In this patent infringement action, the plaintiff, International Designs Corporation, LLC (“IDC”), moved to disqualify the counsel for defendant Hair Art Int’l, Inc. (“Hair Art”). IDC moved to disqualify counsel for Hair Art on the grounds that Hair Art’s counsel also represented/represents an entity named Halo Couture, LLC, a California limited liability company (“HC1”) and, potentially, Halo Couture, LLC, a Delaware limited liability company (“HC2”), which were apparently “sister companies” of IDC and share a common parent.
The district noted that neither HC1 and HC2 were parties to the litigation. The district court also noted that there is “no contention that IDC, Hairtalk GmbH or Günter Alex were ever clients of Defendant’s counsel. The district court also found that IDC had not “presented the Court with any case indicating that representation of an entity that serves as a ‘sister company’ to a present litigation opponent provides a basis under applicable law for disqualification of that counsel in the present litigation, either by way of an actual-conflict theory or a theory based on the presumption of possession of confidential information. Moreover, Movants’ ‘unity of interests’ theory appears to look to a unity of interest between an entity and its ‘parent,’ not between an entity and its ‘sister.’”
The district court also disregarded IDC’s other theories for disqualification, concluding that IDC had “not demonstrated a sufficient basis to conclude that there is a ‘subject matter (technology) based conflict’ because of HC1-HC2’s pending design patent application and Defendant’s product line. Nor have Movants demonstrated that there is a realistic basis for a potential or future conflict based on the continued presence of an antitrust affirmative defense in this action. Their concern on that point is that Defendant ‘can pursue its anti-trust defense, seeking competitive sales data for the hair extension industry, including sales records of HC1 and HC2 and IDC’ and that ‘[i]f DEFENSE COUNSEL pursue the anti-trust discovery, such discovery demand to HC1 and HC2 will pass through’ an attorney who is both in-house general counsel of IDC and ‘special in-house I.P. counsel’ of the corporate parent and HC2.”
On the discovery point, Hair Art pointed out that IDC had “offered no evidence that [Defendant] has sought any such discovery and the discovery cut-off is March 1, 2019. Thus, the likelihood that [Defendant] will pursue this discovery is practically nil.” The district court did note, however, that if Hair Art “pursues antitrust-related document discovery from HC1 and/or HC2 between now and March 1, 2019, Movants may renew their motion, if they believe it makes their case for disqualification stronger.”
Accordingly, the district court denied the motion to disqualify.
International Designs Corporation, LLC v. Hair Art Int’l, Inc., Case No. CV 17-8411-GW (PJWx) (C.D. Cal. Feb. 28, 2019)
The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.