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Yahoo Corp. officials were taken aback when they walked into a meeting to discuss the company’s patent infringement suit against Xfire Inc. Xfire had brought along its attorneys, who happen to be from DLA Piper Rudnick Gray Cary. Yahoo knows the firm all too well; DLA is representing Yahoo subsidiary Overture Services Inc. in a separate matter. Yahoo claimed there was a conflict of interest and asked DLA to withdraw as Xfire’s counsel. DLA refused to do so. Yahoo’s attorney, Michael Jacobs, a partner at Morrison & Foerster, was not available for comment. But in a recent court filing, he pointed out that Yahoo’s associate general counsel is managing the litigation against Xfire as well as DLA’s Overture case. “DLA’s representation of Xfire therefore puts Yahoo in the untenable position of conducting attorney-client privileged communications with one set of DLA attorneys while finding itself adverse to another set of DLA attorneys,” Jacobs wrote. Last month Jacobs asked U.S. District Judge Jeremy Fogel to disqualify DLA Piper Rudnick Gray Cary from the Xfire case. The alleged conflict arose as a result of Piper Rudnick’s merger with Gray Cary Ware & Freidenrich and then DLA. Piper Rudnick originally represented Overture, and Gray Cary was counsel to Xfire before Yahoo filed its suit against the online gaming company for infringement in January. DLA contends that Overture and Yahoo are separate entities, so there is no conflict in being adverse to one and counsel to the other. “Courts start with the premise that subsidiaries and parents are separate entities and then ask, ‘Are they [separate] in the context of conflict of interest?’” said DLA partner William Frimel. “Sometimes they are and sometimes not.” In this case, he said, they are separate.

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