In a rarely-seen determination, Judge Saris granted Syncro Soft’s motion to disqualify Altova’s counsel, Sunstein Kann Murphy & Timbers. Sunstein had previously represented Syncro Soft in a copyright and trade dress dispute with Altova concerning Syncro Soft’s OXYGEN XML Editor software, during which Syncro Soft had provided details on the operation of the software to a Sunstein attorney. That matter resolved without litigation, but Sunstein continued to represent Syncro Soft on other matters through 2014. In 2011, Sunstein began to represent Altova on matters which were not adverse to Syncro Soft, and Sunstein represented both companies through 2017. Altova approached Sunstein about the patent dispute that is the center of this case in June 2017, at which point Sunstein terminated its relationship with Syncro Soft. Sunstein did not note to Syncro Soft the nature of the conflict, and did not seek Syncro Soft’s consent to allow Sunstein to represent Altova in litigation against Syncro Soft. While Sunstein erected an ethical wall blocking three attorneys from accessing Syncro Soft information, one of the three had previously worked closely with Syncro Soft. Judge Saris found that Sunstein’s action, in dropping Syncro Soft so that it could then sue the former client, was a violation of Rule 1.7 of the Massachusetts Rules of Professional Conduct, with which attorneys practicing in this District must comply pursuant to Local Rule 83.6.1(a). The representation of Altova was directly adverse to Syncro Soft, and arose at a time Syncro Soft was still a Sunstein client. Moreover, Sunstein could not fulfill its ethical duties owed Syncro Soft by informing them that Altova was preparing to sue the company without violating the ethical duties it owed Altova. Judge Saris further found that the potential for a conflict arose at least as early as November 2016, when Altova’s patent issued in an area of business in which the parties competed. Sunstein should have at that time sought written consent from both parties to continue the representation or withdrawn from representing both parties on the matter. Judge Saris determined that Sunstein “cannot simply choose the more profitable client and drop the other.”
Judge Saylor granted Defendants’ motion to partially strike SiOnyx’s Fourth Amended Initial Contentions. SiOnyx had sought to reintroduce a claim that had been initially asserted but voluntarily dropped because it was undergoing inter partes review. After the IPR decision upheld the claim, only two days before defendants’ expert was to be deposed and subsequent to opening and rebuttal expert briefs, SiOnyx served the amended contentions with the claim re-added. Judge Saylor noted that there was no good cause shown to permit reinsertion of the claim into the case, and that (to the extent SiOnyx believed it needed to wait on the PTAB’s decision, it was free to seek to stay or modify the schedule. Defendants were entitled to rely on SiOnyx’s decision to withdraw the claim.
Judge Zobel, having issued a claim construction that rendered Emseal’s infringement position unfeasible, issued a final judgment of non-infringement pursuant to Fed. R. Civ. P. 54(b). MM Systems had opposed Emseal’s motion for entry of final judgment of non-infringement on the grounds that, absent a tolling of the statute of limitations on its counterclaims, it would most likely lose the ability to pursue those claims. Emseal had sought to have the counterclaims dismissed with or without prejudice, or in the alternative to enter final judgment under Rule 54(b) and stay the counterclaims. MM Systems was concerned that, with the litigation having been filed in 2014, a dismissal of its counterclaims would result in their not being capable of being refiled, as a dismissed complaint is treated as though it never existed for Federal statute of limitations purposes, and provides for refiling within one year for state statute of limitations purposes. MM Systems also asserted that the Federal Circuit would not accept jurisdiction if the counterclaims were stayed rather than dismissed (although I note that the principal case cited for this proposition, Pause Technology v. TiVo, notes that the Federal Circuit lacks jurisdiction in such circumstances “short of meeting the conditions specified in Rule 54(b)…”). Judge Zobel stayed any activity relating to the counterclaims pending the outcome of the appeal.
In a sibling rivalry gone wrong, American Chair accuses Restaurant Seating and Stephen DiStasio of copyright and trademark infringement, palming off, and violation of M.G.L. 93A in connection with Restaurant Seating’s alleged use of American Chair’s copyrighted photographs, trademarks, and trade dress to steer business from the former to the latter. Prior to forming Restaurant Seating, Stephen DiStasio worked for American Chair under the supervision of his brother and American Chair’s President, Michael DiStasio. Restaurant Seating is accused of using American Chair’s copyrighted photographs on its website, using confusingly similar slogans to those registered by American Chair (e.g., “We build furniture to last the life of your concept” versus American’s registered “Furniture built to last the life of your concept”), and passing off American Chair products as if they were Restaurant Seating’s offerings, including in at least one instance hiring a manufacturer to knock off an American design that had been used to sell to a Salem, MA restaurant. American Chair seeks temporary, preliminary, and permanent injunctive relief in addition to damages and attorneys fees. The case is before Judge Woodlock.
Rothschild accuses Fingent of infringing U.S. Patent No. 7,456,872 by sales of its “ReachOut Suite,” a field service management software application. It is not clear why Rothschild, a Texas entity, is suing Fingent, a New York business, in Massachusetts, and it is equally unclear why venue in Massachusetts is appropriate, as the pleadings related to venue do not appear consistent with the TC Heartland line of cases.
Judge O’Toole ruled on a pair of privilege disputes in this trade secret litigation, finding some claims of privilege to be without merit while upholding others. Lynx accuses Zebra of misappropriating real-time player tracking technology and used it to obtain a deal with the NFL that did not include Lynx. During discovery, certain e-mail chains were produced by Zebra in both keyword-searchable and non-searchable formats; redactions based on privilege were made in only one of the formats. The parties could not resolve whether the privilege claim was legitimate, leading to the filing of a motion to remove the redactions by Lynx. A first set of e-mails included communications between Zebra, Zebra’s counsel, and non-employee consultants hired by Zebra o assist in reaching agreement with the NFL. Following en camera review of the communications in question, Judge O’Toole determined that Zebra had waived privilege in these communications by sharing them with the consultants. He found that the Kovel doctrine, which extends privilege to communications with third parties that are necessary, or at least highly useful, for effective consultation between the client and the attorney, did not apply, because the redacted communications were not made for the purpose of obtaining legal advice, and instead concerned business advice. The communications also did not demonstrate that the consultants were necessary to interpret matters beyond the lawyers’ reach. He also rejected Zebra’s attempted reliance on the “functional equivalent” doctrine, by which non-employee agents of a corporation can be considered functionally equivalent to corporate employees by virtue of their close connection to the corporation, such that privilege would extend. Here, the consultants were not so closely tied to Zebra as to be equivalent to employees – they lacked longstanding relations with the company, worked remotely, were not Zebra’s sole representatives in negotiations, and were free to work for others. Judge O’Toole further noted that neither the First Circuit nor the District of Massachusetts had ever adopted or applied the doctrine. The results were different with respect to a different set of communications, with Judge O’Toole upholding the privilege in communications between Zebra executives and in-house counsel. He noted that such communications would only be privileged if they revolved around legal, as opposed to business, advice, but noted that the communications in question did address legal perspectives on issues being discussed.
A number of discovery disputes boiled over in a suit involving a Chinese hot-pot restaurant chain and a Boston restaurant who had tried to become its first American franchisee, resulting in the award of sanctions against plaintiffs’ attorney. Magistrate Judge Kelley is requiring the attorney to pay the defendants’ reasonable fees and costs for their work on a motion for a protective order and to quash subpoenas issued by the plaintiffs. Limited discovery had been allowed, to determine whether a forum selection clause in the franchise agreement had been triggered, which would require the bulk of the claims to be brought in China. A series of disputes over discovery arose, in which plaintiffs’ attorney repeatedly refused to meet and confer. Among the charges were that the attorney noticed numerous third party subpoenas seeking financial discovery well outside the bounds of the limited discovery that had been permitted at a time when the defendants were negotiating a resolution of a dispute concerning plaintiffs’ attempt to get this information directly from the defendants. Judge Kelley indicated that this is an improper attempt to circumvent the legitimate objections of the defendants to the discovery, and that plaintiffs should have moved to compel if they believed the objections to lack validity. She criticized plaintiffs’ arguments that defendants lacked standing to challenge third party subpoenas as “plainly without merit.” Perhaps most damaging, plaintiff itself cross-moved for sanctions, accusing defendants’ attorney of frivolous and vexatious conduct, obstruction of discovery, and “potentially falsifying discovery documents,” an allegation that he admitted at oral argument was entirely without basis.