Law Firm Disqualified in Fujitsu-Netgear Dispute

(CN) - A San Jose federal judge disqualified Baker Botts from representing Fujitsu in a patent infringement action against Netgear because the law firm has simultaneously represented both companies over the years.

Though Fujitsu filed suit against Netgear and five other companies for patent infringement in September 2010, Baker Botts has represented the Japanese computer company over the issue since 2002.

A Baker Botts lawyer, Barton Showalter, corresponded with Netgear on Fujitsu's behalf over allegations that Netgear infringed on Fujitsu's Ozawa patent by selling wireless interface cards and routers. One of the allegedly infringing products is the WPN824, a high-speed wireless router that employs multiple antenna configurations to enable faster and more stable connections, the ruling states.

Fujitsu, through Showalter, repeatedly offered Netgear a license to the Ozawa patent, but Netgear said it did not need a license because prior art invalidated the patent.

In the meantime, Showalter also tried to represent Netgear on another claim over the WPN824 filed by Ruckus Wireless.

Baker Botts had performed very little work for Netgear and had never even charged for its services in Ruckus proceedings and certain indemnification matters, but Showalter and Kurt Pankratz, a Baker Botts partner, recognized the conflict between Netgear and Fujitsu.

Pankratz informed a Netgear intellectual property director that Fujitsu planned to sue Netgear for patent infringement and asked for a waiver so that the firm could represent Fujitsu.

Netgear instead moved to disqualify Baker Botts from the lawsuit, while Fujitsu argued that Baker Botts corrected the concurrent representation conflict by discontinuing its representation of Netgear.

Though California law prohibits an attorney from dropping a less favored client once a conflict arises, Fujitsu said there is no law against withdrawing in favor of a first client.

Fujitsu also offered to drop the WPN824 product from the case if Baker Botts could continue as its counsel.

U.S. District Judge Lucy Koh rejected the compromise and ruled to disqualify Baker Botts on Dec. 22. Though attorney disqualification is a drastic measure, the judge found that it was the most appropriate action in this case to "restore confidence in the legal profession."

Koh seemed sympathetic to Fujitsu's plight, noting that Showalter represented the company in the matter for the better part of a decade and disqualification will derail litigation.

"Although Baker Botts made a mistake, it is understandable that Baker Botts would attempt to resolve the problem by withdrawing as Netgear's counsel," Koh wrote.

The judge ruled for Netgear, however, "in spite of these concerns."

"Baker Botts clearly accepted two clients whose interests were adverse to each other," Koh wrote. "This is especially inexcusable given that Showalter had been representing Fujitsu for nearly eight years when he agreed to represent Netgear. During that time he attended at least two face to face meetings with Netgear representatives where Fujitsu asserted its infringement claims against Netgear."

Clients have expectations of loyalty from their attorney that must be protected, the ruling states.

"Even though disqualification is a harsh penalty, allowing a law firm to resolve voluntarily created conflicting loyalties by simply dropping the less favored client undermines this expectation," Koh wrote.

The judge added that Baker Botts must return all confidential information it obtained from Netgear and its supplier, Rayspan, and must destroy any work product related to that confidential information.

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