After a three-week trial, the jury returned a 5 to 1 verdict finding the firm committed negligence when it failed to inform Axcess that it was prosecuting patents for Axcess's chief rival, Savi Technology Inc., in related technology in overlapping years. The jury sided with Axcess' arguments that if it had conflict-free counsel, it would have been able to lock down broader patents for its radio-frequency identification technology and reach a licensing deal with Savi, giving it royalties on Savi's successful line of RFID tracking devices.
But the jury also found Axcess knew or should have known in May 2007 that Baker Botts also represented Savi, making its litigation against the firm untimely under a two-year statute of limitations for negligence claims.
When the trial started, Axcess also had a breach of fiduciary claim against the firm, which has a four-year statute of limitations. But Dallas County District Judge Mark Greenberg granted Baker Botts directed verdict eliminating the breach of fiduciary duty claim and a material nondisclosure claim, finding they violate a state anti-fracturing doctrine.
Axcess says the precedent Judge Greenberg followed is wrong, and plans to appeal his fracturing ruling.
“This isn’t over,” said Axcess attorney Jonathan Suder of Friedman Suder & Cooke PC. “Clearly, the jury felt they did us wrong, there’s no question about that. You feel like you won but at the same time you’re disheartened.”
Baker Botts general counsel George Lamb said the firm will move for judgment on the jury’s verdict and will also pursue other post-judgment motions challenging the verdict.
“We continue to believe we lived up to the highest ethical standards and that the claims against us were unjust,” Lamb said. “The jury has entered a mixed verdict, but we are very pleased that the verdict will result in a judgment in favor of Baker Botts.”
The verdict found both Baker Botts and Axcess were negligent — but assigned the lion’s share of the blame to the firm, assigning it 90 percent responsibility and assigning 10 percent to Axcess. The jury couldn’t reach a unanimous verdict on a question of gross negligence, so didn’t award punitive damages.
Axcess argued it was wrong for Baker Botts to ever have represented both companies at once and that the firm should have caught the concurrent representation through better conflicts checks. But it said the real harm happened when Baker Botts discovered the alleged conflict and didn't fix its mistake, sinking Axcess' chances of commercial success and robbing it of its rightful place as a market leader. During closing argument, Suder told the jury it could send a message telling Baker Botts not to treat its other clients the same way.
Axcess claimed it didn't learn about the conflict until 2009, when it was served with a subpoena by AeroScout, an RFID rival that was suing Savi for patent infringement and was claiming Savi's patents were invalid because of prior art in the Axcess patents that Baker Botts failed to disclose to the U.S. Patent and Trademark Office.
The jury, however, found Axcess knew or should have known about the concurrent representation on May 17, 2007 — a date when e-mails the firm introduced during trial showed that Axcess’s CEO had received copies of Savi patents that listed Baker Botts as its counsel of record in 2007, and that its chief technology expert had reviewed them.
Baker Botts has argued Axcess didn’t have enough evidence to support a finding of proximate cause or findings of damages, but Judge Greenberg twice denied the firm’s motions for directed verdict on that point. The firm plans to raise those issues again in post-judgment motions and on appeal, if necessary.
The firm argued there's too wide a gap between what Axcess says went wrong and the harm the company claims it suffered. In closings, Beck Redden LLP’s Murray Fogler said Axcess was relying on a "cascade of assumption and speculation" that required the jury to predict how the USPTO would have interpreted patent claims and to predict Savi's business decisions. He said there’s no causation or connection between any failure of Baker Botts and any harm they suffered.
And Baker Botts said it delivered excellent legal services to Axcess all along, saying there was never a conflict of interest in representing both Axcess and Savi in patent prosecutions because they weren't adversaries, and that Axcess suffered no harm because of work separate Baker Botts attorneys did for Savi.
Axcess is represented by Steven E. Aldous of Forshey Prostok LLP and Jonathan T. Suder and Glenn S. Orman of Friedman Suder & Cooke.
Baker Botts is represented by Paul M. Koning and Brent Basden of Koning Rubarts LLP and Murray Fogler, Jas Brar and Michelle Gray of Beck Redden LLP.
The case is Axcess International Inc. v. Baker Botts LLP, case number CC-13-01301-E, in County Court-at-Law No.5 in Dallas County, Texas.
--Editing by Elizabeth Bowen and Sarah Golin.