From In re Shared Memory Graphics LLC, 2011 U.S. App. LEXIS 19414 (Fed. Cir. Sept. 22, 2011):

This petition arises out of SMG's patent infringement suit against Nintendo, Apple, Inc., Samsung Electronics Co., and Sony Corporation of America. SMG's claims against Nintendo--the only party that sought disqualification here--involve the "Hollywood chip," a complex memory chip composed of multiple components.

The Hollywood chip was previously the subject of a suit for patent infringement, which was brought by Lonestar Inventions, L.P. Advanced Micro Devices ("AMD") and Nintendo were defendants in that suit, and they decided to exchange information concerning litigation tactics and settlement strategies, drafts of briefs, and other confidential information under a Joint Defense Agreement.***

Kent Cooper — the attorney at the center of this dispute — was working as the Director of Patents and Licensing for AMD at the time of the Lonestar litigation. He helped assess the infringement claim and the validity of the patent at issue in that case. After the Lonestar litigation, Cooper left AMD to join the law firm of Floyd & Buss as a partner. Admittedly, the firm did not screen Cooper upon his entry.

Soon thereafter, Floyd & Buss filed this suit on behalf of SMG against Nintendo and the other defendants. Nearly ten months after the suit was filed, Nintendo moved to disqualify Floyd & Buss from continued representation in this case. Although the parties agreed that Cooper never represented Nintendo at any time, there was a dispute whether Cooper received confidential information from Nintendo during the Lonestar litigation. The district court granted the motion and disqualified the entire firm from continued representation. ***

Citing Richardson-Merrell, Inc. v. Koller, 472 U.S. 424 (1985), Nintendo contends that mandamus authority cannot be exercised under the circumstances of this case. Nintendo's reliance on Richardson-Merrell for this proposition, however, is misplaced. The question at issue there was whether an order disqualifying counsel could be appealed under the collateral-order doctrine, which furnishes "an exception to the final judgment rule for a 'small class' of prejudgment orders." Id. at 430.

Far from stating that an order disqualifying counsel may not be remedied through a writ of mandamus, the Court specifically noted that "a rule precluding appeal [under the collateral-order doctrine] would not necessarily leave the client or the disqualified attorney without a remedy" because "a party may seek . . . a writ of mandamus from the court of appeals." Id. at 435.

Nintendo also cannot seriously contest that SMG could meaningfully obtain this relief other than by seeking a writ of mandamus. By the time an appeal here could be taken, the trial would be over, and SMG would have gone through the litigation without the counsel of its choice. Mandamus thus acts as a safety valve to prevent such irreparable harm if appropriate circumstances are presented. See Mohawk Indus., Inc. v. Carpenter, 130 S.Ct. 599, 608 (2009).

Footnote 1. The Supreme Court has described the circumstances in which an order disqualifying counsel could be reviewed on direct appeal, stating that, "should the Court of Appeals conclude after the trial has ended that permitting continuing representation was prejudicial error, it would retain its usual authority to vacate the judgment appealed from and order a new trial." Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 378 (1981). In other words, it appears as though a showing of prejudice would be required. Practically speaking, it would be very difficult to demonstrate prejudice absent some sort of misconduct on the part of counsel.

***SMG argues that the district court erred by granting Nintendo's motion for disqualification. SMG contends that the motion was precluded by the waiver-of-conflict provision in the Lonestar Joint Defense Agreement. According to SMG, the Agreement clearly intended to bar Nintendo from seeking to disqualify "respective counsel" like Cooper who subsequently left one of the parties or its counsel to join another company or law firm. That waiver provision, set forth in Paragraph 6 of the Joint Defense Agreement, provides:

The parties expressly acknowledge and agree that nothing in this Agreement, nor compliance with the terms of this Agreement by either party, shall be used as a basis to seek to disqualify the respective counsel of such party in any future litigation.

***We agree with SMG's interpretation. As an initial matter, while challenging SMG's reading of the Joint Defense Agreement, Nintendo cannot dispute that these types of waiver provisions are enforceable where, as here, there is a non-attorney-client relationship (Cooper did not represent Nintendo in the Lonestar litigation) involving sophisticated parties. See generally Model Rules of Prof'l Conduct 1.7 cmt. 22 (noting "if the client is an experienced user of the legal services involved and is reasonably informed regarding the risk that a conflict may arise, such consent is more likely to be effective").

Even in attorney-client situations, general rules of professional legal conduct recognize that in certain circumstances it is not only proper but beneficial for parties to contractually consent to a waiver of future conflicts of interest. See Restatement (Third) of the Law Governing Lawyers, § 122 cmt. D (2000) ("[T]he gains to both lawyer and client from a system of advance consent to defined future conflicts might be substantial."); see generally Model Rules of Prof'l Conduct 1.7 cmt. 22 (recognizing the appropriateness of contracting advanced waivers of conflicts of interest). Moreover, courts applying California law, which governs motions to disqualify counsel, In re Cnty. of Los Angeles, 223 F.3d at 995, have generally recognized the enforceability of advanced waiver of potential future [*10] conflicts, even if the waiver does not specifically state the exact nature of the future conflict, see Visa U.S.A., Inc. v. First Data Corp., 241 F.Supp.2d 1100, 1105 (N.D. Cal. 2003).