NUMBER 305 1933
Question, A executed a patent license agreement with the corporation B under the terms of which B was to pay A a specific royalty and was also to pay him a share of the profits in each year. Disputes arose over the interpretation of the license agreement, A insisting on the right, because of his profit sharing interest, to dictate the policies and methods of accounting of the corporation B. The president of corporation B, the licensee, retained an attorney to obtain independent opinions of other counsel as to the interpretation of the patent license agreement, and in order that these opinions might be freed from the influence of any personal interest or bias of any kind, the question was presented to such independent counsel without divulging any information which would lead to the identification of any of the parties to the patent license agreement. The request to one counsel (designated as Y) was to have the opinion most favorable to the inventor A. The opinion of the other counsel was asked to be based upon the point of view of the corporation B. These opinions were obtained for the corporation B and were paid for by it. About the time that the said opinions were requested, the inventor A had certain business relations relating to the corporation B with the firm of attorneys Y who had rendered the opinion in the form most favorable to the inventor, but this was unknown to the corporation B or its president, who went abroad, and did not learn of such business relations between the inventor and said attorneys Y until after the opinion had been rendered- It then became known to the attorneys Y and to A and the officers of corporation B that these attorneys Y had rendered the opinion for the corporation B upon which it relied and that the same attorneys Y also represented the inventor A in certain matters. Thereafter these attorneys Y on behalf of the inventor A made demands upon the corporation B for inspection of books, examination of accounts, and for various information which demands were refused as not in accordance with the provisions of the said patent license agreement. Thereafter the inventor A brought an action against the corporation B through these attorneys Y, seeking the annulment of the patent license agreement for alleged breaches thereof and an accounting of royalties and profits, which action involves urging interpretations of various paragraphs of the patent license agreement contrary to the interpretation placed upon them and the advice given in the opinion rendered by such attorneys Y and paid for by the corporation B and upon which it relied in the conduct of its business.
Is it ethical for these attorneys Y to commence and conduct such action against corporation B, which is based upon theories of interpretation and actual interpretation of the provisions of the patent license agreement differing from the views already expressed by them in their opinion for which they have been paid by corporation B?
Answer, In the opinion of the Committee, upon the facts as stated, it is unethical for attorneys Y to commence and conduct, as attorneys for A, an action against B. An attorney should refrain from nullifying his own opinion, under the circumstances stated in the question.