifying Beatie & Osborn was that the firm’s attorneys had violated
California Rule of Professional Conduct 1-120 by inducing and assisting Higgins in
breaching his fiduciary duty to Moore as a former client through his disclosures of
Moore’s confidential information and through the assistance he provided to Patriot in its
litigation against Moore. The appellants do not dispute the historical facts of this case,
but argue instead that Higgins’s conduct was permissible. Under Ninth Circuit law, we
review that issue de novo, United States v. Lopez, 989 F.2d 1032, 1036 (9th Cir. 1993),
and if we sustain the district court’s conclusion that an ethical violation occurred, we
05-1452
7
review the court’s choice of sanction for an abuse of discretion. Golden Eagle Distrib.
Corp. v. Burroughs Corp., 801 F.2d 1531, 1538 (9th Cir. 1986).
A
Rule 3-310 (E) of the California Rules of Professional Conduct states that “[a]
member shall not, without the informed written consent of the client or former client,
accept employment adverse to the client or former client where, by reason of the
representation of the client or former client, the member has obtained confidential
information material to the employment.” The appellants do not dispute that Higgins’s
employment as a consultant to Patriot in its suit against Moore was “employment
adverse to” Moore, or that Higgins’s conduct otherwise fell within the scope of what the
rule prohibits. Under California law, it does not matter that Higgins was acting as a
litigation consultant, rather than Patriot’s attorney. See Am. Airlines, Inc. v. Sheppard,
Mullin, Richter & Hamilton, 96 Cal. App. 4th 1017, 1039 (Cal. App. 2002).
The appellants argue that this court should make federal common law to the
effect that the attorney-client privilege does not apply “when former joint clients in the
invention and patent prosecution process and their successors in interest litigate to
determine inventorship and ownership.” That argument is beside the point, because the
district court’s order disqualifying the appellants was not based on the attorney-client
privilege, but rather on a finding that the attorneys induced Higgins to violate his duty of
loyalty and confidentiality to a former client. The attorney-client privilege is relevant in
this case only to the question whether Higgins should have been permitted to testify,
which as we have stated is not an issue that the appellants have standing to appeal.
05-1452
8
In Zador Corp. v. Kwan, 37 Cal. Rptr. 2d 754 (Cal. App. 1995), the California
court explained that in the context of litigation between former clients, the propriety of
disqualifying an attorney “turns upon the scope of the clients’ consent.” Id. at 759. In
Zador, an attorney had previously represented both Zador and Kwan. The court
declined to disqualify the attorney in subsequent litigation between Zador and Kwan,
because Kwan had signed a waiver before obtaining the attorney’s services. Kwan was
advised that if any conflicts arose between Kwan and Zador, the attorney would
continue to represent Zador, and Kwan agreed not to seek to disqualify the attorney
“notwithstanding any adversity that may develop.” Id. at 762-63. The court held that the
consent was necessary for the attorney to be permitted to represent Zador. Id. In this
case, because there was no such consent we uphold the district court’s conclusion that
Higgins violated Rule 3-310 (E) of the California Rules of Professional Conduct, and that
Beatie & Osborn violated Rule 1-120 by assisting Higgins in doing so.
B
Turning to the question of the appropriateness of the district court’s
disqualification order, we hold that it was not an abuse of discretion for the district court
to disqualify both law firms. As the court noted, Higgins’s disclosures were crucial to the
disputed issue in the case, and both law firms were deemed to be privy to those
disclosures. Moreover, the district court considered the potential hardship to Patriot
Scientific and declined to disqualify Patriot’s Georgia counsel on that ground. Under the
circumstances, we find no abuse of discretion. Cf. Metro-Goldwyn-Mayer, Inc. v.
Tracinda Corp., 43 Cal. Rptr. 2d 327, 332 (Cal. App. 1995) (“Where the duty of loyalty
applies, it requires a per se, or automatic disqualification, in all but a few instances.”).
05-1452
9
We therefore uphold the district court’s order disqualifying the appellants as Patriot’s
counsel.
After Beatie & Osborn and Bramson Plutzik were disqualified, Patriot and the
defendants settled the lawsuit between them. Pursuant to the terms of the settlement,
the district court entered a stipulated judgment dismissing Patriot’s claims with prejudice
and declaring that Moore is at least a co-inventor and TPL is at least a co-owner of all
seven of the patents in suit
Thanks for that old PACER. Here's the meat IMO:
"Patriot and the defendants settled the lawsuit between them. Pursuant to the terms of the settlement, the district court entered a stipulated judgment dismissing Patriot’s claims with prejudice and declaring that Moore is at least a co-inventor and TPL is at least a co-owner of all seven of the patents in suit."
So, with regard to patent inventorship, it appears that the first court action resulted in the court declaring co-inventorship (even though this was a result of the settlement that I recalled). It also appears that the second court action/the appeal had (ultimately) nothing to do with inventorship, but only with Higgins' ability to testify.
So the water is a little muddy. The court ruled co-inventorship as a result of the settlement. Still pretty strong, I'd think, and still something that I doubt Judge Ward would want to tackle. The parties in dispute formally agreed to co-inventorship, and the CA court pretty much put that in stone.
This discussion really helped my understanding (assuming the above is correct) and keeps me in my "comfort zone".
And Ease, you didn't quite have it nailed in that earlier post (close by no cigar), but it brought our resources to bear to vet this out. Thank you to all. And this is probably the nth rehash of this, but since it has resurfaced as an "issue", it was a good rehash - for me at least (I like being in my "comfort zone"!).
Thanks again all.....
SGE
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