Maling v. Finnegan, Henderson, Farabow, Garrett & Dunner, LLP , 473 Mass. 336 ( 2015 )

NOTICE: All slip opinions and orders are subject to formal
revision and are superseded by the advance sheets and bound
volumes of the Official Reports. If you find a typographical
error or other formal error, please notify the Reporter of
Decisions, Supreme Judicial Court, John Adams Courthouse, 1
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us
SJC-11800
CHRIS E. MALING vs. FINNEGAN, HENDERSON, FARABOW,
GARRETT & DUNNER, LLP, & others.1
Suffolk. September 8, 2015. - December 23, 2015.
Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk,
& Hines, JJ.
Patent. Conflict of Interest. Attorney at Law, Conflict of
interest, Attorney-client relationship, Representation of
differing interests.
Civil action commenced in the Superior Court Department on
April 25, 2013.
A motion to dismiss was heard by Janet L. Sanders, J.
The Supreme Judicial Court on its own initiative
transferred the case from the Appeals Court.
Thomas M. Bond for the plaintiff.
Erin K. Higgins (Christopher K. Sweeney with her) for the
defendants.
Paul A. Stewart, of California, & Sara E. Hirshon, for
Knobbe, Martens, Olson & Bear, LLP, & others, amici curiae,
submitted a brief.
1
Lawrence R. Robins, Eric P. Raciti, and Matthew R. Van
Eman.
2
Heather B. Repicky & Lauren E. Ingegneri, for Boston Patent
Law Association, amicus curiae, submitted a brief.
CORDY, J. In this case we consider whether an actionable
conflict of interest arises under Mass. R. Prof. C. 1.7, as
appearing in 471 Mass. 1335 (2015), when attorneys in different
offices of the same law firm simultaneously represent business
competitors in prosecuting patents on similar inventions,
without informing them or obtaining their consent to the
simultaneous representation.2
The plaintiff, Chris E. Maling, engaged the defendant law
firm Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
(Finnegan), including the three individual attorneys named in
this suit, to represent him in connection with the prosecution
of patents for Maling's inventions for a new screwless eyeglass.
After obtaining his patents, Maling learned that Finnegan had
been simultaneously representing another client that competed
with Maling in the screwless eyeglass market. Maling then
commenced this action, alleging harm under various legal
theories resulting from Finnegan's failure to disclose the
alleged conflict of interest. A judge in the Superior Court
2
We acknowledge the amicus briefs submitted by the Boston
Patent Law Association and by Knobbe, Martens, Olson & Bear,
LLP; Honigman Miller Schwartz and Cohn LLP; Nixon & Vanderhye
P.C.; Lewis Roca Rothgerber LLP; Schiff Hardin LLP; Steptoe &
Johnson LLP; Snell & Wilmer LLP; Barnes & Thornburg LLP;
Pillsbury Winthrop Shaw Pittman LLP; Verrill Dana LLP; and
Morrison & Foerster LLP.
3
dismissed Maling's complaint for failure to state a claim under
Mass. R. Civ. P. 12 (b) (6), 365 Mass. 754 (1974). Maling
appealed, and we transferred the case to this court on our own
motion. We conclude that the simultaneous representation by a
law firm in the prosecution of patents for two clients competing
in the same technology area for similar inventions is not a per
se violation of Mass. R. Prof. Conduct 1.7. We further conclude
that based on the facts alleged in his complaint, Maling failed
to state a claim for relief. Accordingly, we affirm the
judgment of dismissal.
1. Background. In 2003, Maling engaged Finnegan to
perform legal services in connection with the filing and
prosecution of patents for Maling's inventions for a new
screwless eyeglass, including a screwless eyeglass hinge block
design. Finnegan prepared patent applications for Maling's
inventions after ordering "prior art" searches. Over the next
several years, Finnegan successfully obtained four separate
patents for Maling.
Attorneys in Finnegan's Boston office represented Maling
from approximately April, 2003, to May, 2009.3 During this
period of time, attorneys in Finnegan's Washington, D.C., office
3
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
(Finnegan), withdrew its representation of Chris E. Maling
before the United States Patent and Trademark Office (USPTO) on
May 20, 2009; however, it is not clear from the record when the
firm and Maling terminated their relationship.
4
represented Masunaga Optical Manufacturing Co., Ltd. (Masunaga),
a Japanese corporation that also sought patents for its
screwless eyeglass technology. Upon learning of Finnegan's
representation of Masunaga, Maling brought suit, asserting
claims stemming from the alleged conflict of interest that arose
from Finnegan's simultaneous representation of both clients.4 We
describe the allegations in Maling's complaint germane to our
decision.
Maling alleges that he engaged Finnegan to "file and
prosecute a patent for [his] inventions for a new screw-less
eyeglass, including without limitation, his invention of a
'screwless' eyeglasses hinge block design," and that in
September, 2003, Finnegan ordered prior art searches relating to
Maling's inventions.5 Maling alleges that Finnegan "belatedly"
4
The original complaint was filed by Maling and his
company, The Formula, LLC, in the United States District Court
for the District of Massachusetts in April, 2012. It was
dismissed following the United States Supreme Court's decision
in Gunn v. Minton, 133 S. Ct. 1059, 1068 (2013), which held that
legal malpractice claims arising from representation in patent
proceedings are not within the exclusive subject matter
jurisdiction of the Federal courts. Maling refiled his case in
the business litigation section of the Massachusetts Superior
Court in April, 2013. After judgment entered dismissing the
complaint on October 29, 2013, notices of appeal were filed by
both plaintiffs, but no filing fee was paid in the Appeals court
on behalf of The Formula, LLC. Therefore, Maling is the sole
appellant.
5
Prior art is "the collection of everything in a particular
art or science that pre-dates the patent-in-suit." Princeton
Biochemicals, Inc. vs. Beckman Coulter, Inc., No. 96-5541
5
commenced preparation of a patent application for his inventions
in or about May, 2004, and that it "[inexplicably] took
[fourteen] months" to do so. Maling also alleges that Finnegan
filed patent applications for Masunaga more quickly than it did
for him. At the same time, Maling acknowledges that Finnegan
successfully obtained patents for his inventions. Maling
further claims that he paid Finnegan in excess of $100,000 for
its services, and that he invested "millions of dollars" to
develop his product. He claims he would not have made this
investment had Finnegan "disclosed its conflict of interest
and/or its work on the competing Masunaga patent." He further
alleges that the Masunaga applications are very similar to the
Maling applications, and that Finnegan knew it was performing
work in the "same patent space" for both clients. Maling also
alleges that he was harmed when Finnegan, in 2008, declined to
provide him with a legal opinion addressing similarities between
the Masunaga patents and the Maling patents. Because Finnegan
did not provide the legal opinion Maling claims, he was unable
to obtain funding for his invention, and his product was
otherwise unmarketable on account of its similarities to the
Masunaga device; as a result, his patents and inventions have
diminished in value. In sum, Maling contends, Finnegan's
(D.N.J. June 17, 2004), aff'd, 411 F.3d 1332 (Fed. Cir. 2005).
See 35 U.S.C. § 102 (2012).
6
simultaneous representation of both clients, as well as its
failure to disclose the alleged conflict, resulted in "great
harm" and "tremendous financial hardship" for Maling.
Finnegan moved to dismiss Maling's complaint for failure to
state a claim under Mass. R. Civ. P. 12 (b) (6). The motion was
granted in October, 2013, and Maling appealed. We then
transferred the case to this court on our own motion.
2. Discussion. We review the sufficiency of Maling's
complaint de novo, taking as true the factual allegations set
forth therein and drawing all inferences in his favor. Curtis
v. Herb Chambers I-95, Inc., 458 Mass. 674, 676 (2011). "[W]e
look beyond the conclusory allegations in the complaint and
focus on whether the factual allegations plausibly suggest an
entitlement to relief." Id., citing Iannacchino v. Ford Motor
Co., 451 Mass. 623, 635–636 (2008).
Maling's complaint sets forth four bases for relief: (1)
breach of fiduciary duty; (2) legal malpractice; (3) unfair or
deceptive practices in violation of G. L. c. 93A; and (4)
"inequitable conduct" before the United States Patent and
Trademark Office (USPTO). Because each count hinges on the
existence of an undisclosed conflict of interest arising from
Finnegan's representation of both Maling and Masunaga, we focus
our inquiry on whether, under the facts alleged, an actionable
7
conflict arose in violation of the Massachusetts Rules of
Professional Conduct.
Rule 1.7 of the Massachusetts Rules of Professional
Conduct, which applies to conflicts of interests between current
clients, governs the issues in this case.6 By its terms, rule
1.7, with limited exceptions, provides that a lawyer shall not
represent a client if the representation is "directly adverse to
another client," Mass. R. Prof. C. 1.7 (a) (1), or where "there
is a significant risk that the representation of one or more
clients will be materially limited by the lawyer's
responsibilities to another client, a former client or a third
person or by a personal interest of the lawyer." Mass. R. Prof.
C. 1.7 (a) (2). The purpose of rule 1.7 is twofold. It serves
as a "prophylactic [measure] to protect confidences that a
client may have shared with his or her attorney . . . [and]
safeguard[s] loyalty as a feature of the lawyer-client
relationship." SWS Fin. Fund A v. Salomon Bros. Inc., 790 F.
7
Supp. 1392, 1401 (N.D. Ill. 1992).
6
Since Maling's complaint was filed in 2012, the
Massachusetts Rules of Professional Conduct have been revised
and updated. Because the substance of rule 1.7 remains
unchanged, we analyze Maling's claims against the most recent
version of the rules, published in 2015. See Mass. R. Prof. C.
1.7, as appearing in 471 Mass. 1335 (2015).
7
The USPTO also sets standards of conduct for attorneys who
practice before it. In 2013, the USPTO adopted new ethics rules
based on the American Bar Association's Model Rules of
8
Professional Conduct. See 78 Fed. Reg. 20,180, 20,180 (2013).
The current regulation on concurrent conflicts of interest, 37
C.F.R. § 11.107 (2013), is virtually identical in language to
Mass. R. Prof. C. 1.7.
At the time this action was brought, concurrent conflicts
of interest were governed by 37 C.F.R. § 10.66 (2012) (entitled,
"Refusing to accept or continue employment if the interests of
another client may impair the independent professional judgment
of the practitioner"), which provided:
"(a) A practitioner shall decline proffered employment
if the exercise of the practitioner's independent
professional judgment in behalf of a client will be or is
likely to be adversely affected by the acceptance of the
proffered employment, or if it would be likely to involve
the practitioner in representing differing interests,
except to the extent permitted under paragraph (c) of this
section.
"(b) A practitioner shall not continue multiple
employment if the exercise of the practitioner's
independent professional judgment in behalf of a client
will be or is likely to be adversely affected by the
practitioner's representation of another client, or if it
would be likely to involve the practitioner in representing
differing interests, except to the extent permitted under
paragraph (c) of this section.
"(c) In the situations covered by paragraphs (a) and
(b) of this section a practitioner may represent multiple
clients if it is obvious that the practitioner can
adequately represent the interest of each and if each
consents to the representation after full disclosure of the
possible effect of such representation on the exercise of
the practitioner's independent professional judgment on
behalf of each.
"(d) If a practitioner is required to decline
employment or to withdraw from employment under a
Disciplinary Rule, no partner, or associate, or any other
practitioner affiliated with the practitioner or the
practitioner's firm, may accept or continue such employment
unless otherwise ordered by the Director or Commissioner."
9
In the practice of patent law, the simultaneous
representation of clients competing for patents in the same
technology area is sometimes referred to as a "subject matter
conflict." See, e.g., Dolak, Recognizing and Resolving
Conflicts of Interest in Intellectual Property Matters, 42 IDEA
453, 463 (2002); Hricik, Trouble Waiting to Happen: Malpractice
and Ethical Issues in Patent Prosecution, 31 AIPLA Q.J. 385, 412
(2003) (Hricik). Subject matter conflicts do not fit neatly
into the traditional conflict analysis. Maling advocates for a
broad interpretation of rule 1.7 that would render all subject
matter conflicts actionable, per se violations. We disagree.
Rather, we conclude that although subject matter conflicts in
patent prosecutions often may present a number of potential
legal, ethical, and practical problems for lawyers and their
clients, they do not, standing alone, constitute an actionable
conflict of interest that violates rule 1.7.
a. Adverse representation under rule 1.7 (a) (1).
Representation is "directly adverse" in violation of rule
1.7 (a) (1) when a lawyer "act[s] as an advocate in one matter
against a person the lawyer represents in some other matter,
even when the matters are wholly unrelated." Mass. R. Prof. C.
1.7 comment 6. In other words, "[a] law firm that represents
client A in the defense of an action may not, at the same time,
be counsel for a plaintiff in an action brought against client
10
A, at least without the consent of both clients." McCourt Co.
v. FPC Props., Inc., 386 Mass. 145, 145 (1982).
In the instant case, Maling and Masunaga were not
adversaries in the traditional sense, as they did not appear on
opposite sides of litigation. Rather, they each appeared before
the USPTO in separate proceedings to seek patents for their
respective screwless eyeglass devices.
Maling contends, however, that he and Masunaga were
directly adverse within the meaning of rule 1.7 (a) (1) because
they were competing in the "same patent space." We disagree
that the meaning of "directly adverse" stretches so far. The
rules of professional conduct make clear that
"simultaneous representation in unrelated matters of
clients whose interests are only economically adverse,
such as representation of competing economic
enterprises in unrelated litigation, does not
ordinarily constitute a conflict of interest and thus
may not require consent of the respective clients."
Mass. R. Prof. C. 1.7 comment 6. Put differently, "[d]irect
adverseness requires a conflict as to the legal rights and
duties of the clients, not merely conflicting economic
interests." American Bar Association Standing Committee on
Ethics and Professional Responsibility, Formal Op. 05-434, at
140 (Dec. 8, 2004) (ABA Op. 05-434).
Curtis v. Radio Representatives, Inc., 696 F. Supp. 729(D.D.C. 1988), a case involving broadcast licenses, offers a
11
useful example. In Curtis, the United States District Court for
the District of Columbia found that no actionable conflict of
interest existed where a law firm simultaneously represented
clients in the preparation and prosecution of applications for
radio broadcast licenses from the Federal Communications
Commission (FCC). Id. at 731-32, 737.8 The court reasoned that
"the fact that an attorney is simultaneously representing two
companies that are competitors in the same industry does not
itself establish an actionable breach of an attorney's fiduciary
duty." Id. at 736, quoting D.J. Horan & G.W. Spellmire, Jr.,
Attorney Malpractice: Prevention and Defense 17-1 (1987). It
went on to explain that a conflict of interest could develop
between clients seeking broadcast licenses under circumstances
where "objectionable electrical interference existed between two
stations." Curtis, supra. However, because the defendant
failed to assert such interference, or even the potential for
such interference, the court could not conclude that a conflict
of interest existed in violation of the rules of professional
conduct adopted by the District of Columbia. Id. at 736-37.
The analysis undertaken by the court in Curtis is
instructive in our evaluation of Maling's claims. Finnegan's
8
There are very few appellate court decisions that deal
with the issues raised in this case. The most instructive cases
are those decided by judges in the Federal District Courts. See
generally Gunn v. Minton, 133 S. Ct. 1059, discussed in note 4,
supra.
12
representation of Maling and Masunaga is analogous to that
undertaken by the law firm in Curtis. Finnegan represented two
clients competing in the screwless eyeglass device market in
proceedings before the USPTO. As Maling acknowledges, Finnegan
was able successfully to obtain patents from the USPTO for both
his device and Masunaga's, in the same way that the law firm in
Curtis was able to obtain radio broadcast licenses for each of
its clients from the FCC. Maling and Masunaga were not
competing for the same patent, but rather different patents for
similar devices.
Like the court in Curtis, we acknowledge that an actionable
conflict of interest could arise under different factual
circumstances. For example, where claims in two patent
applications filed prior to March 16, 2013, are identical or
obvious variants of each other, the USPTO can institute an
"interference proceeding" to determine which inventor would be
awarded the claims contained in the patent applications. 35
U.S.C. § 135(a) (2002).9,10 If the USPTO had called an
9
Under the America Invents Act, inventorship of patents and
patent applications that do not contain any claims entitled to a
priority date before March 16, 2013, must be challenged through
a derivation, rather than interference, proceeding. See 35
U.S.C. § 135 (2012); United States Patent and Trademark Office,
Manual of Patent Examining Procedure (MPEP) § 2159 (rev. Nov.
2013), available at http://www.uspto.gov/web/offices/pac/mpep/
mpep-2100.pdf [http://perma.cc/8TB2-B5RN]. Derivation
proceedings permit a true inventor to challenge a first-to-file
inventor's right to a patent by demonstrating that claims
13
interference proceeding to resolve conflicting claims in the
Maling and Masunaga patent applications, or if Finnegan, acting
as a reasonable patent attorney, believed such a proceeding was
likely, the legal rights of the parties would have been in
conflict, as only one inventor can prevail in an interference
proceeding. In such a case, rule 1.7 would have obliged
Finnegan to disclose the conflict and obtain consent from both
contained in the first application derived from those in the
true inventor's patent application. 35 U.S.C. § 135.
Because the Maling and Masunaga Optical Manufacturing Co.,
Ltd. (Masunaga), patents were filed prior to the effective date
of the relevant provisions of 35 U.S.C. § 135, the applications
would have been subject to an interference proceeding had a
question arisen as to whether the patent applications contained
conflicting claims.
10
Interference proceedings are meant to assist the director
of the USPTO in determining priority, that is, which party first
invented the commonly claimed invention. See MPEP, supra at
§ 2301 (rev. Oct. 2015) at http://www.uspto.gov/web/offices/pac/
mpep/mpep-2300.pdf [http://perma.cc/T2D9-G52D]. This first-to-
invent system was supplanted by the enactment of the America
Invents Act, which updated various provisions of the patent
code, and which gives priority to the first party to file an
application. See 35 U.S.C. § 135 (2012). Prior to the American
Invents Act, 35 U.S.C. § 135(a) (2006) provided, in relevant
part:
"Whenever an application is made for a patent which,
in the opinion of the Director [of the USPTO], would
interfere with any pending application, or with any
unexpired patent, an interference may be declared and the
Director shall give notice of such declaration to the
applicants, or applicant and patentee, as the case may be.
The Board of Patent Appeals and Interferences shall
determine questions of priority of the inventions and may
determine questions of patentability."
14
clients or withdraw from representation. See Mass. R. Prof. C.
1.7 comments 3 & 4.
Maling's conclusory allegations as to the high degree of
similarity between his device and the Masunaga device are
contradicted by his acknowledgment elsewhere in the complaint
that patents issued for both his applications and the Masunaga
applications. Although Maling alleges that the Masunaga and
Maling applications are "similar . . . in many important
respects," he does not allege that the claims are identical or
obvious variants of each other such that the claims in one
application would necessarily preclude claims contained in the
other. Additionally, we appreciate that the claims comprising a
patent application may be sufficiently distinct so as to permit
the issuance of multiple patents for similar inventions, or
components of an invention, as was the case here. Accordingly,
Maling's allegations do not permit any inference as to whether
the similarities between the inventions at the time Finnegan was
retained to prepare and prosecute Maling's patent applications
were of such a degree that Finnegan should have reasonably
foreseen the potential for an interference proceeding.11
Maling's conclusory statement that the inventions were very
11
Maling's allegation that he and Masunaga competed in the
"same patent space," without more, fails to demonstrate
entitlement to relief. Maling cites no authority, and we have
found none, that gives this term special meaning in the context
of patent jurisprudence.
15
similar is precisely the type of legal conclusion that we do not
credit. See Iannacchino, 451 Mass. at 636. Moreover, Maling
makes no allegations that an interference proceeding was
instituted, nor has he alleged facts supporting the inference
that Finnegan took positions adverse to Maling and favorable to
Masunaga in the prosecution of their respective patents.
We also recognize that subject matter conflicts can give
rise to conflicts of interest under rule 1.7 (a) (1) in
nonlitigation contexts. Comment 7 to rule 1.7 explains that
directly adverse conflicts may also arise in the course of
transactional matters. For example, "a lawyer would be
precluded . . . from advising a client as to his rights under a
contract with another client of the lawyer . . . . Such
conflict involves the legal rights and duties of the two clients
vis-[à]-vis one another." ABA Op. 05-434, supra at 140.
Here, such a conflict likely arose in 2008 when Maling
sought a legal opinion from Finnegan regarding the likelihood
that he might be exposed to claims by Masunaga for patent
infringement. Finnegan declined to provide the opinion, and
Maling alleges that he lost financing as a result. Providing
the opinion arguably would have rendered the interests of Maling
and Masunaga "directly adverse" within the meaning of rule
1.7 (a) (1), and either declining representation or disclosing
the conflict and obtaining consent would have been the proper
16
course of action.12 But there is no allegation that Finnegan had
agreed to provide such opinions in its engagement to prosecute
Maling's patents. Without such a claim, we cannot conclude that
a conflict based on direct adversity has been adequately
alleged.
b. Material limitation under rule 1.7 (a) (2). We turn
next to the question whether Finnegan's representation of
Masunaga "materially limited" its representation of Maling in
contravention of rule 1.7 (a) (2), which prohibits
representation where "there is no direct adverseness . . . [but]
there is a significant risk that a lawyer's ability to consider,
recommend or carry out an appropriate course of action for the
client will be materially limited as a result of the lawyer's
other responsibilities or interests." Mass. R. Prof. C. 1.7
comment 8. The "critical inquiry" in analyzing potential
conflicts under rule 1.7 (a) (2), "is whether the lawyer has a
competing interest or responsibility that 'will materially
interfere with the lawyer's independent professional judgment in
considering alternatives or foreclose courses of action that
reasonably should be pursued on behalf of the client.'" Matter
of Driscoll, 447 Mass. 678, 686 (2006) (quoting comment 4 to
12
The record does not reflect Finnegan's rationale for
declining to provide the opinion.
17
previous version of Mass. R. Prof. C. 1.7 [b], which contained
language now in rule 1.7 [a] [2]).
In his complaint, Maling alleges in conclusory terms that
Finnegan was unable to protect both his interests and Masunaga's
and ultimately chose to protect Masunaga at his expense in the
patent prosecution process. In Maling's view, Finnegan "pulled
its punches" and got more for Masunaga than for Maling before
the USPTO. He has failed, however, to allege sufficient facts
to support such a proposition.
The case of Sentinel Prods. Corp. vs. Platt, U.S. Dist.
Ct., No. 98-11143-GAO (D. Mass. July 22, 2002) (Sentinel),
illustrates how a subject matter conflict resulting from the
prosecution of patents for competing clients could give rise to
a conflict of interest under rule 1.7 (a) (2). In the Sentinel
case, a law firm prosecuted patents for two clients, a company
(Sentinel), and one of Sentinel's former employees. Id. at 1.
Sentinel brought suit, claiming that because of the simultaneous
representation, its patent applications "were denied, delayed,
or otherwise impeded" and that it suffered economic losses as a
result. Id. at 5. On a motion for summary judgment, the court
concluded that the law firm filed applications with the USPTO
for Sentinel, and then two weeks later for the former employee.
Id. at 1-2. The firm's attorneys testified that they thought
the applications "overlapped" and that they were unable "to
18
discern a patentable difference between" the applications. Id.
at 5. A patent for the employee's application was issued first,
and Sentinel's application was rejected after the USPTO found it
conflicted with claims contained in the employee's patents. Id.
at 2-3. The firm subsequently narrowed the claims in Sentinel's
application to avoid conflict with the former employee's
application, and the USPTO issued Sentinel patents containing
the narrower claims. Id. at 3, 6-7.
The so-called "claim shaving," see Hricik, supra at 415,
that occurred in Sentinel clearly implicates rule 1.7 (a) (2).
Altering the claims in one client's application because of
information contained in a different client's application at
least creates a question of fact as to whether "courses of
action that reasonably should be pursued on behalf of the
client" were foreclosed. Mass. R. Prof. C. 1.7 comment 8.
Unlike the facts in Sentinel, Maling's complaint provides
little more than speculation that Finnegan's judgment was
impaired or that he obtained a less robust patent than if he had
been represented by other, "conflict-free" counsel. Maling does
not allege that the claims contained in his applications were
altered or narrowed in light of the Masunaga applications, as
the plaintiffs demonstrated in Sentinel, or, importantly, that
his client confidences were disclosed or used in any way to
19
Masunaga's advantage.13 Nor does he allege that Finnegan delayed
filing his patent application to ensure the success of
Masunaga's application over his own. Ultimately, Maling's bare
assertions that Masunaga was given preferential treatment and
was "enrich[ed]" to his "detriment" as a consequence do not
support an inference that Finnegan was "materially limited" in
its ability to obtain patents for Maling's inventions.
Finnegan's subsequent inability or unwillingness to provide
a legal opinion regarding the similarities between the Maling
and Masunaga inventions also raises a question whether the
simultaneous representation "foreclose[d] [a] course[] of
action" that should have been pursued on Maling's behalf. Mass.
R. Prof. C. 1.7 comment 8. As previously discussed, rendering
such an opinion would likely have created a direct conflict
between Maling and Masunaga in violation of rule 1.7 (a) (1).
To the extent that such a conflict was foreseeable, because, as
Maling alleges, the Masunaga and Maling inventions were so
similar, it is possible that Finnegan should have declined to
represent Maling from the outset of his case so as to also avoid
a violation of rule 1.7 (a) (2). This, however, depends in
13
Contrast Tethys Bioscience, Inc. v. Mintz, Levin, Cohn,
Ferris, Glovsky & Popeo, P.C., No. C09-5115 CW, slip op. at 4,
10 (N.D. Cal. June 4, 2010) (allegations that defendant law
firm's use of "nearly identical" language in patent applications
for plaintiff and plaintiff's competitor were sufficient to
plead actionable conflict of interest because court could draw
inference of the improper disclosure of client information).
20
large measure on the nature of Finnegan's engagement by Maling
in 2003.
Before engaging a client, a lawyer must determine whether
the potential for conflict counsels against undertaking
representation. Comment 8 to rule 1.7 elaborates:
"The mere possibility of subsequent harm does not
itself require disclosure and consent. The critical
questions are the likelihood that a difference in
interests will eventuate and, if it does, whether it
will materially interfere with the lawyer’s
independent professional judgment in considering
alternatives or foreclose courses of action that
reasonably should be pursued on behalf of the client."
Maling's complaint does not contain any allegations as to
the services or scope of representation agreed upon by Maling
and Finnegan other than that Finnegan "agreed to file and
prosecute a patent for Maling's inventions." Nor is it
adequately alleged that Finnegan should have reasonably
anticipated that Maling would need a legal opinion that would
create a conflict of interest. There are simply too few facts
from which to infer that Finnegan reasonably should have
foreseen the potential conflict in the first place. See, e.g.,
Vaxiion Therapeutics, Inc. v. Foley & Lardner LLP, 593 F. Supp.
2d 1153, 1173 (S.D. Cal. 2008) (deciding that expert testimony
created question of fact as to likelihood that conflict of
interest would develop from firm's simultaneous representation
of competitor clients in patent prosecution). Based on these
21
inadequacies, we agree with the motion judge that the complaint
does not sufficiently allege that Finnegan violated its duties
under rule 1.7 (a) (2) by undertaking representation of both
Maling and Masunaga.
Because Maling's claims hinge on the existence of a
conflict of interest, and because we conclude there was none
adequately alleged in this case, he fails to state a claim on
each of the counts in his complaint.14,15
14
At oral argument, Maling's counsel implied that
Finnegan's failure to discover and disclose Masunaga's patents
in the course of its prior art searches constituted malpractice
or negligence. Because Maling's complaint contains no
allegations to this effect, we do not decide the question
whether an attorney has an ongoing obligation to discover prior
art.
15
Maling also alleges that Finnegan failed to disclose
information to the USPTO such that it engaged in "inequitable
conduct." "Inequitable conduct" in the USPTO occurs when a
party withholds information material to patentability, or
material misinformation is provided to the USPTO, with the
intent to deceive or mislead the patent examiner into granting
the patent. Outside the Box Innovations, LLC v. Travel Caddy,
Inc., 695 F.3d 1285, 1290 (Fed. Cir. 2012)
Even if this claim arises from conduct unrelated to the
alleged conflict of interest, Maling nonetheless fails to state
a claim. First, it is unsettled whether the "inequitable
conduct" doctrine is merely a defense or whether it provides an
independent cause of action against counsel. See ShieldMark,
Inc. v. Creative Safety Supply, LLC, No. 1:12-CV-221, slip op.
at 12-13 (N.D. Ohio Oct. 9, 2012), report and recommendation
adopted, No. 1:12-CV-221 (N.D. Ohio Jan. 9, 2013) (describing
"the dearth of case law on the issue"). We need not decide the
issue, however, as Maling failed to plead sufficient facts to
state a claim for inequitable conduct. "To successfully prove
inequitable conduct, the accused infringer must provide evidence
that the applicant (1) made an affirmative misrepresentation of
22
c. Identifying conflicts of interest. This case also
raises important considerations under Mass. R. Prof. C. 1.10, as
appearing in 471 Mass. 1363 (2015), which prohibits lawyers
associated in a firm from "knowingly represent[ing] a client
when any one of them practicing alone would be prohibited from
doing so by Rule[] 1.7." Mass. R. Prof. C. 1.10 (a).16 To
ensure compliance with both rules 1.7 and 1.10, firms must
implement procedures to identify and remedy actual and potential
conflicts of interest. See Mass. R. Prof. C. 5.1 comment 2, as
appearing in 471 Mass. 1445 (2015) (requiring firms to make
"reasonable efforts to establish internal policies . . .
designed to detect and resolve conflicts of interest").
What constitutes an adequate conflict check is a complex
question. As a member of this court observed, "[a]gainst a
backdrop of increasing law firm reorganizations and mergers,
material fact, failed to disclose material information, or
submitted false material information, and (2) did so with intent
to deceive the [USPTO]." Cancer Research Tech. Ltd. v. Barr
Labs., Inc., 625 F.3d 724, 732 (Fed. Cir. 2010), cert. denied,
132 S. Ct. 499 (2011). Maling, at a minimum makes no
allegations as to Finnegan's intent to deceive the USPTO, and
therefore fails to state a claim of inequitable conduct.
16
The lawyers working on Masunaga's patent prosecution
worked out of a different office than the lawyers working on the
prosecution of Maling's patents. Although the risks of
inadvertent confidential client information disclosure or misuse
may be reduced in such circumstances, this makes little
difference from a disciplinary rules standpoint as conflicts are
generally imputed to all members of the firm regardless of their
geographical location or work assignments.
23
lateral transfers, and the rise of large-scale firms that
transcend State and national borders, the issue of dual
representation is one of multifaceted overtones and novel
complexity." Coke v. Equity Residential Props. Trust, 440 Mass.
511, 518 (2003) (Cowin, J., concurring). Nothing we say here
today, however, should be construed to absolve law firms from
the obligation to implement robust processes that will detect
potential conflicts.
This court has not defined a minimum protocol for carrying
out a conflict check in the area of patent practice, or any
other area of law. However, no matter how complex such a
protocol might be, law firms run significant risks, financial
and reputational, if they do not avail themselves of a robust
conflict system adequate to the nature of their practice.
Although Maling's complaint does not plead an actionable
violation of rule 1.7 sufficiently, the misuse of client
confidences and the preferential treatment of the interests of
one client, to the detriment of nearly identical interests of
another, are serious matters that cannot be reconciled with the
ethical obligations of our profession.
3. Conclusion. As noted throughout this opinion, there
are various factual scenarios in the context of patent practice
in which a subject matter conflict may give rise to an
actionable violation of rule 1.7. On the facts alleged in
24
Maling's complaint, however, we find that no actionable conflict
of interest existed. The dismissal of the complaint is
affirmed.
So ordered.