Silicon Graphics, Inc. v. ATI Technologies, Inc.
99 U.S.P.Q. 2d (BNA) 1508, 741 F.Supp.2d 970, 2010 U.S. Dist. LEXIS 107057 (2010)
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Rule of Law:
In the Seventh Circuit, a law firm can rebut the presumption of shared confidences and avoid imputed disqualification by implementing a timely and effective ethical screen, even when the newly associated, personally disqualified lawyer performed substantial work for the opposing party in the same litigation.
Facts:
- David Leichtman, a partner at the law firm Morgan, Lewis & Brockius, performed legal work for plaintiff Silicon Graphics, Inc. in its patent infringement lawsuit against defendants ATI Technologies, Inc. and others.
- Between December 2006 and October 2007, Leichtman billed Silicon Graphics for 186 hours for his work on third-party discovery, inequitable conduct claims, and damages issues.
- Leichtman left Morgan Lewis in October 2007.
- In the fall of 2009, Leichtman interviewed for a position with Robins, Kaplan, Miller & Ciresi LLP (Robins Kaplan), the law firm representing defendants in the same lawsuit.
- Leichtman disclosed his prior representation of Silicon Graphics to Robins Kaplan, and Silicon Graphics subsequently declined to waive the conflict of interest.
- In February 2010, Leichtman joined Robins Kaplan as a partner in its New York office, while the Robins Kaplan attorneys working on the Silicon Graphics case were located in the Minneapolis office.
Procedural Posture:
- Plaintiff Silicon Graphics, Inc. filed a patent infringement lawsuit against defendants ATI Technologies, Inc., and others in the U.S. District Court for the Western District of Wisconsin.
- Following discovery and motion practice, the district court granted summary judgment for defendants on one patent.
- A jury trial was held on the validity of another patent, resulting in a verdict in favor of Silicon Graphics.
- On appeal by both parties, the U.S. Court of Appeals for the Federal Circuit upheld the jury's verdict but reversed the district court's construction of two patent terms.
- The Federal Circuit remanded the case to the district court for further proceedings on the issue of infringement under the new constructions.
- Upon remand, plaintiff Silicon Graphics filed a motion to disqualify defendants' counsel, the law firm of Robins, Kaplan, Miller & Ciresi LLP.
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Issue:
Does a law firm's implementation of a timely and effective screening mechanism rebut the presumption of shared confidences and prevent its imputed disqualification when it hires a lawyer who previously performed substantial work for the opposing party in the same ongoing litigation?
Opinions:
Majority - Crabb, J.
Yes. A law firm's implementation of a timely and effective screening mechanism can rebut the presumption of shared confidences and prevent its disqualification. The court held that federal law, specifically the precedent set by the Seventh Circuit in Cromley v. Board of Education, governs disqualification motions in federal court, not the more restrictive state ethics rules proposed by the plaintiff. Under the Cromley standard, the effectiveness of an 'ethical wall' or screening procedure is the determinative factor for avoiding imputed disqualification. The court rejected the argument that the substantiality of the disqualified lawyer's prior work for the former client makes screening an inappropriate remedy. The court found that Robins Kaplan had implemented a comprehensive and timely screen, which included denying Leichtman access to all physical and electronic files, prohibiting any communication about the case, ensuring he received no fees from the matter, and separating him geographically from the litigation team. Therefore, the presumption of shared confidences was successfully rebutted, and disqualification was not warranted.
Analysis:
This decision reaffirms the Seventh Circuit's established position that favors lawyer mobility and a client's right to their chosen counsel over more rigid disqualification rules. The court explicitly holds that federal case law, not conflicting state ethics rules, provides the standard for disqualification motions in federal court. By rejecting a test based on the quantity of the conflicted lawyer's prior work (such as Wisconsin's 'minor and isolated' rule), the court solidifies a functional approach where the central inquiry is the effectiveness of the screening mechanism in preventing the disclosure of confidential information. This provides clear guidance for law firms in the Seventh Circuit on how to manage conflicts arising from lateral hires, emphasizing procedural safeguards over per se prohibitions.
