What In-house Counsel Can't Quite Leave Behind

What In-house Counsel Can't Quite Leave Behind

What are the duties that an in-house counsel owes to her company once she leaves for a new job? That’s the question Schlumberger Ltd. is raising in a new motion to disqualify a plaintiff’s inside and outside counsel in a federal patent case.

The motion raises serious ethical and confidentiality issues around the work of Charlotte Rutherford, Schlumberger’s former deputy general counsel for intellectual property. Rutherford left to take a job as senior vice president of Acacia Research Group, a Houston-based patent licensing company, in June of last year.

In February her new company sued Schlumberger in federal court for infringement of a patent in a Petrel product that Rutherford had gained direct knowledge about while working at Schlumberger, an oil-services firm in Houston.

A month later Schlumberger sued Rutherford in state court in Houston for theft of trade secrets, implying that she used her knowledge of Schlumberger’s IP to bring the patent case. She then responded by filing an anti-SLAPP counterclaim against her former company last week.

The motions—and the vitriol—just keep flying. Last Friday Schlumberger filed a motion in U.S. District Court in Austin asking that Rutherford and Acacia’s entire in-house legal department, along with outside law firm Collins, Edmonds & Pogorzelski, be disqualified from participating in the patent suit. It also sought the suit’s dismissal.

The motion accuses Rutherford of “an incurable conflict of interest” based on her representation of Schlumberger on matters “substantially related to her representation of Acacia in this case.”

It goes on to say the conflicts of interest and implied sharing of confidences must be imputed to all in-house counsel at Acacia and to the company’s outside counsel, led by attorney Michael Collins. He was out of the office this week and his law firm declined comment Monday.

Rutherford could not be reached for comment. But an Acacia spokesperson previously accused Schlumberger of using bullying tactics by filing the state action and of making baseless allegations against Rutherford.

A Schlumberger spokesman said the company doesn’t comment on ongoing litigation, and its outside counsel, Maximilian Grant of Latham & Watkins, declined comment.

The motion states, “because this action has been infected by Rutherford’s conflict of interest from its inception, dismissal without prejudice is warranted.”

The federal court had stayed discovery in the patent case, pending claim construction. But after Schlumberger recently deposed Rutherford in the trade secrets case, the federal court allowed the company to file its dismissal motion.

According to the motion, the outside counsel, Collins, had told the court that his law firm had kept Rutherford screened from any conversations about anything related to Schlumberger.

But in her deposition in the state trade secrets case, Rutherford said she had “concurred” in the decision for Acacia to acquire the so-called 319 patent and to sue Schlumberger over its infringement, apparently meaning that she had taken part in some communications.

Her concurrence was passed on to the chief executive of Acacia and to outside counsel, the motion states. Acacia has also sued five other companies over the 319 patent.

Rutherford “spoke and communicated directly with her colleagues at Acacia and the Collins Edmonds firm regarding the decision to sue Schlumberger, thereby confirming the ethical violation that requires disqualification of the attorneys involved in this suit and dismissal of this case,” the motion concludes.

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