Counsel Concerns

Attorney-Client Privilege. The U.S. District Court for the Northern District of Illinois held that Arachnid Inc., a plaintiff in a computer-jukebox patent suit, had waived in limited scope its attorney-client privilege when its lawyer failed to object to the disclosure of attorney advice about the patent during the deposition of a former employee in a prior lawsuit. (Arachnid's lawyer had represented both Arachnid and the former employee in the prior litigation.) Rowe International Corp. v. ECast Inc., 06 C 2703. Plaintiff Arachnid Inc. had obtained a patent for jukeboxes that delivered digital music. Rowe International and Arachnid later filed a patent-infringement suit. During discovery, defendant ECast sought production of 'all privileged communications (including the 'patent reports') concerning the patentability of the inventions claimed in the patents-in-suit, [a prior, similar] Patent, communications relating to the preparation and prosecution of the applications of the patents-in-suit, and communications concerning inventorship.'

The district court additionally found that 'even if [Arachnid counsel John] Held's failure to object at the [prior suit] deposition' to statements by former employee Michael Tillery about counsel's advice on the computer-jukebox patent 'did not waive Arachnid's privilege, Arachnid most certainly waived the privilege when it provided a copy of Tillery's deposition transcript to the [Patent and Trademark Office (PTO)]. It is hard to imagine a more 'knowing disclosure' than making the substance of a privileged communication part of the public record.' But the district court went on to note: 'On the other hand, the Court rejects defendants' contention that the waiver extends to the other patents in suit, inventorship, and issues of patentability generally. Courts narrowly construe the scope of waiver in patent cases.'

ECast also claimed the attorney-client privilege had been waived by the crime-fraud exception because Held had told the PTO '[a]lthough superficially similar,' the prior similar patent 'is, upon close analysis, fundamentally different from applicant's invention.' But the district court emphasized: 'Defendants contend that this statement and others like it are fraudulent because the patent reports reveal that Held believed that [the prior similar patent] blocked patents for inventions such as computer jukebox systems. Held's statements to the PTO do not implicate the crime-fraud exception because he did not misrepresent material facts. Rather, Held's statements constituted legal argument.'

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Motion for Disqualification. The U.S. District Court for the Eastern District of Tennessee ruled that a litigation attorney for an Internet-streaming service should be disqualified because he was likely to be a witness in the case due to his personal involvement in the Internet company. But the attorney's firm can continue to serve as litigation counsel to the company, the district court decided. Eon Streams Inc. v. Clear Channel Communications Inc., 3:05-CV-578.

Eon Streams, which provided Internet streaming services to Clear Channel's radio stations, sued for breach of an alleged new contract with Clear Channel. Clear Channel moved to disqualify Eon Streams counsel Herbert S. Sanger Jr. and his firm Wagner, Myers & Sanger (WMS). Sanger had been on the Eon Streams board of directors and had served as company secretary.

Looking at the Rules of Professional Conduct in effect in Tennessee, the district court added: 'Sanger is the apparent signatory of the minutes summarizing the events of the April 27, 2005 [Eon Streams] board meeting, which is a contested issue. Though other witnesses could testify as to what occurred at the meeting, Sanger's testimony may be the preferred course to authenticate the minutes and to explain their content. Accordingly, this Court determines that Sanger is likely to be a necessary witness at trial.'

The district court went on to find Eon Streams would suffer no substantial hardship, first because 'it was reasonably foreseeable that Sanger would be called as a necessary, material witness.' Second, the court allowed WMS to continue as Eon Streams' counsel in the case. The court noted: '[A]lthough the parties disagree as to the percentages of [Eon Streams] stock owned by members of the [WMS] firm, all percentages presented are minor. Therefore, any dividends distributed based on a judgment award would be relatively insignificant and diluted by the costs of distribution and legal fees.'

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 Personal Jurisdiction in Legal-Fees Dispute. The New York Appellate Division found long-arm personal jurisdiction over an out-of-state client sued by a New York attorney for legal fees. Fischbarg v. Doucet, 01964. Suzanne Doucet, president of Only New Age Music (ONAM), had contacted Manhattan attorney Gabriel Fischbarg regarding possible copyright infringement claims against Allegro Corp. Fischbarg represented ONAM from his New York office after Allegro sued ONAM in Oregon federal court. Fischbarg subsequently sued Doucet ' who never came to New York to meet with Fischbarg ' in New York state court for approximately $60,000 in legal fees.

Affirming denial of the Doucet defendants' motion to dismiss, the appellate division explained in part: 'It is defendants' actions, requesting plaintiff to do substantial work for them in New York, which makes defendant subject to New York jurisdiction. Defendants 'projected themselves' into this state by calling plaintiff, who did not know them, consulting him, writing to him, sending him voluminous documents, and then retaining him as their lawyer ' Defendants had plaintiff do extensive work for them, plaintiff's records indicating over 238.4 hours, all in New York, and had plaintiff work for them exclusively from New York, even while defending them in the Oregon action. In fact, because plaintiff did not travel, defendants saved substantial sums.'

Attorney-Client Privilege. The U.S. District Court for the Northern District of Illinois held that Arachnid Inc., a plaintiff in a computer-jukebox patent suit, had waived in limited scope its attorney-client privilege when its lawyer failed to object to the disclosure of attorney advice about the patent during the deposition of a former employee in a prior lawsuit. (Arachnid's lawyer had represented both Arachnid and the former employee in the prior litigation.) Rowe International Corp. v. ECast Inc. , 06 C 2703. Plaintiff Arachnid Inc. had obtained a patent for jukeboxes that delivered digital music. Rowe International and Arachnid later filed a patent-infringement suit. During discovery, defendant ECast sought production of 'all privileged communications (including the 'patent reports') concerning the patentability of the inventions claimed in the patents-in-suit, [a prior, similar] Patent, communications relating to the preparation and prosecution of the applications of the patents-in-suit, and communications concerning inventorship.'

The district court additionally found that 'even if [Arachnid counsel John] Held's failure to object at the [prior suit] deposition' to statements by former employee Michael Tillery about counsel's advice on the computer-jukebox patent 'did not waive Arachnid's privilege, Arachnid most certainly waived the privilege when it provided a copy of Tillery's deposition transcript to the [Patent and Trademark Office (PTO)]. It is hard to imagine a more 'knowing disclosure' than making the substance of a privileged communication part of the public record.' But the district court went on to note: 'On the other hand, the Court rejects defendants' contention that the waiver extends to the other patents in suit, inventorship, and issues of patentability generally. Courts narrowly construe the scope of waiver in patent cases.'

ECast also claimed the attorney-client privilege had been waived by the crime-fraud exception because Held had told the PTO '[a]lthough superficially similar,' the prior similar patent 'is, upon close analysis, fundamentally different from applicant's invention.' But the district court emphasized: 'Defendants contend that this statement and others like it are fraudulent because the patent reports reveal that Held believed that [the prior similar patent] blocked patents for inventions such as computer jukebox systems. Held's statements to the PTO do not implicate the crime-fraud exception because he did not misrepresent material facts. Rather, Held's statements constituted legal argument.'

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Motion for Disqualification. The U.S. District Court for the Eastern District of Tennessee ruled that a litigation attorney for an Internet-streaming service should be disqualified because he was likely to be a witness in the case due to his personal involvement in the Internet company. But the attorney's firm can continue to serve as litigation counsel to the company, the district court decided. Eon Streams Inc. v. Clear Channel Communications Inc., 3:05-CV-578.

Eon Streams, which provided Internet streaming services to Clear Channel's radio stations, sued for breach of an alleged new contract with Clear Channel. Clear Channel moved to disqualify Eon Streams counsel Herbert S. Sanger Jr. and his firm Wagner, Myers & Sanger (WMS). Sanger had been on the Eon Streams board of directors and had served as company secretary.

Looking at the Rules of Professional Conduct in effect in Tennessee, the district court added: 'Sanger is the apparent signatory of the minutes summarizing the events of the April 27, 2005 [Eon Streams] board meeting, which is a contested issue. Though other witnesses could testify as to what occurred at the meeting, Sanger's testimony may be the preferred course to authenticate the minutes and to explain their content. Accordingly, this Court determines that Sanger is likely to be a necessary witness at trial.'

The district court went on to find Eon Streams would suffer no substantial hardship, first because 'it was reasonably foreseeable that Sanger would be called as a necessary, material witness.' Second, the court allowed WMS to continue as Eon Streams' counsel in the case. The court noted: '[A]lthough the parties disagree as to the percentages of [Eon Streams] stock owned by members of the [WMS] firm, all percentages presented are minor. Therefore, any dividends distributed based on a judgment award would be relatively insignificant and diluted by the costs of distribution and legal fees.'

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 Personal Jurisdiction in Legal-Fees Dispute. The New York Appellate Division found long-arm personal jurisdiction over an out-of-state client sued by a New York attorney for legal fees. Fischbarg v. Doucet, 01964. Suzanne Doucet, president of Only New Age Music (ONAM), had contacted Manhattan attorney Gabriel Fischbarg regarding possible copyright infringement claims against Allegro Corp. Fischbarg represented ONAM from his New York office after Allegro sued ONAM in Oregon federal court. Fischbarg subsequently sued Doucet ' who never came to New York to meet with Fischbarg ' in New York state court for approximately $60,000 in legal fees.

Affirming denial of the Doucet defendants' motion to dismiss, the appellate division explained in part: 'It is defendants' actions, requesting plaintiff to do substantial work for them in New York, which makes defendant subject to New York jurisdiction. Defendants 'projected themselves' into this state by calling plaintiff, who did not know them, consulting him, writing to him, sending him voluminous documents, and then retaining him as their lawyer ' Defendants had plaintiff do extensive work for them, plaintiff's records indicating over 238.4 hours, all in New York, and had plaintiff work for them exclusively from New York, even while defending them in the Oregon action. In fact, because plaintiff did not travel, defendants saved substantial sums.'