On July 26, in Altova GmbH v. Syncro Soft SRL, the United States District Court for the District of Massachusetts held that Sunstein Kann Murphy & Timbers LLP (“Sunstein”) violated its duty of loyalty to Syncro Soft (“Syncro”) by dropping Syncro in favor of its more profitable client, Altova, in Altova’s patent infringement action against Syncro. Judge Pattis Saris granted Syncro’s motion to disqualify Sunstein. Picking
Prior to the parties becoming adverse, Sunstein represented both companies for six years without issue. Syncro originally retained Sunstein in 2004 on a trademark infringement matter. In 2011, Altova retained Sunstein on trademark matters that were not adverse to Syncro. In fact, Altova had not yet filed the patent application for the 2016 patent that eventually became the subject of its current dispute with Syncro.
In 2017, Altova informed Sunstein that it had a patent dispute with Syncro, Sunstein withdrew from representation of Syncro, relying on a provision in its 2004 retainer letter that allowed for termination, upon reasonable notice, due to a conflict of interest.
Judge Saris applied Massachusetts Rule of Professional Conduct 1.7, which governs conflicts among current clients, and reasoned that “[W]here circumstances arise such that a reasonable lawyer would believe that the actions required to provide competent representation of one client would render the client’s interests adverse to those of another client of the lawyer, the proper course of action is to disclose the conflict and obtain the informed consent of both clients, or withdraw from representation.”
Judge Saris concluded that Sunstein should have anticipated a conflict when Altova received its 2016 patent and should have consulted with both clients to obtain consent or withdraw from its representation of both parties on that matter. Moreover, Sunstein’s email terminating its representation of Syncro, without discussion, did not comport with the reasonable notice promised in Sunstein’s engagement letter. Ultimately, Judge Saris held that “Sunstein owed Syncro Soft a duty of undivided loyalty during the representation. Sunstein cannot simply choose the more profitable client and drop the other.”
Read the full opinion here.
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