Previous posts (here and here) discussed some of the patent enforcement activity by Celgard, a North Carolina company that manufactures specialty membranes and separators for lithium ion batteries.

Celgard has filed several lawsuits alleging infringement of U.S. Patent No. 6,432,586 (’586 Patent), including one against LG Chem.  The ’586 Patent is entitled “Separator for a high energy rechargeable lithium battery” and directed to a separator including a ceramic composite layer and a polyolefinic microporous layer.  The ceramic layer has a matrix material and is adapted to block dendrite growth and prevent electronic shorting.

Last month, the Court of Appeals for the Federal Circuit disqualified the Jones Day law firm from representing Celgard in the litigation due to a conflict of interest.  Jones Day was concurrently representing Apple in other matters when it entered the case on behalf of Celgard against LG Chem.

The problem was LG Chem is Apple’s Li-ion battery supplier.  The district court granted Celgard’s motion for a preliminary injunction against LG Chem, the case was appealed, and Apple intervened seeking to disqualify Jones Day.

In a 5-page opinion, the Federal Circuit ruled for Apple, finding that the duty of loyalty protects Apple from Jones Day continuing to represent Celgard.  This despite the fact that Apple was not a named party in the case:

This conclusion is not altered by the fact that Apple is not named as a defendant in this action.  The rules . . . make clear it is the total context, and not whether a party is named in a lawsuit, that controls whether the adversity is sufficient to warrant disqualification.

Here, the total context, which included both Apple’s potential problem with LG Chem as a supplier and Celgard as a putative licensor or supplier, compelled a conclusion that Jones Day’s representation of Celgard was adverse to Apple:

Apple faces not only the possibility of finding a new battery supplier, but also additional targeting by Celgard in an attempt to use the injunction issue as leverage in negotiating a business relationship.  Thus, in every relevant sense, Jones Day’s representation of Celgard is adverse to Apple’s interests.

The Patently-O blog discusses this case here and notes the danger this opinion may raise for law firms involved in patent infringement litigation.

In view of this decision, some of those firms might attempt to extend the scope of their already unenforceable advance conflict waivers, which I previously wrote about here.

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