## Facts

- Schlumberger employed Charlotte Rutherford in senior intellectual property roles, including responsibility for IP enforcement strategy and advising on IP risk.
- Rutherford worked on matters involving Schlumberger’s Petrel software, including litigation oversight and evaluation of legal risks and competing technologies.
- Rutherford later joined Acacia, where she oversaw patent acquisition and enforcement activities.
- During Acacia’s acquisition process for U.S. Patent No. 7,986,319, Petrel was identified as a potential infringement target; Rutherford participated in related decisions, including selecting outside counsel.
- Dynamic 3D was formed to hold and enforce the ’319 patent and sued Schlumberger for allegedly infringing the patent through Petrel.
- Schlumberger moved to disqualify Rutherford, Acacia in-house counsel, and Dynamic 3D’s outside counsel, arguing Rutherford possessed Schlumberger confidential information relevant to the dispute.

## Issues

1. Whether Rutherford’s prior work for Schlumberger was substantially related to the later patent infringement suit such that Texas conflict rules required her disqualification with an irrebuttable presumption of shared confidences.
2. Whether Rutherford’s conflict was properly imputed to Acacia’s in-house lawyers and to Dynamic 3D’s retained outside counsel.
3. Whether the district court abused its discretion by dismissing the complaint without prejudice because disqualified counsel drafted and prosecuted the pleadings.

## Decision

- The Federal Circuit affirmed the district court’s order disqualifying Rutherford.
- The Federal Circuit affirmed imputed disqualification of Acacia’s in-house counsel and Dynamic 3D’s outside counsel.
- The Federal Circuit affirmed dismissal of Dynamic 3D’s complaint without prejudice.
- The court applied abuse-of-discretion review and found no misapplication of governing Texas conflict-of-interest standards or remedial discretion.

## Legal Principles

- Under Texas conflict-of-interest rules, a former client establishes a disqualifying conflict by showing a substantial relationship between the attorney’s prior representation and the current matter.
- Once a substantial relationship is shown under Texas law, an irrebuttable presumption arises that the attorney received confidential information relevant to the current dispute, requiring disqualification.
- A conflicted attorney’s disqualification may be imputed to associated in-house counsel and retained firms when the attorney held a senior strategic role and participated in directing or initiating the challenged representation.
- A district court may dismiss an action without prejudice as a remedy for conflicted representation when pleadings and litigation conduct are tainted by disqualified counsel and substitution alone would not adequately remove the taint.

## Conclusion

The Federal Circuit upheld disqualification and imputation based on a substantial relationship between Rutherford’s prior Petrel-related work for Schlumberger and later enforcement efforts targeting Petrel, and it sustained dismissal without prejudice because the case had been prosecuted through pleadings prepared by disqualified counsel.


Dynamic 3D Geosolutions LLC v. Schlumberger Ltd., 837 F.3d 1280 (Fed. Cir. 2016)