Apple ramps up pressure over lawyer who planned lawsuit against iPhone

Slavko Milekic shows his touchscreen at the 2008 Philadelphia Flower Show.

About a month ago, an array of documents from a patent lawsuit over Apple's iPhone became public, revealing a stunning scheme: FlatWorld Interactives, a patent-holding company demanding a royalty on nearly every iOS device, is partly owned by an attorney at one of Apple's go-to law firms for patent work. 

Days after the documents were unsealed, the attorney in question, John McAleese, disappeared from the roster of partners at Morgan, Lewis & Bockius, apparently pushed out of his firm. Apple, meanwhile, filed a motion insisting that the law firm representing FlatWorld, Hagens Berman Sobol Shapiro, should be kicked off the case. Given McAleese's position at Morgan Lewis, Apple's lawyers argued that he was essentially acting as an extra attorney in the case, and that taints FlatWorld's whole case.

Apple, betrayed by its own law firm | A patent attack on the iPhone came from a surprising source.

Now FlatWorld is scrambling to keep its lawyers. "Despite Apple's effort to create smoke, there is no fire," wrote the patent-holding company's lawyers in response to Apple's allegations. "A careful review of the facts shorn of Apple's innuendo and invective shows Hagens Berman never acted as co-counsel with Mr. McAleese in this case."

Morgan Lewis investigated its network and McAleese—an environmental lawyer who has never worked on an Apple case—came up clean, they wrote. "Mr. McAleese never accessed any Apple files, and never sent or received any e-mails containing Apple confidential or privileged information."

This week, Apple fired back with its reply, maintaining its position that FlatWorld's attorneys must get off the case. In those dozens of e-mail exchanges, John McAleese was "either rendering legal advice or being asked to render legal advice," Apple insisted. Just communicating with Hagens Berman about his appearance on the "privilege log" is enough to taint the case, they argue. McAleese was basically acting as "in-house counsel" for the patent company. The brief continues:

FlatWorld’s opposition also confirms that even now, FlatWorld has not provided the whole truth to the Court. The man at the center of the controversy is John McAleese—a lawyer with twenty years of experience who knew full well his ethical duties to his then-client, Apple, and ignored them during six years of counseling FlatWorld against Apple. But Mr. McAleese is conspicuously silent. Instead, FlatWorld provides a carefully crafted declaration from his wife—who knew about her husband’s conflict no later than 2012 but continued to provide him case pleadings while concealing her actions from FlatWorld’s trial counsel.

The McAleeses own 35 percent of FlatWorld Interactives. The remainder is owned by FlatWorld inventor Slavko Milekic, a professor of design at The University of the Arts, who claims he had a pivotal role in inventing touchscreen functionality and deserves royalties on nearly every Apple device. But he's never written a line of code or even taken a programming class. Rather, his specialty is in child psychology and design. According to local newspaper articles, Milekic used ready-made tools like RunTime Revolution (now RunRev) to write the software for the large touchscreen installations he built in 2007 and 2008.

FlatWorld had a few contracts to build actual touchscreen installations during those years, including one at the Philadelphia Zoo. By 2009, the company stopped operating and focused on altering its patent claims to be custom-made to sue Apple, according to a letter written by Jennifer McAleese. She and Milekic were convinced that they had an "excellent position against Apple" if they wanted to sue, and she started reaching out to "troll patent" companies to gauge interest. 

The argument about how involved Jennifer's husband John McAleese was will now be played out in court. John's apparent ousting from Morgan Lewis doesn't appear to be a huge setback, though; he was quickly hired as a partner at the Philadelphia office of McCarter & English, another large law firm.

If Apple is successful in kicking the Hagens Berman law firm off the case, it would be a major setback for FlatWorld. Both Jennifer McAleese and Slavko Milekic admitted as much in their recently filed declarations. "FlatWorld's only option to continue the case without Hagens Berman would be to find another firm that would be willing to accept the substantial costs of coming up to speed in a case that has been active for over a year," stated Jennifer McAleese. "It would be difficult for FlatWorld to replace Hagens Berman with a patent litigation firm of equal quality." FlatWorld has no revenue, she added.

It will likely be several weeks before this issue is resolved one way or the other. Oral argument on the motion is scheduled for July 31. The case has also been reassigned to a different judge, newly appointed US District Judge William Orrick, according to an order posted yesterday.

Other than trying to get the Hagens Berman firm off the case, there's probably not much more Apple could do. The idea of a big-firm lawyer taking a walk into the land of patent trolling is rife with potential conflict and may strike some as unethical, but it's perfectly legal.

Apple could punish Morgan Lewis by cutting down its relationship with that firm, but such action is far from a sure thing. With a decade-long relationship between the two, there would be a cost to both sides to taking drastic action, and Morgan Lewis is surely bending over backward to convince Apple that McAleese was just one rogue lawyer, unconnected with Apple's work.

The problem is that McAleese did alert the firm's general counsel—twice—that he and his wife were invested in a company about to file a wide-ranging lawsuit against a firm client. Morgan Lewis has a new general counsel who has been deposed about events in the FlatWorld case, but no part of that deposition has yet been made public.

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