Two years ago John Desmarais left Kirkland & Ellis, acquired 4,500 patents, and opened a patent licensing company called Round Rock Research. He also debuted a small law firm called Desmarais LLP that represents Round Rock in litigation. Now one of Round Rock’s adversaries is raising ethical objections to Desmarais’ unusual role as both Round Rock’s CEO and head of its go-to law firm.
Dell Inc. filed a petition for a writ of mandamus with the U.S. Court of Appeals for the Federal Circuit on Thursday, urging the court to block the entire Desmarais LLP law firm from accessing proprietary information Dell must provide to Round Rock during discovery. Dell, which is represented by Winston & Strawn and Farella Braun & Martel, argues that the Desmarais LLP lawyers might share the proprietary information with founder Desmarais, who in turn may use it to bolster Round Rock’s business ambitions.
“Disclosing Dell’s ‘Confidential – Attorney’s Eyes Only’ information to the Desmarais LLP law firm will result in either its inadvertent disclosure to Mr. Desmarais or its inadvertent use by other Desmarais LLP attorneys in support of Round Rock’s licensing-by-litigation business,” Dell’s lawyers argued in a motion filed earlier this month. “Mr. Desmarais himself has shown that the risk of such cross-over is very real, having at least once already provided to Round Rock reverse engineering information obtained from one client–while wearing his ‘Desmarais LLP’ hat–in order to facilitate Round Rock’s licensing effort against another target.”
At an oral argument in the Delaware case on May 14, Dell’s lawyer Roderick Thompson of Farella Braun elaborated on this accusation. He alleged that Desmarais, based on conversations he had with an executive at Micron Technology in his capacity as a lawyer at Desmarias LLP, broadened the scope of Round Rock’s pending patent applications. Thompson argued that the conduct, while not illegitimate, demonstrates the crossover of information between Desmarais’ company and his law firm.
Round Rock and Desmarais LLP sued Dell for patent infringement in federal district courts in Delaware and Eastern Texas in 2011. The cases involve about twenty patents relating to everything from server maintenance to computer hardware like liquid crystal displays. To ease Dell’s concerns that Round Rock and its law firm are one and the same, Desmarais (the person) consented to protective orders in both cases blocking him from accessing confidential business information Dell is required to turn over during discovery. Desmarais also agreed to never work on patent applications for related technology in the future.
Desmarais’ proposed protective order didn’t go far enough for Dell. It claims there is a high risk of lawyers at Desmarais LLP sharing the information with Desmarais, and therefore wants both parts of the protective order–the confidential information shield and the patent prosecution bar–extended to every lawyer at the firm. The Texas judge rejected Dell’s arguments in an opinion issued in April, finding that “there is no factual or legal basis to deem Desmarais LLP’s other sixteen lawyers as competitive decisionmakers for Round Rock and disqualify them from discovery in the case.” The Delaware judge reached the same conclusion in a bench ruling earlier this month, prompting Dell’s lawyers to try their luck at the Federal Circuit.
Round Rock and Desmarais LLP have not formally responded to Dell’s motion, but they made their position clear in a motion filed on Friday opposing Dell’s bid to stay discovery in the Delaware case pending resolution of the mandamus petition. They argue that Dell’s theory would lead to an “absurd” result by forcing law firms to choose between prosecuting patents and litigating them. “Under Dell’s rule, once a litigation attorney adverse to Dell receives confidential information in litigation under a protective order, knowledge of that confidential information would be imputed to every lawyer at the firm, precluding patent prosecution attorneys in that adverse firm from continued practice in any area in which Dell competes,” Round Rock argues. “The regular practice of dozens of patent and general litigation firms throughout the county belie Dell’s approach.”
This article originally appeared on The Am Law Litigation Daily.
