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Freeman Equipment, Inc. v. Caterpillar, Inc.

United States District Court, N.D. Illinois, Eastern Division

March 13, 2017

Freeman Equipment, Inc., Plaintiff,
Caterpillar, Inc., Defendant.


          Elaine E. Bucklo United States District Judge.

         In this patent infringement suit, plaintiff alleges that defendant Caterpillar manufactures and sells heavy duty tractor crawlers incorporating “final drive guard assemblies” that infringe three of plaintiff's patents. Before me is defendant's motion to disqualify plaintiff's counsel, which I deny for the following reasons.


         Defendant asserts two bases for disqualification: first, that plaintiff's counsel, Michael Padden, spoke by telephone to William Perry, a retired Caterpillar employee, about “Caterpillar's internal legal practices pertaining to patent procurements, ” without disclosing to Mr. Perry that he represented an entity suing Caterpillar for patent infringement; and second, that Mr. Padden previously represented Caterpillar in a patent infringement litigation. Defendant seeks to disqualify both Mr. Padden and his law firm from representing plaintiff in this action.

         Defendant's chief complaint is that Mr. Padden called Mr. Perry on February 2, 2017, and, without identifying himself or his client, asked Mr. Perry whether he recalled a conversation he had had with Ernie Freeman (the owner of Freeman Equipment) at a tradeshow in 2008. Perry Decl., Exh. 1 to Def.'s Mot. at ¶ 4. Mr. Perry responded that he did not. Id. Mr. Padden also asked: 1) whether Caterpillar had any internal process for evaluating and drafting patent applications, and if so, what that process was; and 2) about Caterpillar's inventor disclosure form, and the incentives Caterpillar uses to encourage employees to disclose patentable inventions. Id. at ¶¶ 5-6. Finally, Mr. Padden allegedly asked “if anyone at Caterpillar would ever attempt to falsely represent an idea as their own in order to obtain a patent or other reward.” Id. at ¶ 6. The Perry Declaration does not disclose how Mr. Perry responded to these questions. It states that the conversation lasted twenty to thirty minutes. Id. at ¶ 7.

         Plaintiff disputes that Mr. Padden failed to identify himself during the call with Mr. Perry. Plaintiff points to Mr. Padden's declaration, which states that at the outset of the call, he introduced himself by name and explained that he was an attorney representing plaintiff in a patent case against Caterpillar involving final drive guards. Padden Decl., Exh. 3 to Pl.'s Resp., at ¶ 6. Mr. Padden further states that he asked Mr. Perry if he would be willing to answer some questions about Mr. Freeman's guards, and that Mr. Perry agreed. Id. at ¶ 7. The Padden Declaration goes on to describe the nature of Mr. Padden's questions and of Mr. Perry's answers. Id. at ¶¶ 8-9. Mr. Padden acknowledges asking Mr. Perry “about the general procedures for evaluating and patenting new inventions at Caterpillar, ” and states that he told Mr. Perry he “only wanted a general outline of the process, not any specific details or confidential information.” Id. at ¶ 10. Mr. Padden states affirmatively that Mr. Perry did not “talk about any legal advice he had seen or received at Caterpillar, or about any specific internal matter.” Id. at ¶ 11.

         Secondarily, defendant argues that disqualification is required based on Mr. Padden's previous representation of Caterpillar “in a number of litigations, including a patent infringement litigation.” Def.'s Mem. at 12. In support of this argument, defendant attaches Mr. Padden's notice of appearance in a case captioned Global Patent Holdings LLC v. Green Bay Packers, Inc., et al., No. 00 C 4623 (N.D. Ill. 2000), which identifies Mr. Padden as local counsel for Caterpillar. See Yashar Decl., Exh. 10. Defendant also refers to another, unidentified patent infringement suit in which Mr. Padden “was involved...for Caterpillar, ” Def.'s Mem. at 13, but offers no evidence of that litigation or of Mr. Padden's role in it.

         Mr. Padden, for his part, confirms that he acted as local counsel for Caterpillar in Global Patent Holdings, a case he recalls as involving “a patent on some type of website functionality against a wide variety of businesses.” Padden Decl. at ¶ 2. Mr. Padden attaches to his Declaration a copy of the docket in Global Patent Holdings, which reflects that the only substantive pleading filed on Caterpillar's behalf was an answer and counterclaim, which was filed by Caterpillar's lead counsel. Padden Decl., Exh. A at ¶ 98. Mr. Padden states that the case was stayed pending reexamination of the asserted patent, and was later dismissed without prejudice by agreement of all parties in view of the ongoing reexamination proceedings. Padden Decl. at ¶ 4. Mr. Padden does not recall having been involved in any substantive analysis of the complaint or of Caterpillar's counterclaims, or having access to Caterpillar's confidential information. Id. at ¶ 5.


         Motions for disqualification are evaluated using a two-step analysis. First, I consider whether an ethical violation has occurred. Second, if I find that there has been a violation, I determine whether disqualification is the appropriate remedy. Guillen v. City of Chicago, 956 F.Supp. 1416, 1421 (N.D. Ill. 1997). The Seventh Circuit has cautioned that disqualification “is a drastic measure which courts should hesitate to impose except when absolutely necessary.” Freeman v. Chicago Musical Instrument Co., 689 F.2d 715, 721 (7th Cir. 1982). The court emphasized that because disqualification deprives a party of representation of its choosing, motions to disqualify “should be viewed with extreme caution for they can be misused as techniques of harassment.” Id. at 722. Accordingly, the movant “bears a heavy burden of proving facts required for disqualification.” Guillen, 956 F.Supp. at 1421.

         Defendant argues that Mr. Padden's phone call to Mr. Perry violated Rules 4.3 and 4.4 of the Illinois Rules of Professional Conduct. Rule 4.3 provides:

In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer's role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding.

In re Air Crash Disaster Near Roselawn, Indiana on October 31, 1994, 909 F.Supp. 1116, 1123 (N.D. Ill. 1995). On its face, the Perry Declaration does not suggest that Mr. Padden either stated or implied that he was “disinterested” in this litigation. Rather, Mr. Perry states that Mr. Padden did not mention the litigation at all. In defendant's view, that omission was an ethical breach because Mr. Padden had an affirmative duty to inform Mr. Perry of the litigation, his role in it, and the fact that his client is adverse to Mr. Perry's former employer. Def.'s Mem. at 3 (citing Brown v. St. Joseph Cty., 148 F.R.D. 246, 254 (N.D. Ind. 1993). But even if I assume that Mr. Perry indeed failed to provide that information, it is clear that defendant suffered no harm as a result.

         Indeed, the record does not suggest that Mr. Padden sought, or obtained, any privileged information from Mr. Perry. To the contrary, the evidence reveals that defendant has publicly disclosed its practices relating to the very topics it now faults Mr. Padden for discussing with Mr. Perry: Caterpillar's patent evaluation and application process and its inventor incentive program. See Pl.'s Resp., Exh. 1 (Simon Crompton, How Caterpillar Protects Its IP, Managing Intellectual Property, (July 16, 2014) (describing the “patent review process” that takes place “for all new ideas” as part of Caterpillar's New Product Introduction process)); Exh. 2, Jacqueline Bell, Invention Incentive Programs Get Results: Survey, Law360 (Jan. 28, 2009) (identifying Caterpillar as among 220 companies that ...

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