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In a dispute arising out of a multimillion-dollar patent licensing program, Jenkens & Gilchrist is asking a state court to block two attorneys formerly with the firm from disclosing “trade secrets and confidential information” that Jenkens alleges belong to the firm and an unnamed client. Jenkens and L. Steven Leshin, a shareholder in the firm, filed the suit on June 25 in Dallas’ 162nd District Court. The firm and Leshin allege in their petition in Jenkens & Gilchrist and L. Steven Leshin v. Stuart D. Dwork and Roger Maxwell that Dwork and Maxwell “drafted and threatened to file legal papers” that would cause “substantial harm” to the firm and an unnamed client. [See the plaintiffs' original petition.] “This is a case where two employees seek more money as a direct result of what they believe was there contribution to a contingency fee licensing agreement,” Michael P. Lynn, Jenkens’ attorney, says. Lynn, a partner in Dallas’ Lynn Tillotson & Pinker, says the firm and Leshin filed Jenkens, which seeks a declaratory judgment that they don’t owe Dwork and Maxwell, as a pre-emptive strike. Sayles, Lidji & Werbner shareholder Mark Werbner of Dallas represents Leshin. Michael W. Shore, an attorney representing Dwork and Maxwell, says his clients planned to file a suit to enforce a fee-splitting agreement the two had with the firm and Leshin. The materials that the two attorneys threaten to disclose if they file a suit include a large amount of confidential information that Dwork received from the client while representing it, Jenkens and Leshin allege in their petition. The threats to disclose the documents Jenkens and Leshin don’t want disclosed were made to give Dwork and Maxwell leverage in their quest for more money, the firm and shareholder allege in their petition. “If they filed what they said they were going to file, they would have disclosed a number of materials we thought were confidential,” Lynn says. Shore contends that most of the information his clients plan to disclose if they file a suit relates to a fee-splitting agreement between Jenkens and the firm’s attorneys who worked on a patent licensing project for Austin-based Forgent Networks Inc. Shore says Forgent is the client that the firm declines to name in its petition, and Lynn confirms that the unnamed client in the petition is Forgent. In an interview, Shore, a partner in Akin Gump Strauss Hauer & Feld in Dallas, alleges that Dwork and Maxwell, both patent lawyers and engineers, made tens of millions of dollars for Jenkens but were not paid the amounts required by the fee-splitting agreement. “I would characterize it as a seven-figure dispute for each of them,” Shore says. Jenkens contends that Dwork and Maxwell were “paid what they were due” under the firm’s policies and procedures, Lynn says in an interview. However, Lynn says he is restricted in what he can say about the suit because of an agreement the parties in Jenkens reached during a June 25 hearing before 191st District Judge Catharina Haynes, who was sitting in for 162nd District Judge Bill Rhea. In their petition, Jenkens and Leshin ask Rhea for a declaratory judgment that they are not contractually or otherwise required to pay the two attorneys more money. Shore says Dwork and Maxwell were the principal architects of a licensing strategy used to pursue companies that Forgent believed were infringing on its patent for digital compression technology the so-called “JPEG” file format for transmitting still digital images. Dwork and Maxwell also developed the infringement analysis that Forgent used in its licensing program and litigation, Shore says. TRO SOUGHT Lynn says that Leshin is lead counsel for Forgent in the patent licensing effort and is the attorney to whom the company turns for advice. Forgent spent the past two years negotiating licensing agreements with companies it alleges infringed on the patent assigned to Compression Labs Inc., which Forgent bought in 1997. However, the company began this year pursuing companies in court if they did not agree to a license. In April, Forgent filed suits against 31 high-tech companies, alleging that the companies infringed on its patent. The suits, Compression Labs Inc. v. Adobe Systems Inc., et al. and Compression Labs Inc. v. Dell Inc., et al., are pending in the U.S. District Court for the Eastern District in Marshall. On July 2, more than 20 companies fired back by suing Forgent, Compression Labs and Motorola Inc.’s General Instrument Corp., seeking to invalidate the patent. That suit, AGFA Corp., et al. v. Compression Labs, is pending in the U.S. District Court of Delaware in Wilmington. AGFA and several of the other companies are incorporated in Delaware. Meanwhile, Jenkens and Leshin are trying to block Dwork and Maxwell from releasing information pertaining to the firm’s representation of Forgent. In their petition, Jenkens and Leshin are asking Rhea first to issue a temporary restraining order and ultimately to enjoin Dwork and Maxwell from disclosing information received from Forgent. These are “confidential materials” as defined by Texas Disciplinary Rule of Professional Conduct 1.05, the firm and Leshin allege in their petition. Jenkens and Leshin also allege in the petition that Dwork has taken trade secrets and information that belong to Jenkens and Forgent. They allege that the information Dwork threatens to disclose if he and Maxwell file a suit against the firm and Leshin includes financial arrangements, strategies and technical analyses relating to the patent. They further allege that Dwork’s conduct violates Texas Disciplinary Rule 1.05, Restatement (Second) of Torts �� 757 and 759, Restatement of Unfair Competition �� 38, 41 and 42 and Texas Penal Code � 31.05. “I think the arguments over proprietary and confidential information are ridiculous,” Shore says. “They sued Mr. Dwork and Mr. Maxwell to protect privilege for a client without even telling the client,” he alleges. Forgent spokesman Michael Noonan says he was unaware of the suit until Texas Lawyer asked about it. “From our point of view, it is just a dispute between Jenkens and two ex-employees,” Noonan says. Forgent doesn’t believe the suit has any impact on the intellectual property program it has with Jenkens, he says. Shore says that Forgent is seeking attorney fees from the defendants in its suits pending in the federal court in Marshall, which effectively makes the fee arrangements between Jenkens and Forgent discoverable as well as any fee-splitting agreements between the firm and the lawyers representing Forgent. Shore also points out that Dwork’s arrangement as of counsel at Jenkens involved a simple contract that never was designated confidential or proprietary. “If the information related to Mr. Dwork’s compensation arrangement was meant to be trade secrets, proprietary or confidential, they [the firm and Leshin] need to sue themselves for failing to get that in writing,” he says. “An agreement on splitting fees with a nonpartner must be disclosed to the client, and once the client seeks attorneys’ fees from the defendants, that agreement is discoverable,” Shore says. “If it’s discoverable, it can’t be privileged, confidential or proprietary.” Shore alleges that Jenkens not only did not pay Dwork and Maxwell what they were due under the fee-splitting agreement but also terminated them. “They decided to mine these guys for all they could get out of them … and they cut them loose,” he alleges. Shore alleges that Jenkens fired Dwork, who was of counsel at the firm until earlier this year. In a Feb. 29, 2004, letter to Dwork, Jenkens chairman Thomas H. Cantrill confirmed that Dwork’s employment with the firm was terminated effective as of the date of the letter. Jenkens instructed Maxwell, a shareholder, that he was not to work on the Forgent case and placed him on disability status after he suffered a stroke in March 2003, Shore alleges. In a June 18, 2004, letter to Maxwell, Cantrill confirmed that the Jenkens’ electoral committee had determined that Maxwell is totally and permanently disabled and terminated his status as a shareholder. Dwork and Maxwell will have an opportunity to work out their differences with Jenkens and Leshin at a July 21 settlement conference requested by Haynes. Lynn says he’s always willing to talk to anyone to try to resolve differences, and Werbner says he expects there will be a “good-faith” effort to resolve the matter. But Shore isn’t hopeful that, in this case, more talking will do much good. Notes Shore: “These guys have tried to settle this dispute for several months with Jenkens.”

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