UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF TEXAS 

MARSHALL DIVISION 

HEADWATER RESEARCH LLC, 

Plaintiff, 

 v. 

AT&T SERVICES, INC., AT&T 

MOBILITY, LLC, and AT&T CORP., 

Defendants. 

Civil Action No. 2:23-cv-00397-JRG-RSP 

(Lead Case) 

JURY DEMANDED 

HEADWATER RESEARCH LLC, 

Plaintiff, 

 v. 

AT&T SERVICES, INC., AT&T 

MOBILITY, LLC, and AT&T CORP., 

Defendants. 

Civil Action No. 2:23-cv-00398-JRG-RSP 

(Member Case) 

JURY DEMANDED 

PLAINTIFF HEADWATER RESEARCH LLC’S REPLY IN SUPPORT OF MOTION 

TO DISQUALIFY MCKOOL SMITH AS COUNSEL FOR DEFENDANTS 

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While AT&T and McKool Smith acknowledge that “attorney disqualification rules are not 

to be ‘mechanically applied’” (Opp. at 5), that is precisely what they seek to do here. AT&T 

effectively asks this Court to ignore McKool Smith’s clear ethical violations in favor of a rigid, 

narrow (and erroneous) application of the law, and take the position that because this exact factual 

scenario has not previously been encountered by this Court, McKool Smith cannot be disqualified. 

This fails. There is not merely a danger of the appearance of impropriety here. There is an actual

ethical breach that requires disqualification under Fifth Circuit and federal law. 

A. AT&T Has Failed to Disprove the Existence of a Common Legal Interest and 

Does Not Dispute that It Received Headwater’s Confidential Information 

AT&T asserts that Headwater “misstates Fifth Circuit precedent on disqualification” (Mot. 

at 6), but it is AT&T who is wrong. The court’s holding in Armco Steel makes clear that “no direct 

attorney-client relationship” is necessary to support disqualification where (a) the parties shared a 

common legal interest, and (b) “confidential exchanges of information” in furtherance of that 

interest took place. Wilson P. Abraham Const. Corp. v. Armco Steel Corp., 559 F.2d 250, 253 (5th 

Cir. 1977). Nowhere in Armco Steel did the court hold that only defendants participating in a joint 

defense can be protected by the common interest doctrine. To the contrary, courts commonly 

recognize the common interest privilege outside of the joint defense context, including with respect 

to patentees and licensees. See Ferko v. Nat’l Ass’n For Stock Car Auto Racing, Inc., 219 F.R.D. 

403, 406 (E.D. Tex. 2003) (explaining that “the common interest doctrine exists to protect 

communications between two parties or attorneys that share a common legal interest,” and “courts 

have found that “co-defendants, an insurer and an insured, and a patentee and a licensee share a 

common legal interest”); In re Whitcomb, 575 B.R. 169, 173 (Bankr. S.D. Tex. 2017) (rejecting 

argument that “construe[d] the common legal interest requirement too narrowly”). The Santa Fe

case on which AT&T so heavily relies does not hold otherwise. The court explained that the 

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privilege “encompasses shared communications between various co-defendants,” but did not hold 

that it is limited to co-defendants, and acknowledged a case where it was applied to a corporation 

and its auditor subpoenaed by the SEC. In re Santa Fe Int’l, 272 F.3d 705, 712 (5th Cir. 2001). 

AT&T’s attempt to distinguish Diva Limousine fails. The mere fact that it is a California 

case is inconsequential, as motions to disqualify “implicate federal law” and are “not limited to 

the state’s ethical rules.” Rembrandt Techs., LP v. Comcast Corp., No. CIV.A. 2:05CV443, 2007 

WL 470631, at *2 (E.D. Tex. Feb. 8, 2007). AT&T also fails to identify any substantive difference 

between Texas’s and California’s ethical standards. Further, that the disqualified attorney was 

prior counsel for Uber’s co-plaintiff only further disproves AT&T’s argument that disqualification 

pursuant to a common legal interest can only apply in the joint defense context. 

At bottom, AT&T and McKool Smith have no credible argument refuting that Headwater 

and shared a common legal interest. The transaction Headwater and were 

contemplating was the functional equivalent of being co-parties to litigation, where 

would participate in the assertion of Headwater patents. In fact, they were contemplating being coparties in the very litigation that Headwater is now pursuing and in which McKool has effectively 

switched sides. And to erase any doubt, the parties expressly memorialized their “ 

” in the NDA. Ex. 3 ¶ 7. This was not mere 

“boilerplate,” as AT&T contends. Indeed, prior versions of the NDA did not contain a common 

interest section at all. Paragraph 7 was later inserted pursuant to the parties’ discussions. 

AT&T’s reliance on the NDA’s purported “circumspect language” stating that Headwater 

“ ” with (Opp. at 12) also fails. McKool does not dispute 

that its attorneys in fact received Headwater’s confidential business and technical information 

pursuant to the /Headwater discussions. The NDA expressly states that all such shared 

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materials, including “

,” are deemed “ .” Ex. 3 ¶ 7. The parties’ communications also 

expressly acknowledge that their discussions and shared materials were “confidential 

.” Ex. 11. The “bounds and contours” of any applicable privilege are 

not at issue here. All that matters is that McKool Smith received Headwater’s confidential 

information pursuant to McKool’s representation of with whom Headwater shared a 

common legal interest. 

Critically, McKool Smith admits that no less than four of its attorneys had access to 

Headwater’s confidential information—one of whom (Mr. Kamprath) “remains at the firm,” and 

another (Mr. Hess) who is currently counsel of record for AT&T in this matter. Opp. at 3. McKool 

attempts to downplay Mr. Hess’s involvement by asserting that he worked “fewer than 30 hours 

on the project” and “and attended only a single meeting with a Headwater employee.” Id. But 

AT&T fails to mention how much time the other McKool Smith attorneys working on the matter 

spent reviewing Headwater’s materials, which included prepared legal and technical analyses, not 

just public patents. In any event, there is no “minimum hour” requirement to support 

disqualification. Nor is there any minimum requirement regarding amount of shared confidential 

documents or information. And Texas Disciplinary Rule 1.09(b) makes clear that confidential 

information provided to the firm is imputed to all members of the firm. 

B. AT&T Cannot Legitimately Dispute that the Prior /Headwater 

Discussions Are Substantially Related to This Case 

Contrary to AT&T’s assertions, the relationship between the prior /Headwater 

discussions regarding Headwater’s patent enforcement and litigation strategy, and this litigation 

involving AT&T’s infringement of Headwater’s patents, are not merely “tangentially related.” 

Opp. at 13. As set forth in detail in the motion, those discussions involved Headwater’s 

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identification of who are currently involved in 

litigation with Headwater (and with whom AT&T’s counsel presumably has a joint-defense 

relationship), Headwater’s infringement, validity, and damages theories, notice, willfulness, 

inventorship, conception, reduction to practice, third-party licenses, 

, and Headwater’s management structure and financials, among other issues. 

Headwater also provided a confidential work-product 

. All of these issues relate directly to this case. Indeed, at least one other defendant in the 

related cases ( has subpoenaed regarding the negotiations and materials 

shared with further confirming that the matters are substantially related. Ex. 20. 

AT&T does not dispute any of the foregoing facts regarding the nature of the shared 

documents. Instead, it merely takes issue with amount of detail provided by Headwater. Id. But 

Headwater provided as much information as possible regarding the nature of the common interest 

materials without revealing specific privileged and confidential information that could give AT&T 

an unfair advantage in this case (not to mention waive the applicable privileges). AT&T’s position 

that Headwater is required to provide it with unfettered access to the very privileged and 

confidential information that is the entire basis for this motion is absurd. As Headwater indicated 

several times in the motion, Headwater is willing to provide unredacted copies of any documents 

from the data to the Court for in camera review. 

That and Headwater did not specifically discuss suing AT&T is 

inconsequential. Headwater shared confidential information relating directly to common litigation 

issues such as its infringement, validity, and damages theories—information that could be used to 

Headwater’s disadvantage and/or the advantage of AT&T. See Comment 4B to Texas Disciplinary 

Rule 1.09; Staton Techiya, LLC v. Samsung Elecs. Co., No. 2:21-CV-00413-JRG-RSP, 2022 WL 

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16964746, at *2 (E.D. Tex. Nov. 16, 2022) (to be substantially related, the subject matter “need 

only be akin to the present action in a way reasonable persons would understand as important to 

the issues involved”); Diva Limousine, 2019 WL 144589, at *7. 

Finally, the fact that the data log shows only one McKool Smith attorney purportedly 

viewed the “for less a minute” (Opp. at 13) is also irrelevant. There is no “five second 

rule” when it comes to attorney breaches of confidentiality and loyalty. AT&T also conveniently 

ignores that a McKool Smith paralegal (Melissa Kalka) downloaded every single document in the 

data room—including the and the document relating to AT&T—multiple times. See Ex. 

10. Presumably, those documents were distributed to the attorneys working on the matter. Only 

McKool Smith has those records, and it chose not to disclose them. Nor did Mr. Hess deny that he 

accessed those documents. 

C. Headwater Applied the Correct Legal Standard—In the Fifth Circuit, 

Disqualification Is Mandatory Under These Circumstances 

The law is clear—prior representation in a substantially related matter “by itself requires 

disqualification.” In re Am. Airlines, Inc., 972 F.2d 605, 619 (5th Cir. 1992); see also Texas 

Disciplinary Rule 1.09; ABA Model Rule 1.9(a). For example, in Staton Techiya, this Court 

granted disqualification after concluding that the matters at issue were substantially related, and 

did not evaluate any other factors. 2022 WL 16964746, at *2. The Court did not mention the 

“appearance of impropriety” at all. See id. The impropriety is inherent in the breach. 

Regardless, contrary to AT&T’s assertions, Headwater did address these concerns in 

Section IV.B of its motion. AT&T simply ignores these arguments. That McKool Smith 

purportedly complied with the NDA by not disclosing Headwater’s materials to third parties, and 

its belated after-the-fact offer to wall off Mr. Hess—who remains counsel of record to this very 

day—cannot cure McKool Smith’s conflict. 

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 Dated: February 16, 2024 Respectfully submitted, 

/s/ Brian Ledahl 

Marc Fenster 

CA State Bar No. 181067 

Email: mfenster@raklaw.com

Reza Mirzaie 

CA State Bar No. 246953 

Email: rmirzaie@raklaw.com

Brian Ledahl 

CA State Bar No. 186579 

Email: bledahl@raklaw.com

Ben Wang 

CA State Bar No. 228712 

Email: bwang@raklaw.com

Dale Chang 

CA State Bar No. 248657 

Email: dchang@raklaw.com

Paul Kroeger 

CA State Bar No. 229074 

Email: pkroeger@raklaw.com

Neil A. Rubin 

CA State Bar No. 250761 

Email: nrubin@raklaw.com

Kristopher Davis 

CA State Bar No. 329627 

Email: kdavis@raklaw.com

James S. Tsuei 

CA State Bar No. 285530 

Email: jtsuei@raklaw.com

Philip Wang 

CA State Bar No. 262239 

Email: pwang@raklaw.com

Amy Hayden 

CA State Bar No. 287026 

Email: ahayden@raklaw.com

Jason M. Wietholter 

CA State Bar No. 337139 

Email: jwietholter@raklaw.com

RUSS AUGUST & KABAT 

12424 Wilshire Blvd. 12th Floor 

Los Angeles, CA 90025 

Telephone: 310-826-7474 

Attorneys for Plaintiff Headwater 

Research LLC

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CERTIFICATE OF SERVICE 

I hereby certify that on February 16, 2024, I electronically filed the foregoing document 

with the Clerk of the Court for the Eastern District of Texas using the ECF System under seal, and 

served defendants with a copy via electronic mail. 

 /s/ Brian Ledahl 

 Brian Ledahl 

CERTIFICATE OF AUTHORIZATION TO FILE UNDER SEAL 

I hereby certify that the foregoing document is authorized to be filed under seal pursuant to the 

Protective Order entered in this case.

 /s/ Brian Ledahl 

Brian Ledahl

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