The Second Opinion: When Is A Little Knowledge A Dangerous Thing? When It Is Used To Disqualify In-House Counsel

A powerful tool in the litigation arsenal is the bringing of a motion to remove counsel from a file, either because she possesses disqualifying confidential information or faces a disqualifying conflict of duty.  A recent ruling of the Federal Court of Appeal, Valeant Canada LP v. Canada, 2014 FCA 50, confirms that even a party's in-house counsel is potentially vulnerable to such an attack.

Valeant Canada and Cobalt Pharmaceuticals are involved in litigation concerning a Valeant patent ("the '224 Patent"), and a Valeant product with diltiazem hydrochloride ("DH") as its active ingredient.  Valeant had alleged that three disqualification issues had arisen in the proceeding:

• First, until 2008, law firm DWW had been the long-time external counsel of Valeant's predecessor corporation ("Biovail").  During its past mandates, DWW had worked for Biovail on cases involving the '224 Patent and DH products.  In this context, the law firm had gained confidential