Take2 Technologies Limited v. Pacific Biosciences of California, Inc.

Background

Take2 Technologies Limited and the Chinese University of Hong Kong moved to disqualify PacBio’s entire in-house legal department from representing PacBio in the infringement action. Before joining PacBio, Yang Tang had been an attorney at Perkins Coie, the law firm representing the plaintiffs. From April through July 2022, Tang billed more than 65 hours on Take2’s behalf, including work preparing for the lawsuit, evaluating the patent at issue, and assessing Take2’s infringement claim against PacBio.

Tang joined PacBio as senior intellectual-property in-house counsel in August 2022. Before accepting the position, she told Perkins Coie that she would not work on Take2 matters and consulted outside counsel. After the lawsuit was filed, PacBio represented that its general counsel had instructed the legal department that Tang could not work on or discuss Take2 matters. PacBio also maintained a restricted document repository that Tang could not access and stated that she would not receive fees from the matter.

Legal standard and conflict imputation

The court applied California law to the attorney-disqualification issue. California Rule of Professional Conduct 1.10 generally imputes one lawyer’s conflict to other lawyers associated in the same firm. The rule has an exception for a lawyer who joins a new firm from a prior firm if the lawyer did not substantially participate in the same or a related matter, was timely screened, received no part of the fee, and written notice was promptly given to the affected former client.

The court rejected PacBio’s argument that the plaintiffs had implicitly waived their right to seek disqualification by waiting to file the motion. The court found that the plaintiffs moved promptly after the case was transferred to the Northern District of California, had notified PacBio of the conflict shortly after filing the complaint, and had raised a serious conflict involving Tang’s work on the patent at issue.

The court found that PacBio had not shown that Tang failed to substantially participate in the matter. The undisputed evidence showed that Tang had worked on preparing the lawsuit, evaluated the specific patent, and assessed Take2’s infringement claim. The court concluded that, given Tang’s seniority and experience, she likely performed substantive work and received confidential Take2 information. The court noted that Tang appeared to have been timely screened, but the evidence was unclear about whether PacBio promptly provided written notice to Take2. Because the substantial-participation requirement was not met, the conflict remained imputed under Rule 1.10.

Scope of disqualification

The plaintiffs requested disqualification of PacBio’s entire in-house legal department. The court explained that Rule 1.10 defines a “firm” to include lawyers employed in a corporation’s legal department, division, or office, and therefore permits conflicts to be imputed among associated in-house counsel. However, the court was reluctant to disqualify every PacBio in-house lawyer and found that a narrower, fact-specific approach was appropriate.

The court ordered disqualification of Tang and any lawyer associated with her in the same “department, division or office.” It did not immediately determine which specific lawyers fell within that scope because the parties had not submitted enough evidence about PacBio’s internal legal organization. The court ordered the parties to meet and confer about an acceptable arrangement and to submit either a joint proposed order or, if they could not agree, a joint statement with separate proposals and supporting evidence.

The requested measures were required to be preventative rather than punitive and to impose disqualification within PacBio’s legal department no more broadly than absolutely necessary. The court identified information the parties should provide, including the size of PacBio’s legal department; Tang’s role, reporting structure, and management responsibilities; the relationship between Tang’s team and the litigation team; existing screening measures; PacBio’s contacts with outside defense counsel; communications between Tang and members of the legal department about the matter; and teams or individuals who had not interacted with Tang.

Disposition

The court granted in part and denied in part the plaintiffs’ motion to disqualify. Tang was disqualified from representing PacBio in the matter, as was any lawyer associated with her in the same department, division, or office. The parties were ordered to meet and confer within 14 days of the order and submit a joint proposal or joint statement within 21 days. The court also stayed discovery until the parties submitted their proposals and the court issued a later order implementing the disqualification.