IP: Subject matter conflicts of interest in patent prosecution – Case law

Vaxiion Therapeutics v. Foley & Lardner provides an important example in avoiding conflicts of interest

As discussed in the introductory article of this series, conflict of interest issues are a significant concern for attorneys. Patent practitioners have an additional layer of concern with respect to subject matter conflicts of interest. This type of additional conflict search is not related to the inventors, assignee or research team, but is directly related to the patent application disclosure.

There are several key cases to show how this type of conflict is problematic and what it can do to a client relationship and to the client’s perception of whether the attorney is representing that client zealously. The first case that will be reviewed in this series is Vaxiion Therapeutics v. Foley & Lardner in the Southern District of California.

Foley & Lardner is a large law firm with offices in multiple cities. Their San Diego office represented Vaxiion Therapeutics with respect to their patent work. The Foley D.C. office represented a Vaxiion competitor, EnGeneIC, with respect to their patent work. According to the court filings, Vaxiion claimed that they were not notified that Foley represented this competitor, and under a traditional conflict of interest check — this conflict may not have even been flagged by the firm.

In 2001 and 2002, Foley’s San Diego patent team filed two provisional patent applications for Vaxiion in the United States directed to minicell technology. While the firm successfully filed a United States utility patent application claiming priority back to the two provisional patent applications by the one-year deadline of the first provisional filing, they did not file the Patent Cooperation Treaty (PCT) application until the next business day, which was four days late. As a result, the PCT application and any resulting foreign patent applications were only able to claim priority to the 2002 provisional filing and not the 2001 provisional application filing. And, there’s a question as to whether any foreign applications could have been filed, based on the fact that the “first filing” was in 2001 — more than a year from the date of the PCT application filing date.

Between the 2001 and 2002 Vaxiion provisional patent application filings, the D.C. Foley office filed a provisional patent application for EnGeneIC for minicell technology. That office also filed a PCT application for EnGeneIC by the one-year deadline, successfully claiming priority back to the EnGeneIC provisional patent application. So while Vaxiion had United States patent application coverage that dated back to 2001, EnGeneIC had the possibility of foreign patent protection dating back to 2002 — predating the second Vaxiion provisional application.

To compound the problem, Foley’s D.C. patent team received a rejection from the United States Patent & Trademark Office (USPTO) regarding the EnGeneIC patent application, citing the U.S. Vaxiion application. The attorneys tried to antedate or “swear behind” the Vaxiion application based on trying to show that they had reduced it to practice before Vaxiion did. When that effort failed, they then contacted Vaxiion about cross-licensing the minicell technology, which is when Vaxiion learned of the dual representation.

The malpractice lawsuit related to a breach of fiduciary duty and dual representation of adverse interests (among other things) arose from that failure to file the PCT application for Vaxiion on time. While the case ultimately settled, some interesting information came from the court. First, the court said that it was unnecessary to show that attorneys in San Diego communicated Vaxiion client confidences to their colleagues in the D.C. office who were representing EnGeneIC. In addition, the court pointed out that ethical rules in different jurisdictions (California, D.C. and USPTO) may have different implications.

Ultimately, two acts in advance of the EnGeneIC representation could have negated or dramatically minimized the subject matter conflict issues in this case. First, Vaxiion should provide a list of competitors to Foley and request that they not represent any company or individual on that list. That list should be put into Foley’s conflict system as “adverse parties” or “related parties”, so that a conflict search will flag those companies. Vaxiion should also update that list with outside counsel as needed.

Second, Foley should have conducted a subject matter conflict search in advance of EnGeneIC’s engagement within the patent group to ensure that there was no subject matter conflict of interest. There are a couple of ways to set up such a search, depending on the size of the firm and the conflict database. At small and mid-size firms, this type of search may be a simple email to the patent group that states: “We are considering representing a company who develops and manufactures minicell technology, and specifically bacterial minicell technology where the minicells are used to target tumors with specific treatments. Please reply back immediately if you represent any clients who use this technology.” A large firm may also consider utilizing this method of conflict checking, but a better system may be to use a conflict database that allows attorneys to select “business codes” related to the type and subtypes of businesses, followed by adding keywords to help focus in on whether someone else at the firm is handling matters in that technology space. It is likely that a simple keyword search of “minicell” would have flagged this conflict.

A firm’s internal conflict of interest system should not begin and end when a prospective client is brought into the firm but should continue through the patent prosecution process. Had Foley’s D.C. counsel searched the firm’s conflict database when the EnGeneIC office action came in, they would have flagged the conflict there as well, which wouldn’t have resulted in Foley pitting one client’s patent applications against another in public documents.

It is important to summarize that both the client and the law firm have responsibilities to provide information to one another. Vaxiion would have been well-served to provide a competitor list to Foley — and at that time — Foley’s management would have had to consider if that representation was worth the exclusion of the Vaxiion competitors. It is also clear that firewalls and different offices are not going to shield a law firm from claiming that information about proprietary technology is going to be segregated, and at the very least, it is not going to give either client a good feeling about the law firm’s representation of their important legal work. The next article in this series will focus on how to disclose inventions to potential new counsel without giving away proprietary information.

Contributing Author

author image

Sandra P. Thompson

Sandra P. Thompson, J.D., Ph.D., is a Shareholder in the Orange County office of Buchalter Nemer. Her practice focuses on intellectual property, specifically, patents and...

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.