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Intellectual Ventures v Checkpoint (D Del June 30, 2011)

Intellectual Ventures v Checkpoint (D Del June 30, 2011)

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Published by: dsb001 on Jul 26, 2011
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IN
THE
UNITED STATES DISTRICT COURT 
FOR
THE
DISTRICT
OF
DELAWARE 
INTELLECTUAL VENTURES I LLC, Plaintiff,Civ. No. 10-1067-LPS
v.
CHECKPOINT SOFTWARETECHNOLOGIES LTD., CHECKPOINTSOFTWARE TECHNOLOGIES, INC.McAFEE, INC., SYMANTEC CORP.,TREND MICRO INC., and TRENDMICRO, INC. (USA),Public VersionIssued June 30, 2011Defendants.
MEMORANDUM OPINION
Joseph J. Farnan,
ill,
Brian E. Farnan, FARNAN LLP, Wilmington, DE; John P. Lahad,Houston, TX; Parker C. Folse III, Brooke A.M. Taylor, Lindsey N. Godfrey, Seattle, W A; RyanC. Kirkpatrick, Los Angeles, CA, SUSMAN GODFREY L.L.P., Attorneys for Plaintiff.John W. Shaw, Andrew
E.
Russell, YOUNG CONAWAY
STARGATI
&
TAYLOR, LLP,Wilmington, DE; Stefani
E.
Shanberg, Matthew
A.
Argenti, Palo Alto, CA; Larry
L.
Shatzer,Washington, D.C. WILSON SONSINI GOODRICH
&
ROSATI, P.C.; Pamela Phillips,
Amy
L.
Bomse, HOWARD RICE NEMEROVSKI CANADY F ALK
&
RABKIN, San Francisco, CA,Attorneys for Defendant.June 22,2011Wilmington, DE
 
Stark, U.S. District Judge:
Pending before the Court is a motion filed
by
plaintiff Intellectual Ventures I, LLC todisqualify Wilson Sonsini Goodrich and Rosati, PC, counsel for defendants Check PointSoftware Technologies, Inc. and Check Point Software Technologies, LTD. (D.l. 55) The Courtheld oral argument on the instant motion on May 16,2011. (D.l. 91, hereinafter "Tr.")
At
theoral argument, the Court ordered supplemental briefing, which is now complete. (D.l. 89; D.L90) For the reasons that follow, the Court will grant the motion.
I. BACKGROUND
Wilson Sonsini Goodrich and Rosati ("WSGR") is a law
firm
that, from 2002 to 2009,represented Intellectual Ventures
I,
LLC ("IV"), the plaintiff in the instant lawsuit. Thisrelationship, however, did not end on good tenns. As counsel for WSGR noted at oral argument,this motion, therefore, involves a degree
of
"emotional heat."] (Tr. at 33) Because
of
theintensely factual analysis involved in motions to disqualify, the Court finds it necessary to
layout
the relevant facts in some detail.
A.
IV's Business
Intellectual Ventures
I,
LLC (referred to collectively with its predecessors and affiliates
as
"IV") was formed in 2002
as
a "non practicing entity" or NPE. (D.I. 1 at 3; D.l. 67 at 1-2) Sinceits founding, IV, along with its parent company, Intellectual Ventures Management, LLC ("IVManagement"), has been, according to IV, deeply involved in the "business
of
invention." (D.I.1 at 3.;
see also
Tr. at 5) At the core
of
IV's business model are patents: creating inventions andlWSGR is represented by the law firm
of
Howard Rice Nemerovski Canady Falk
&
Rabkin for purposes
ofthis
motion. (D.I.63)
1 
 
filing patents on those inventions; collaborating with other inventors and scientists
to
developand patent inventions; and acquiring patents and patent rights from individual inventors,universities, and other institutions.(0.1. 1 at 3) Indeed, "[t]he entire business
of
IntellectualV entures revolves around patents and technology protected
by
patents." (Tr. at 5)IV appears to have
had
some measure
of
success: as
of
2006, IV
had
filed at least 500
of
its own patent applications and acquired a "huge
war
chest"
of
more than 30,000 patents andpatent applications. (D.I. 82 Ex. F at 29; D.!. 1 at 4) A key component
of
IV's
business islicensing its patents to various technology and software companies. (D.!.
1
at 3) Thesetechnology and software companies invest in IV and,
in
exchange, receive licenses to practicepatents. In order to effectively monetize its patents and provide a return
on
its investment, aswell as a return for individual inventors,
IV's
business model uses "patent acquisition funds,"which are comprised
of
various entities that hold patent assets. (D.!. 56 at 3) The funds
in
turncreate "portfolio licenses" -that is, licenses that cover hundreds
or
even thousands
of
patentsprovided to a specific investor in the fund. (D.!. 65 at 2)The four patents-in-suit were acquired in 2006 and 2007 and placed in four Delawareentities. (D.!. 58 at 2) In 2010, the four entities merged to form IV, the plaintiff in the instantaction.
B.
Wilson Sonsini's Representation
of
IV
IV first retained
WSGRin
November 2002. (D.!. 58 Ex. A) Peter Detkin, a co-founder
of
IV, is a former partner at
WSGR
and, therefore, had ties to the law firm. (D.I. 58 at
1)
Theinitial engagement letter between the parties defined the nature and scope
of
the duties
WSGR
agreed to perform for IV as follows:2 

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