Fish & Richardson's attempt to work around a conflict failed this week when a New Jersey federal judge disqualified the firm from defending a family of companies in a patent suit brought by Nasdaq Inc.

Judge Brian Martinotti of the U.S. District Court for the District of New Jersey handed down a disqualification ruling on Monday that stops Fish from continuing its representation of Miami International Holdings Inc., operator of the MIAX options exchange, and several affiliated companies. The decision stems from a suit dating back to September 2017, in which MIAX faces allegations that it infringed several electronic trading patents owned by Nasdaq and subsidiaries Nasdaq ISE LLC and FTEN Inc. In addition, Nasdaq accuses MIAX of misappropriating trade secrets.

In his ruling, Martinotti said Fish should be barred from defending MIAX in light of the law firm's past representation of Nasdaq between 1998 and 2011, a role that included prosecuting four of the seven patents at the center of the case.

U.S. District Judge Brian R. Martinotti/courtesy photo

“An attorney-client relationship existed between Fish and Nasdaq for over a decade, which means Fish has familiarity with Nasdaq's strategic approaches to managing its technology and inventions,” wrote Martinotti. “In fact, Fish prosecuted Nasdaq patents asserted in this case, and, as such, there is no doubt that during the course of that relationship Fish obtained confidential information that is likely to bear upon the current dispute between Nasdaq and MIAX.”

Fish, for its part, had acknowledged its past patent prosecution work for Nasdaq—and that the lawyers who completed the prosecution are largely still working for the firm in Boston. But the law firm, represented on the conflict issue by Lowenstein Sandler, argued that the terms of its engagement as MIAX's defense counsel insulated Fish from any potential conflicts.

Specifically, Fish reached a “limited scope” agreement when signing on to defend MIAX, according to court documents. That agreement called for MIAX to also hire a second law firm, Reed Smith, to serve as “conflicts counsel” and handle issues that related specifically to the Nasdaq patents.

The idea was for Reed Smith to lead the defense on the four Nasdaq patents, while Fish would lead MIAX's defense on claims stemming from the patents owned by Nasdaq subsidiaries ISE and FTEN. Fish would also screen all the lawyers participating in the case, and the firm entirely “walled off” its Boston office from having any role, according to Monday's ruling.

Despite the preemptive attempt to avoid conflicts, Nasdaq, now represented by Susman Godfrey and local counsel Critchley, Kinum & DeNoia, objected to Fish's arrangement with MIAX. In March, Nasdaq's lawyers filed a motion to disqualify in which it called Fish's efforts “woefully deficient.”

In early September, a federal magistrate judge assigned to the case sided with Nasdaq and granted the stock exchange's motion to disqualify Fish from the case. The law firm then appealed to Martinotti, who has the authority to set the magistrate's ruling aside if he determined it was clearly incorrect or misapplied the relevant law. Monday's decision marks the district judge's rejection of Fish's appeal.

“Despite MIAX's attempt to parcel individual claims in this case for conflict purposes, this is one lawsuit, all claims are contained in a single complaint, and MIAX elected to file a single motion to dismiss in response to the complaint,” the judge wrote.

A lawyer for Nasdaq, Arun Subramanian of Susman Godfrey, did not immediately respond to a request for comment, nor did Michael Himmel of Lowenstein Sandler, an outside lawyer for Fish.