Dynamic

Facts

In 2006, Schlumberger (D) hired Charlotte Rutherford in a senior counsel position as Manager of Intellectual Property Enforcement, in licensing and litigation; promoted her to Director of Intellectual Property in 2009; and then promoted her again to Deputy General Counsel for Intellectual Property. Rutherford was right in the middle of all of D’s IP patents, trademarks, and trade secrets. Rutherford managed a copyright lawsuit involving Petrel, D's software platform for three-dimensional visualization, mapping, and reservoir modeling of oil wells. She was also involved in a project that evaluated further patentable aspects of Petrel and assessed the risk of lawsuits against it. In mid-2013, Rutherford left and began working as Senior Vice President and Associate General Counsel at Acacia Research Group LLC, the parent company of various patent-holding entities, including P. One of D's competitors created a product called Austin Geomodeling's RECON software. Austin Geomodeling filed a patent application in 2007 that eventually issued as U.S. Patent 7,986,319 ('the '319 patent') in 2011. RECON is supposedly the commercial embodiment of the '319 patent, which is directed to systems and methods of combining seismic and well log data into a real-time, interactive three-dimensional display. Rutherford was very familiar with the product from her work at D. The patent was acquired, and P was formed as a wholly-owned subsidiary of Acacia, and days later was assigned the '319 patent. P had no employees. P filed several lawsuits, including one against D. D raised Rutherford's potential conflict of interest to the court in April 2014. D filed a motion to disqualify P's counsel. The district court granted the motion, disqualifying Rutherford, other in-house counsel for Acacia Research Corporation and its subsidiaries, and the CEP firm from representing O in the instant case. D then sued Rutherford in Texas state court in March 2014, presenting evidence that she retained copies of confidential and privileged information. The court dismissed all but the breach-of-contract claim for violating her confidentiality agreement but that was protected by anti-SLAPP statutes. The court sanctioned D for bringing the suit, ordering payment of $600,000 in attorneys' fees and sanctions. The district court in this case found that the evidence created an irrebuttable presumption that Rutherford acquired confidential information requiring her disqualification. It determined that the acquired knowledge should be imputed to all Acacia attorneys for purposes of participating in P's suit against D. The court found that P failed to rebut the presumption of disclosure of D's confidential information, and thus disqualified in-house counsel for Acacia Research Corporation and its subsidiaries. The district court also disqualified co-counsel in that P was assigned the burden to prove non-disclosure after D met its burden to create a rebuttable presumption of disclosure. Because the pleadings were drafted by counsel presumed to possess D's confidential information, the district court dismissed all of P's claims against D without prejudice. Ps appealed. 

Issues

Rule of Law

Holding and Decision

Legal Analysis

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