On October 20, 2009, Judge Amy St. Eve denied CIVIX-DDI’s (CIVIX) motion to disqualify Morrison & Foerster (MoFo) as Yahoo’s counsel in CIVIX-DDI LLC v. Nat’l Assoc. of Realtors et al.  CIVIX had moved to disqualify MoFo, which serves as both litigation and reexamination counsel for Yahoo, for allegedly violating a protective order.   The Court concluded that CIVIX had not met its burden of showing facts necessitating disqualification.  The Court stated that it “does not condone Yahoo’s conduct,” but “declines to sanction an attorney’s violation of a court order (especially in the absence of an ethical violation) with the severe measure of disqualification based on the scant evidence of either willfulness or prejudice CIVIX presents.”

CIVIX argued that a MoFo attorney violated the Court’s protective order by participating in reexamination proceedings before the PTO after participation in court depositions designated as confidential.  Specifically, CIVIX maintained that MoFo “engaged in sanctionable misconduct when it prepared and submitted otherwise ‘non-submittable’ declarations to the PTO via a contrived invocation of the ‘litigation exception’ to the bar on third party submissions [in an ex parte reexamination], by first filing the documents as part of a supposed status report before this Court.”

Yahoo did not dispute that filing the status report and attached declarations with the PTO constituted participation in “Patent Prosecution,” as defined by the protective order.  Rather, Yahoo argued that the protective order only applied to patentees and their counsel, not to Yahoo’s counsel.  The Court disagreed, noting that Yahoo’s “reading of the Protective Order as applying only to the patentee’s counsel does not comport with its plain terms.” Yahoo also asserted that the MoFo attorney never saw the confidential information that was submitted to the PTO, and that the prosecution bar in the protective order was personal in nature, and should not be imputed throughout counsel’s law firm.

The Court did not consider these arguments, rather the Court focused on whether there was an intentional violation of the Protective Order, the level of misconduct, and the degree by which CIVIX was prejudiced by the misconduct.    Based on a sworn declaration by the Mofo attorney submitting the declarations to the PTO that he believed the protective order did not apply to him, the Court concluded that evidence of an intentional violation of the protective order did not exist.  The Court observed that “Yahoo’s counsel appears to be walking the line between aggressive advocacy and strategic exploitation/manipulation of the PTO’s rules and this Court’s docket.”  The Court concluded that “[t]he conduct does not, however, rise to the level of misconduct warranting disqualification.”  Finally, although CIVIX highlighted that a portion of a PTO office action issued after the declarations were filed, repeated the precise section of a document quoted in one of the submitted declarations, the Court concluded that this did not show sufficient prejudice to warrant disqualification.

The Case is CIVIX-DDI LLC v. Nat’l Assoc. of Realtors et. al., case number 05-C-6869, in the United States District Court, Northern District of Illinois.