An interesting conflict: Canadian Federal Court of Appeal refuses to see conflict of interest in patent case
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ANINTERESTINGCONFLICT:CANADIANFEDERALCOURTOFAPPEAL
REFUSESTOSEECONFLICTOFINTERESTINPATENTCASE
JASONMOSCOVICI*
ROBIC,LLP
LAWYERS,PATENT&TRADEMARKAGENTS
OnFebruary17th,2017,theFederalCourtofAppealrefusedanappealfromappellants
C.StevenSikes,Aquero,LLcandAquial,LLC(“Sikes”),whowereseekingtheremoval
ofthesolicitorsforRespondentsEncanaCorporation,CenovusFCCLLTD.,FCCL
PartnershipandCenovusEnergyInc.(“Encana”),duetoanallegedconflictofinterest.
CounselforEncanahadpreviously“satdown”withSikestodiscussthepatent
infringementmatterthatwasatissue,priortoanactionbeingtaken.Thiscaseserves
asaninterestingstudyofthesolicitor-clientrelationshipinpatentcases,andhowthe
courtsevaluatethepotentialforaconflictofinterest.[Sikev.EncanaCorporation,2017
FCA37].
FACTS
InJune2008,Sikeswasseekingtoretaincounseltodiscussthepatentrightsitwas
lookingtoassert.Morespecifically,Sikescontactedeightdifferentlawfirmstodiscuss
infringementissuesarisingfromtheissuanceofapendingpatentinCanada.Mr.
Garland,aprofessionalworkingforthefirmthatisactingasCounselforEncana,was
amongstthoseconsulted.
SikesandMr.Garlandspent15minutesdiscussing“aCanadianpatentpendinganda
possibleinfringementsituationpertainingtowaterclarificationchemicalsandprocesses
intheoil-sandsregion”.MrGarlandtookinformationfromSikesandopenedageneral
fileentitled“AqueroCompany”,asperhisfirmsinternalconflictcheckprocess.During
thischeck,therewereongoingexchangesbetweenMr.GarlandandSikes,upuntil
Sikeswasinformed,attheendofJune2008,thatMr.Garlandcouldnottakethefile
duetoaconflictofinterest.Hethenprovidedrecommendationsastootherlawfirms
thatcouldbecontacted.
©CIPS,2017.*OfROBIC,LLP,afirmoflawyers,patentandtrademarkagents.Publishedat(2017),31:4World
IntellectualPropertyReport.Publication064.318.
2
Yearslater,in2014,Mr.Garland’sfirmwasappointedassolicitorsforEncanainthe
underlyinginfringementactionagainstSikesthatwasalreadyongoing.Morethana
yearafterthat,SikesmovedtohaveMr.Garland’sfirmremovedfromthefilebasedon
SikespriormeetingwithMr.Garlandin2008.
Conflictedviews
Sikesallegedthatduringtheirfirstmeeting,confidentialinformationwasprovidedtoMr.
GarlandandthatMr.GarlandhadalsogivenlegaladvicetoSikesregardingthe
infringementmatterathand.
TheinitialmotionwaspresentedbeforetheProthonotarywhowaspresidingasCase
ManagementJudgeforthefile.Itwasdismissed.TheProthonotaryheldthatMr.
Garland’sevidence,whichwasunchallenged,establishedthattheinformationthatwas
communicatedbySikeswasgeneral,notconfidential,andthatnolegaladvicehad
beenprovided.TheProthonotaryfoundthatwhiletheconversationbetweenSikesand
Mr.Garlandwasheldoversevenyearsago,Mr.Garland’snoteshelpedcorroboratehis
evidenceandaffirmthathedidnotstrayfromhisfirm’sconflictofinterestreview
procedure.
AnappealwasfiledbySikesbeforetheFederalCourtofCanada,whichwasdismissed.
InreferringtotheProthonotary’sconclusions,theFederalCourtfoundthattherewasno
basissupportingtheallegationthatasolicitor-clientrelationshipexisted.Itisinteresting
tonotethehighlevelofdeferencethatwasgivenbytheFederalCourttothe
Prothonotaryinitsdecision.TheProthonotarywasactingastheCasemanagement
judgefortheunderlyinginfringementactionandtherefore,hadamasteryoftheissues
andfactsatbar.Therefore,theFederalCourtfoundthattheProthonotary’sdecision
wasdiscretionaryandfactual.Itsawnoneedtointervene.
TheFederalCourtofAppeal
SikesappealedtheFederalCourt`sdecision.OnAppeal,theCourtremindsusthat
discretionarydecisionsrenderedbyProthonotariesareindeedreviewable,ifthe
Prothonotaryerredinlawormadeapalpableandoverridingerror.
TwogroundswereadvancedbytheProthonotarytodismissthemotion:one,thatSikes
failedindemonstratingthataclient-solicitorrelationshipexistedandtwo,thattherewas
noriskthattheuseofanyconfidentialinformationwouldprejudiceSikes.
SikesallegedthattheProthonotarymisunderstoodthetestthatneededtobeapplied.
AccordingtoSikes,thefollowingquestionsneededtobeansweredinorderto
determineifthereisaconflictofinterestornot:1)Didthelawyerreceiverelevant
confidentialinformationthatisattributabletoasolicitorclientrelationshipand2)isthere
ariskthatuseofthisinformationwillprejudicetheclient?
3
Morespecifically,Sikesmaingroundforappealwasthat,undertherelevantcaselaw,
theinformationthatwasgiventoMr.Garlandispresumedconfidentialandthatthe
Prothonotarydidnotgiveanyeffecttothispresumption.TheFederalCourtofAppeal
acceptedthatinformationwasexchangedaspartofanexploratoryandeventual
solicitor-clientrelationshipandthatthepresumptionofconfidentialitycouldtherefore
extendtothisinformation.TheFederalCourtofAppealthereforeagreedthatan
argumentcouldbemadethatwithregardstothetwoquestionsadvancedbySikes
above,thattheycouldapplyevenwheninasituationwhereasolicitor-client
relationshipwasnotcreated.
Nevertheless,theFederalCourtofAppealfoundthattheProthonotary,initsdecision,
usedlanguagesuggestingthathedidinfactconsiderthispresumption(“Ifindthatthe
[appellants]havefailedtodischargetheirburden”)butthatinanyevent,the
Prothonotary`sdecisiondidnot“hingeonwhohadtheburdenorwhobenefitedfromthe
presumption”.
Furthermore,theProthonotary’sdecisionwasalsobasedonhisappreciationofthe
contradictoryevidencethatwasplacedbeforehim.Ononehand,therewasclearand
unchallengedevidenceprovidedbyMr.Garland:Mr.Garland’swrittennotes
corroboratedhisposition,thatnolegaladvicewasgiven,andthattheinformation
conveyedwasgeneralandnotconfidential.Ontheother,Sikesproducedevidence
stemmingfromaffidavits.Inlightofthecrossexaminationsthatensued,misstatements
andembellishmentsbySikeswerebroughttolightdespitethefactthatMr.Garlandwas
unabletorecallthedetailoftheoverseven-year-oldconversation.
TheFederalCourtofAppealagreedthatifconfidentialinformation“comestothe
knowledgeofmembersofalegalfirmtargetedbyamotiontodisqualify,itbecomes
almostimpossibletoshowthatsuchinformationwillnotbeusedinaprejudicial
fashion”.However,theitalsore-establishedthattheremaybecaseswhere“no
informationwasimpartedwhichcouldberelevant”totheunderlyingdispute.Thisis
whattheProthonotaryfoundinitsdecisionandtheFederalCourtofAppealfoundno
reasontointervene.Inotherwords,simplybecausecounselwasconsultedforapatent
matter,priortoaconflictcheck,doesnotautomaticallyprecludethemfromactingfor
theotherpartyinaninfringementmatter.Thereisnoautomaticpresumptionofa
conflictofinterest.
Conclusion
Thiscaseisagoodreminderoftherolesandresponsibilitiesthatareentrustedto
intellectualpropertyprofessionalstheminuteaprospectiveclientstepsthroughthe
door.Discussionsregardingtheambitofaclient’sintellectualpropertyportfolioisnot
sufficienttodeterminewhetherasolicitor-clientrelationshipexists,evenifnoclientfile
isopenedornoretainerispaid.Furthermore,thedisclosureofinformationnecessary
foralawyertoconductandcompleteaconflictcheckdoesnotautomaticallycreatethis
4
solicitorclientrelationship,eveniftheinformationthatwasdiscussedcouldbe
presumedconfidential.Lastly,eveniftheinformationisinfactconfidential,onecannot
alwayspresumethatthisinformationcanautomaticallybeusedagainstaprospective
clientifnomandateisgranted.
WhileitwasclearinthiscasethatSikesmetwithMr.Garlandtodiscusspossible
patentinfringement,theCourtfoundthatameremeetingisnotsufficienttodisqualify
counselfromrepresentinganopposingpartytothiscase.TheCourtalsoremindsus
thatwhileapresumptionofconfidentialitycouldapplytoanyinformationgivenduring
suchameeting,whetherasolicitor-clientprivilegeexistsornot,itistherelevancyofthis
informationtothematterathandthatcouldhelptipthescale.
InIPmatters,counselisoftenprivytomanyaspectsofapotentialclient`sbusiness.Itis
thereforeprudenttokeepquestioninggeneralandtonotgiveanyadviceofalegal
natureuntilaconflictcheckhascleared.Thisshouldnotautomaticallyprecludecounsel
fromrefusingthefileandrepresentinganotherpartyconcernedwiththesamematter.
Furthermore,thisservesasaclearexampleoftheimportanceoftakinggoodnotes
beforeandaftermeetingswithpotentialclients!
5
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