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Fujitsu Limited v. Belkin International

December 22, 2010

FUJITSU LIMITED,
PLAINTIFF,
v.
BELKIN INTERNATIONAL, INC.; BELKIN, INC.; D-LINK CORPORATION; D-LINK SYSTEMS, INC.;
NETGEAR, INC.; ZYXEL COMMUNICATIONS CORPORATION; AND ZYXEL COMMUNICATIONS, INC.,
DEFENDANTS.



The opinion of the court was delivered by: Lucy H. Koh United States District Judge

United States District Court For the Northern District of California

ORDER GRANTING NETGEAR, INC.'S MOTION TO DISQUALIFY BAKER BOTTS AND DENYING NETGEAR, INC.'S MOTION FOR STAY

Defendant Netgear, Inc. moves to disqualify the law firm of Baker Botts and for a stay pending resolution of this motion. Dkt. No. 34 ("Mot."); see also Dkt. No. 60 ("Reply Br.").

Plaintiff Fujitsu Limited opposes the motion. Dkt. No. 55 ("Opp'n"). After considering the parties' 22 submissions and oral arguments, the Court GRANTS Netgear's motion to disqualify Baker Botts 23 and DENIES Netgear's motion for a stay as moot.

I. BACKGROUND

Netgear and Fujitsu agree that three separate legal matters, all involving Baker Botts, pertain to Netgear's current motion. These matters include (1) Baker Botts' representation of Fujitsu in its current patent infringement action against Netgear and other defendants; (2) Baker Botts' representation of Netgear and another client in a reexamination proceeding; and (3) Baker Botts' representation of Netgear concerning some of Netgear's indemnity issues with suppliers.

5 infringement of Fujitsu's United States Patent No. Re. 36,769 (the "Ozawa Patent"), a Fujitsu 6 executive first notified Netgear of its infringement claim in a letter dated March 19, 2002. Dkt. No. 38 ("Busse Decl."), at ¶ 19; Dkt. No. 56 ("Showalter Decl."), at ¶ 3. In this letter, Fujitsu 8 offered Netgear a license to the Ozawa Patent. Busse Decl. ¶ 19. Netgear's outside counsel, Jamie 9

A. Fujitsu's Patent Infringement Action against Netgear

Although Fujitsu only recently filed its complaint against Netgear and other defendants for DiBoise and other lawyers at Wilson, Sonsini, Goodrich & Rosati, responded and informed Fujitsu 10 that a license was unnecessary given that the Ozawa Patent claims appeared invalid over the prior art. Id. After receiving this response, Fujitsu asked Barton Showalter of Baker Botts to communicate with Wilson Sonsini regarding Fujitsu's claims against Netgear. Showalter Decl. ¶ 3.

Besides exchanging many letters and e-mails, Showalter and representatives of Netgear also met twice in face to face meetings and once through a videoconference. Id. At the two face to face 15 meetings, held on June 18, 2003 and July 26, 2004, the parties discussed Netgear's contention that 16 certain prior art, which was not before the examiner who initially allowed the Ozawa Patent to 17 issue, invalidated the patent. See Busse Decl. ¶ 20; Showalter Decl. ¶¶ 3-4; Dkt. No. 41 ("DiBoise Decl."), at ¶¶ 2-3. After discussions ended without resolving the matter, Fujitsu decided to petition 19 the United States Patent & Trademark Office ("PTO") for a reexamination of the Ozawa Patent. 20

Baker Botts began the reexamination proceeding on behalf of Fujitsu on May 18, 2005.

Showalter Decl. ¶ 4. Showalter acted as one of the counsel of record for Fujitsu during the 23 reexamination process. Busse Decl. ¶ 22. By letter dated September 30, 2005, Showalter informed 24

Patent. Showalter Decl. ¶ 6. Netgear did not respond. Id. During 2007 and 2008, Baker Botts and Busse Decl. ¶¶ 35-38. On December 8, 2009, the PTO issued the Ozawa Patent reexamination See Busse Decl.¶ 20; Showalter Decl. ¶ 4.

Wilson Sonsini of the reexamination proceeding and again offered Netgear a license to the Ozawa Showalter continued to represent Fujitsu in the Ozawa Patent reexamination proceeding. See certificate and allowed, over the prior art cited by Netgear and others, forty-five of the original Ozawa Patent claims and forty-one new claims. Showalter Decl. ¶ 4.

Showalter was copied on the letter. Busse Decl. ¶ 17. On September 3, 2010, Fujitsu, still 6 represented by Baker Botts, filed this lawsuit against Netgear and Rayspan for infringement of the Following the issuance of the Ozawa Patent reexamination certificate, on February 1, 2010, Fujitsu's in-house counsel wrote Netgear reasserting Fujitsu's patent infringement claim. Id. ¶ 15.

Ozawa Patent. Id. ¶ 29. Fujitsu alleges that Netgear infringes the Ozawa Patent by selling wireless 8 interface cards and routers. Id. One of the allegedly infringing products is the WPN824, a high-9 speed wireless router that employs multiple antenna configurations to enable faster and more stable 10 connections. Id. ¶¶ 7, 29.

Netgear and Rayspan Corporation, one of Netgear's suppliers of antenna technology. Dkt. No. 36 Wireless Router infringes its U.S. Patent Nos. 7,358,912 and 7,139,562. Busse Decl. 3. Shortly 16 after Ruckus filed its complaint, Netgear and Rayspan agreed to a formal common defense and 17 joint defense arrangement. Id. ¶ 4. Under the arrangement, Netgear and Rayspan maintained joint 18 representation by the same counsel and pursued a common strategy. Id. Brian Busse, Netgear's Director of Intellectual Property, Legal, and Sandra Godsey, Rayspans' Chief IP Counsel, freely 20 shared information and ideas about the Ruckus case throughout the dispute. Id.

B. Ruckus Reexamination Proceeding

On May 5, 2008, Ruckus Wireless, Inc. filed a complaint for patent infringement against ("RJN"), Ex. A ("Ruckus Compl."), at 1. Ruckus alleges that Netgear's WPN824 RangeMax

In September 2008, Netgear and Rayspan hired counsel to represent them in defending the Ruckus lawsuit and in pursuing a reexamination of the Ruckus patents. Id. ¶ 5. The PTO ordered a 23 reexamination of certain claims of the '562 and '912 patents on November 28, 2008 and December 2, 2008, respectively. Id. The court ordered a stay of the patent infringement suit while the 25 reexaminations, which are still pending, proceeded in the PTO. Id. On November 4, 2009, Ruckus 26 filed a second patent infringement lawsuit against Netgear and Rayspan. Id. ¶ 6. The court also 27 ordered the stay of this second lawsuit pending the completion of the '562 patent's reexamination.

Id.

2 litigation and reexamination proceeding. In their search for new counsel, they participated in a 3 conference call with Baker Botts on November 17, 2009. Dkt. No. 37 ("Godsey Decl."), at ¶¶ 3-4.

Showalter participated in the call after signing a non-disclosure agreement. Id. ¶ 4. During the 5 call, and afterwards, Godsey provided Baker Botts with information about the lawsuit, Netgear's 6 history with Ruckus, the design of the WPN284, and general litigation and reexamination strategy.

Baker Botts' representation of them in the reexamination proceeding. Showalter Decl. ¶ 9. In 9 response to Rayspan and Netgear's request, Showalter also submitted a budget proposal for the Netgear and Rayspan ultimately decided to retain other counsel, not Baker Botts, to defend them in the Ruckus litigation. They did, however, sign an engagement letter with Baker Botts for 13 the '562 reexamination matter on January 4, 2010. Busse Decl. ¶ 6. For various reasons, 14 11. To help Showalter prepare for a meeting with Godsey and others at Rayspan's facility in San WPN824. Busse Decl. ¶ 18. Showalter never reviewed the information. Showalter Decl. ¶ 16.

20 a representation related to Netgear's indemnification agreements with its chipset suppliers and 21 international manufacturers. Busse Decl. ¶ 13. Netgear communicated with Kurt Pankratz, a 22 partner in Baker Botts' Dallas office concerning the engagement. Id.; Showalter Decl. ¶ 13.

Netgear. Busse Decl. ¶ 15. After Busse discussed the conflict with Pankratz, Netgear agreed to 26 waive the conflict. Id. Netgear also granted Baker Botts a limited advance waiver of certain future 27 conflicts. Id. ¶ 16. This waiver allowed Baker Botts to "represent a party with interests directly

In 2009, Godsey and Busse began discussing replacing their current counsel in the Ruckus Id. ΒΆΒΆ 4-5. On November 25, 2009, Showalter submitted ...


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