Note: This disposition is nonprecedential. 

## United States Court of Appeals for the Federal Circuit
2008-1108, -1116 COMMONWEALTH SCIENTIFIC & INDUSTRIAL RESEARCH ORGANISATION, Plaintiff-Appellee,

v. TOSHIBA AMERICA INFORMATION SYSTEMS, INC., NINTENDO OF AMERICA, INC., FUJITS U COMPUTER SYSTEMS CORPORATION, ASUS COMPUTER INTERNATIONAL, D-LINK SYSTE MS, INC., BELKIN CORPORATION, ACCTON TECH NOLOGY CORPORATION USA, SMC NETWORKS, INC., 3C OM CORPORATION, BELKI N INTERNATIONAL, INC., and ACCTON TECHNOLOGY CORPORATION, Defendants, and MARVELL ASIA PTE., LTD., MA RVELL INTERNATIONAL, LTD., and MARVELL SEMICONDUCTOR, INC., Movants-Appellants.

------------------------------------------------------------------------------ ------------- MICROSOFT CORPORATION, APPLE COMPUTER, INC.,

HEWLETT-PACKARD COMPANY and NETGEAR, INC., Plaintiffs,

v. COMMONWEALTH SCIENT IFIC & INDUSTRIAL RESEARCH ORGANISATION, Defendant-Appellee,

v. MARVELL ASIA PTE., LTD., MA RVELL INTERNATIONAL, LTD.,and MARVELL SEMICONDUCTOR, INC., Movants-Appellants.

James M. Wagstaffe , Kerr & Wagstaffe, LLP, of San Francisco, California, argued for plaintiff-appellee an d defendant-appellee. With him on the brief were Michael K. Ng and Keith K. Fong

. Paul B. Gaffney , Williams & Connolly LLP, of Washington, DC, argued for movants-appellants. With him on the brief was John G. Kester . Of counsel on the brief were Warren S. Heit , White & Case LLP, of Palo Alto, California, and Marc E. Ackerman , of New York, New York. Appealed from: United States District C ourt for the Eastern District of Texas Judge Leonard DavisNOTE: This disposition is nonprecedential 

## United States Court of Appeals for the Federal Circuit
2008-1108, -1116 COMMONWEALTH SCIENTIFIC & INDUSTRIAL RESEARCH ORGANISATION, Plaintiff-Appellee,

v. TOSHIBA AMERICA INFORM ATION SYSTEMS, INC., NINTENDO OF AMERICA, INC., FUJI TSU COMPUTER SYSTEMS CORPORATION, ASUS COMPUTER INTERNATIONAL, D-LINK SYSTEMS, INC., BELKIN CORPORATION, ACCTON TECH NOLOGY CORPORATION USA, SMC NETWORKS, INC., 3COM CORPOR ATION, BELKIN INTERNATIONAL, INC., and ACCTON TECHNOL OGY CORPORATION, Defendants, and MARVELL ASIA PTE., LTD., MAR VELL INTERNATIONAL, LTD., and MARVELL SEMICONDUCTOR, INC., Movants-Appellants.

MICROSOFT CORPORATION, APPLE COMPUTER, INC., HEWLETT-PACKARD COMPANY, AND NETGEAR, INC., Plaintiffs,

v. COMMONWEALTH SCIENTIFIC & INDUSTRIAL RESEARCH ORGANISATION, Defendant-Appellee,v. MARVELL ASIA PTE, LTD., MARVELL INTERNATIONAL, LTD., and MARVELL SEMICONDUCTOR, INC., Movants-Appellants. Appeals from the United States District Court for the Easter n District of Texas in Cases No. 06-CV-550 and No. 06-CV-549, Judge Leonard Davis.

__________________________

DECIDED: October 23, 2008

__________________________ Before LINN and DYK, Circuit Judges , and STEARNS, District Judge

. ∗ STEARNS, District Judge

. Marvell Semiconductor, Inc., Marvell Asia PTE, Ltd., and Marv ell Int’l, Ltd. (collectively “Marvell”), appeal from a decision of the United States District Court for the Eastern District of Texas de nying a motion to intervene fo r the purpose of seeking a stay of proceedings or, in t he alternative, the disqualification of the law firm of Townsend and Townsend and Crew LLP (“Townsend”), counsel for appellee Commonwealth Scientific & Industrial Research Organization (CSIRO). See Microsoft Corp. v. Commonwealth Scientific and Indus. Research Org. , 2007 WL 4376104 (E.D. Tex. Dec. 13, 2007). 1 We affirm.

∗ Honorable Richard G. Stearns, District Ju dge, United States District Court for the District of Massachus etts, sitting by designation.

1 In May of 2005, anticipating su it by CSIRO, Microsoft and Intel Corporation filed separate declaratory judgm ent actions against CSIRO in the Northern District of California. In December of 2006, the actions were transferred to Judge Leonard Davis in the Eastern District of Texas. See Case No. 6:06-CV-549-LED (“ Microsoft action”), and Case No. 6:06-CV-551-LED (“ Intel action”). In December of 2006, CSIRO asserted patent infringement clai ms against Toshiba America Information Systems, Inc., and ten other co mputer parts manufacturers. See Case No.

2008-1108, -1116 2I. BACKGROUND CSIRO, a scientific research arm of the Australian government, holds U.S. Patent No. 5,487,069 (“the = 069 patent”), entitled A Wireless LAN. @ The = 069 patent teaches a transceiver design for the wireless transmi ssion of data over a local area network (“LAN”). CSIRO claims that the = 069 patent defines the operat ing technology used by most LAN devices worldwide. Marvell s upplies semi-conductor chips to manufacturers of LAN-related products, such as notebook computers. Townsend represents CSIRO in its efforts to enforce the = 069 patent. Townsend has filed infringement claims on behalf of CSIRO against a number of LAN component manufacturers, including customers of Marvell. 2 Marvell claims to have indemnity agreements with at least three customers who are parties to the Microsoft and Toshiba actions. 3 Townsend also represents CSIRO in negotiations over the licensing of the

= 069 patent. In February of 1999, three years befor e CSIRO became a client, Townsend 6:06-CV-550-LED (“ Toshiba action”). Neither Microsoft nor Intel is named as a defendant in the Toshiba action.

2 Townsend has represented CSIRO si nce 2002 in litigation and licensing matters involving the = 069 patent.

3 On January 23, 2005, Marvell signed an agreement to indemnify

A Customer A @ A in certain patent infringement claims. @ In May of 2005, Marvell and Customer A signed a forbear ance agreement tolling Custom er A’s indemnification claims. Four days later, Customer A intervened as a plaintiff in the Microsoft action. On September 4, 2006, Marvell si gned an indemnity agreement with A Customer B. @ Three weeks later, CSIRO filed an answer and count erclaims alleging in fringement of the = 069 patent by Microsoft and Intel. In October of 2006, Customer A m ade a second tender to Marvell under the indemnity agreement. On December 22, 2006, CSIRO filed the Toshiba action. One month later, Customer B made a tender to Marvell under its indemnity agreement. There are no details in the record r egarding “Customer C,” other than a notation in Judge Davis’s opinion that the identify of Cust omer C (as well as Customer B, but not Cust omer A) was disclosed by Marvell to the court.

2008-1108, -1116 3began representing Marvell in trademark prosec utions. In late 2005, Marvell began sending patent work to Townsend. Duri ng 2006, Townsend represented Marvell in the prosecution of four patent app lications for LAN-related inventions. Sometime in early 2005, Marvell learned that Townsend also represented CS IRO. In June of 2005 and February of 2006, Marvell asked Townsend to act as an intermediar y in negotiating a license from CSIRO. Townsend advised Marvell on both occasions that a license was unnecessary because CSIRO had no intention of suing LAN component manufacturers. On March 5, 2007, Marvell made a third inquiry of Towns end about obtaining a license from CSIRO. After considerable back-and-forth, Townsend informed Marvell that it would need a written conflict waiver before un dertaking a license negotiation. Marvell agreed to waive any prospective conf lict, but not past conflicts. On March 13, 2007, Marvell informed Townsend of the ex istence of the indem nity agreements. Marvell accused Townsend of vi olating its ethical obligati ons and duty of loyalty to Marvell by its continued r epresentation of CSIRO. On March 21, 2007, Marvell filed suit aga inst Townsend in the California state court, seeking to enjoin Townsend from representing CSIRO in the Microsoft and Toshiba actions. In May of 2007, Marvell brought a declaratory judgment action against CSIRO in the Eastern District of Texas, Case No. 6:07-CV-204-LED, seeking a judgment of non-infringement. On June 13, 2007, the Californ ia court ruled that it lacked jurisdiction to enter an order disqualif ying a law firm from r epresenting a party in a federal court action. On July 3, 2007, Marvell sought permission to intervene in the Microsoft and Toshiba actions for the limited pur pose of seeking a stay of the litigation involving its

2008-1108, -1116 4customers, or in the alternative, the disqualification of Townsend. 4 On December 13, 2007, Judge Davis denied Marvell’s motion to intervene as moot after discussing the merits of Marvell’s motion to stay and/or disqualify (both of wh ich Judge Davis also denied). 5 This appeal followed. II. DISCUSSION This Court has jurisdiction pursuant to 28 U.S.C. § 1295(a)(1). Denying a motion to intervene is a final judgment subject to appellate review. See Stringfellow v. Concerned Neighbors In Action , 480 U.S. 370, 377 (1987) (“[ W]hen an order prevents a putative intervenor from becoming a party in any respect, the order is subject to immediate review.”). We need not decide w hether in general in considering an appeal from the denial of a motion to intervene, we ma y also consider the me rits of the specific underlying reason for which intervention is sought, in this case the disqualification motion. This is an unusual si tuation in which a district court denied a motion to intervene after rejecting the underlying disqualification motion on its merits. 6 We

4 No customer of Marvell jo ined the motion; one opposed it.

5 Marvell sought to intervene in the alter native as a matter of right, although its motion clearly fell under t he permissive intervention prong of Fed. R. Ci v. P. 24(b), and was treated as such by Judge Davis.

6 Marvell also sought, in the alternative, a stay pursuant to the “customersuit doctrine.” Under this doctrine, “liti gation against or brought by the manufacturer of infringing goods takes precedence over a suit by the patent owner against customers of the manufacturer.” Katz v. Lear Siegler, Inc. , 909 F.2d 1459, 1464 (Fed. Cir. 1990). The district court rejected a st ay on the ground that Marvell’s justification – that a stay would obviate the need to disqualify Townsend – was spurious in light of Marvell’s admission that a stay would not in fact negat e the issue. As Judge Davis observed, “partially staying the case without addressing the disqualification issue would . . . only prolong the issue instead of efficiently disposi ng of it.” We agree wit h the district court’s reasoning in this regard and follow its exam ple in focusing our analysis on the motion for disqualification.

2008-1108, -1116 5conclude that the district court did not err in rejecting the motion to disqualify, and thus did not err in denying intervention. 7 As the parties recognize, a motion to disqualify counsel is governed by Fifth Circuit law. Picker Int = l, Inc. v. Varian Assocs., Inc. , 869 F.2d 578, 580-81 (Fed. Cir. 1989). In the Fifth Circuit, motions to disqualify counsel “are determined by applying standards developed under federal law,” and “by reference to the ethical rules announced by the national profession.” In re Dresser Indus., Inc ., 972 F.2d 540, 544, 543 (5th Cir. 1992). 8 In resolving conflict issues, the Fifth Circuit loo ks to the American Bar Association (ABA) Model Rules. See Perillo v. Johnson , 205 F.3d 775, 801 (5th Cir. 2000); In re Asbestos Litig. , 90 F.3d 963, 977 (5th Cir. 1996); Beets v. Scott , 65 F.3d 1258, 1269-70 (5th Cir. 1995). ABA Model Rule 1.7(a) states that: [e]xcept as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a conc urrent conflict of interest. A concurrent conflict of interest exists if: (1) the representation of one clie nt will be directly adverse to another client; or (2) there is significant risk that the representation of one or more clients will be materially limited by the lawyer = s responsibilities to another client, a former client or third person or by a personal interest of the lawyer. In his analysis, Judge Davis concluded that Marvell’s motion should be governed by the more lenient disqua lification standard that applie s to former as opposed to concurrent client representation. In this regard, Judge Davis credited Townsend’s claim

7 Since the issue has not been raised by either party, we express no view as to whether the district cour t properly tied the intervention motion to the merits of the disqualification motion.

8 The moving party bears the burden of proving that disqualification is warranted. See In re Am. Airlines, Inc. , 972 F.2d 605, 614 (5th Cir. 1992).

2008-1108, -1116 6that it only became aware of the potential conflict arising from its representation of CSIRO in March of 2007 when Marvell disclosed the existence of the indemnity agreements. Upon being informed of the agr eements (and after being denied a waiver), Townsend terminated its repr esentation of Marvell. In deciding to treat CSIRO as a former client of Townsend’ s, Judge Davis relied principally on comment 5 to AB A Model Rule 1.7. Comment 5 recognizes the “thrust upon” exception to what is colloquia lly termed the “hot potato” gambit

C the stratagem by which a law firm creates a conflict to rid it self of one client so as to retain another (usually more lucrative) client. 9 See Picker , 869 F.2d at 582. As Judge Davis explained, “[t]he ‘thrust upon’ exceptio n applies when [as here] unforeseeable developments cause two concurrent cli ents to become directly adverse.” Microsoft , 2007 WL 4376104, at *6. Marvell objects vehemently to Judge Davis’s finding that it created the conflict in March of 2007 by disclosing to Townsend t he hitherto concealed i ndemnity agreements. Marvell maintains that the conflict aros e in September of 2006 when Townsend filed counterclaims on behalf of CSIRO in the Microsoft action, and was exacerbated in December of 2006 when the Toshiba action was filed (ther eby potentially exposing

9 Comment 5 to ABA Model Rule 1. 7 states that “[u]nforeseeable developments, such as changes in corporat e and other organizational affiliations or the addition or realignment of parti es in litigation, might create conflicts in the midst of a representation, as when a company sued by t he lawyer on behalf of on e client is bought by another client represented by the lawyer in an unrelated matter. Depending on the circumstances, the lawyer may have the option to withdraw from one of the representations in order to avoid the conflict. The lawyer must seek court approval where necessary and take steps to minimize harm to the clients. See Rule 1.16. The lawyer must continue to protect the confiden ces of the client from whose representation the lawyer has withdrawn. See Rule 1.9(c).”

2008-1108, -1116 7Marvell to liability under the agreements). 10 Marvell contends that Townsend should have known of the existence of the agr eements because such agreements are an “industry standard.” Therefor e, Marvell argues, it was incumbent on Townsend to

A discover @ the conflict without Marvell’s assistance. The argument is unpersuasive. As Judge Davis observed, Marvell takes the position that it had no reason to disclose its indemnity obligations as those agreements might be used against them in licensing negotiations with CSIRO. While Marvell is free to choose whic h facts it does and does not disclose to counsel, Marve ll cannot subsequently assert those purposefully withheld facts as a means to disqualify. This is the exact scenario Comment 5 [to ABA Model Rule 1.7] contemplates. Microsoft , 2007 WL 4376104, at *7. We agree with Judge Davis that the more lenient standard of ABA Model Rule 1.9 governing conf licts involving the representation of former clients applies to Marvell’s motion to disqualify. 11 In cases involving former representation, a party moving for di squalification must prove that the present and former matters are so “substantially relat ed” that confidential client information may be presumed to hav e been disclosed or that such information was actually disclosed by counsel. Am. Airlines , 972 F.2d at 614-15. Under the “substantial relationship” test , the movant must prove: A (1) an actual attorney-client

10 Marvel knew as early as 2004 of the threat of litigation over the = 069 patent. Marvell participated in joint meet ings convened among potential defendants to develop a common defense strategy. CSIRO fil ed the first of its infringement actions against Buffalo Technology (USA ), Inc., in the Eastern Distr ict of Texas in February of 2005.

11 “A party seeking to disqualify oppos ing counsel on the ground of a former representation must establish that: (1) an actual attor ney-client relationship existed between the moving party and the opposing counsel ; (2) the present litigation involves a matter that is ‘substantially related’ to the subject of the movant’s prior representation; and (3) the interests of the opposing counsel’s present client are materially adverse to the movant.” ABA Model Rule 1.9.

2008-1108, -1116 8relationship between [it] and the attorney [it] seeks to di squalify and (2) a substantial relationship between the subject matter of the former and present representations. @ Id. at 614. In applying the test, courts consider three relevant factors: A (1) the factual similarities between the current and former repr esentations, (2) the similarities between the legal questions posed, and (3) the nature and extent of the attorney’s involvement with the former representation. @ Power Mosfet Techs, L.L.C. v. Siemens AG , 2002 WL 32785219, at *2 (E.D. Tex. Sept. 30, 2002). We agree with Judge Davis that Marvell failed to meet its burden of showing a subs tantial relationship between the prior work done on its behalf by Townsend and the LAN-related products figuring in the Microsoft and Toshiba actions. 12 With respect to the disclosure of confi dential client information, Marvell raises several possibilities, only one of which merits discussion. In June of 2007, Townsend undertook to recruit attorney Andrew Pratt as an associate in its Washington, D.C. office. While employed as a junior lawy er at the firm of McGuireWoods LLP, Pratt attended a meeting on F ebruary 1, 2007, at which Marvell’ s strategy in dealing with the CSIRO litigation was discussed. Marvell also claims that Pratt was copied on related emails and other documents. When Townsend learned of the conflict in volving Pratt, it asked Marvell for a waiver. When Marvell re fused, Townsend rescinded its job offer to Pratt who has since been given only unrelat ed legal work by Townsend as a homebased independent contractor . Marvell does not contradict Townsend’s affidavits that

12 Specifically, Judge Davis noted that Marvell offered no evidence – only “broad statements” – that Townsend worked on matters related to Marvell’s LAN products, and gave no explanation of how To wnsend’s work on Marvell’s LAN patent applications in 2006 could possi bly relate to products that were accused in litigation begun eighteen months earlier.

2008-1108, -1116 92008-1108, -1116 10 Pratt has no access to Townsend’s files, computer network, or telephone system, or that he has no interaction with the lawyers assigned to the CSIRO team. 13 We agree with Judge Davis that Townsend fully discharged its ethical obligations to Marvell by the manner in which it dealt with Pratt. Because we find that the district cour t properly denied Marvell’s motion to intervene, we affirm

.

13 “Townsend employees have been inst ructed not to communicate with [Pratt] regarding his limited work for Marvell or any matters pertaining to CSIRO, and he has been instructed not to talk to anyone at Townsend about such work. @ J.A. 632 ( Herhold Decl. & 4).