Who’s On Your Side?

Companies facing patent infringement lawsuits need help. First, they need litigation counsel to handle the lawsuit. Second, they may look to third–party vendors for support if the patent claims read on products provided by third parties. Good counsel and a reliable vendor can keep the acid reflux triggered by patent litigation in check. Two recent court decisions underscore the significance of these relationships, and how they can go well or poorly:

• In the first, Intellectual Ventures, the prominent patent troll recently profiled by Planet Money, succeeded in disqualifying opposing counsel in one of its recent lawsuits in Delaware. Defendant CheckPoint Software Technologies hired the firm of Wilson Sonsini Goodrich and Rosati to defend it against IV’s patent infringement claims. As set forth in a detailed opinion by Judge Stark, IV was co–founded by a former Wilson Sonsini partner, Peter Detkin, and Wilson Sonsini performed significant work—over $2.6 million worth—for IV on the business side of IV’s operations. Based on this relationship, IV moved to disqualify the Wilson firm from representing CheckPoint in litigation that post–dated IV’s relationship with the firm. The court agreed with IV, finding that the Wilson firm was conflicted out, and that not even an ethical wall within the firm could cure the evident conflict between Wilson’s duties to its current and former client. As noted by Judge Stark, one reason Wilson Sonsini sought to, and eventually did, stop doing legal work for IV was that some of the firm’s large clients were concerned about the firm’s work on behalf of a large patent–assertion entity that was likely to target them with licensing offers or patent litigation in the future. In the end, the firm was left betwixt and between, no longer representing IV, and now unable to represent IV’s litigation foes.
• On the vendor side of the equation, the Rocket Docket IP Litigation Blog reports on a notable success by a vendor on behalf of its customers in fending off a patent infringement claim. Gift–card service provider Stored Value Solutions filed a declaratory judgment action (also in Delaware) against a company called Card Activation Technologies, after CAT had sued SVS’ customers for infringement of a patent purportedly relating to gift card technology. SVS successfully argued to the Court (Judge Jordan of the Third Circuit Court of Appeals, sitting by designation) that the majority of CAT patent’s claims were invalid, thereby neutralizing the threat posed by CAT to SVS’ customers—at least for the moment. The parties have reached a stipulated judgment of invalidity so that CAT may pursue an appeal to the Federal Circuit Court of Appeals both from the district court judgment and a related adverse determination by the Patent Office in reexam proceedings.