A tug of war over one of the best-known names in the Canadian patent world has ended in a tie after patent agency Sim & McBurney agreed to drop its trademark infringement claim against the upstart Aird & McBurney LP last week.
Sim & McBurney, a 46-year-old affiliate of intellectual property law boutique Sim Ashton & McKay LLP, launched the lawsuit shortly after Aird & McBurney began operating in April with three partners who had defected from the older firm, claiming the name infringed on its trademarks and was causing confusion with its services.
The action also targeted the new firm’s affiliate law firm, Toronto full-service outfit Aird & Berlis LLP, as well as Sim & McBurney’s own founding partner, Peter McBurney, a registered patent agent and elder statesman in the Canadian intellectual property field.
McBurney, now in his 80s, retired from the Sim & McBurney partnership in 1999, but he stayed on in a senior consultant role, before cutting ties at the end of 2015 and jumping ship to take a job with the same title at Aird & McBurney.
In a further blow to Sim & McBurney, on June 20, Ontario Superior Court Justice Sean Dunphy disqualified its lawyers of choice at Gowling WLG because the dissident partners had previously shopped themselves around to that firm before finally landing at Aird & Berlis.
On July 5, with new counsel in place, Sim & McBurney moved to dismiss all its claims on consent after reaching a settlement that will see both parties continue under the same names. Tom Curry, Sim & McBurney’s new lawyer, says his clients are “very pleased” to have reached a “satisfactory resolution.”
“They are happy to have this behind them and resolved so that everybody can go on as they did before without the issues in the litigation hanging over them,” says Curry, a partner at litigation boutique Lenczner Slaght Royce Smith Griffin LLP.
Jeffrey Kaufman, who argued the disqualification motion for Aird & McBurney and the other defendants, says his clients were also “very satisfied” with the result. He says it was surprising that such a typical lateral move got so contentious.
“This sort of thing happens every day,” Kaufman says.
According to Dunphy’s decision, events were set in motion last summer when Timothy Lowman, a lawyer who was partner in both Sim firms, approached Gowlings on behalf of himself and three patent agent partners at Sim & McBurney to discuss a move.
Some of the dissidents met with Scott Jolliffe, then-CEO at Gowlings in July 2015, before Gowlings agreed to a non-disclosure agreement. An exchange of the group’s client lists, billings, and compensation details followed, but the negotiations ultimately proved fruitless, and Lowman joined Aird & Berlis in October 2015.
The three patent agent partners followed the next month, and by April 1, Peter McBurney was on board and the patent agency was launched as Aird & McBurney. A few days later, Sim & McBurney hired Gowlings to send a cease-and-desist letter to the new patent firm, and then filed its statement of claim alleging a common-law passing-off claim, in addition to several other trademark infringement causes of action relating to the new firm’s name and associated domain names.
According to Dunphy, Sim & McBurney also alleged two further categories of claim against the defendants: one accusing Peter McBurney of breaching a contract with them when he switched to Aird and McBurney and helped them solicit clients from his old firm. And another against Aird & Berlis that alleged the law firm induced the three patent agent partners to breach the fiduciary duty they owed to Sim & McBurney. The defendants then quickly moved to have Gowlings removed from the file, arguing the non-disclosure agreement signed during negotiations created a duty of confidence and placed the law firm in a conflict of interest. However, Sim & McBurney took the position that removal of counsel should only be reserved for cases where conflicts arise out of duties to clients or “near clients.” Only a small group of people at Gowlings knew about the discussions with the dissident partners, and since they were never clients, their names failed to show up in Gowlings’ internal conflicts check. It was Jolliffe himself who told the litigation team handling the Sim & McBurney claim about the negotiations in mid-April, just before the statement of claim was issued.
In his June 20 decision, Dunphy sided with Aird & McBurney, ruling that the court’s ability to disqualify counsel goes beyond solicitor-client conflicts.
“There are few moments in the life of a lawyer where he or she is more vulnerable than when contemplating moving law firms to find a platform better suited to his or her professional aspirations.
The mere whisper of the fact that a lawyer is looking at another firm could be enough to jeopardize his or her career,” Dunphy wrote. “I find that all four dissident partners had a reasonable expectation of confidentiality attending their meetings and negotiations with Gowlings that predated the delivery of an NDA and survived the termination of their negotiations. Each had a reasonable right to expect that Gowlings would keep the information conveyed, including the fact of their meetings, confidential.”
The judge removed Gowlings, concluding that it was “not reasonable” for the defendants to have to accept their involvement “subject only to an ethical wall that might now be put in place this long after the fact.”