Telstra has tripped over a legal conflict of interest issue as it fights a patent infringement claim

A Telstra retail store. Photo: James Alcock/Getty Images

Telstra has been sideswiped by conflict of interest issues after suddenly changing lawyers while defending claims that its mobile eCommerce platform has been infringing an inventor’s patents for many years.

King & Wood Mallesons had been representing Telstra in the Federal Court, but last month the telco filed notice that it had changed to another top-of-town firm, Herbert Smith Freehills, with Sue Gilchrist as the representing lawyer.

The Telstra account, a plump piece of business for any law firm, is potentially worth millions each year.

However, Telstra’s new firm, Freehills, is known to have acted for Upaid as recently as last month when it filed a patent application in Australia.

Upaid has now made an application to the Federal Court seeking to restrain Freehills from acting against the interests of Upaid. A hearing is set down for later this month.

The telco’s reasons for changing lawyers in the middle of a major court case are not known.

A Telstra spokesman said: “We remain committed to exercising all our legal rights in this case. We will not be commenting on who might be providing us with legal advice at a particular time.”

Freehills have been contacted for comment.

The alleged conflict of interest issue is a sideshow to the main case, which has been on a slow burn for about 18 months.

Potentially at stake is hundreds of millions of dollars for past and future use of patents held by Thailand-based Simon Joyce, the British-born chairman of Upaid Systems, which he founded in 1997.

Upaid is taking similar action against telecommunications giant NTT DoCoMo in Japan, seeking more than $100 million. In the US, communication groups Verizon and Qualcomm license patents from Upaid.

In documents lodged in the court, and seen by Business Insider, Upaid alleges Telstra infringed patents which allow customers to make ­purchases using their Telstra mobile while roaming overseas or through Bigpond.

The technology claimed by Upaid allows mobile phone users to conduct business with a large number of merchants over many networks, rather than being tied to one telecommunications provider, which was a constraint in the early days of mobile transactions.

Telstra has rejected Upaid’s claims.

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