The Am Law Litigation Daily: September 3, 2008

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September 3, 2008 11:48 AM

The Am Law Litigation Daily: September 3, 2008

Posted by Dimitra Kessenides

Edited by Ben Hallman and Alison Frankel

IP
Howrey Finally Gets Good News for Boston Scientific

2008 got off to a brutal start for Boston Scientific, which in the first five months of the year was hit with a pair of eye-popping patent infringement verdicts: $431 million last February in a case brought by Dickstein Shapiro client Bruce Saffran; and another $250 million in May for Medtronic, represented by McKool Smith. Yikes. But last Thursday federal district court judge T. John Ward of Marshall, Texas took a lot of the sting out of the $250 million verdict, ruling that two of Medtronic's patents were unenforceable because of inequitable conduct. The judge cut Medtronic's damages down to $19 million, providing some solace for Boston Scientific's lawyers at Howrey, who lost the case at trial.

Ward found that a Medtronic patent agent, James Crittenden, "cultivated deliberate ignorance of what a reasonable examiner would consider material art" when Medtronic sought two patents on catheters that could deliver drug-coated stents to cardiac patients. Among the material Crittenden withheld from the U.S. Patent and Trademark Office was information on Medtronic's own prior inventions. (The Am Law Daily provides a link to Ward's occasionally testy ruling.)

Howrey still plans to appeal the jury's finding of infringement against Boston Scientific, though lead partners Edward Han and Matthew Wolf wouldn't talk about the case with the Am Law Daily. Medtronic, meanwhile, says it plans to appeal Judge Ward's inequitable conduct ruling. The company's McKool lawyers--Sam Baxter, Kevin Burgess, Mark Mathie, Rosemary Snider, and Theodore Stevenson III--argue that Crittenden did not intentionally deceive the PTO and did not withhold material information.

Boston Scientific has had considerably less success in cutting the $431 million Saffran verdict. (Kenyon and Kenyon, not Howrey, lost that trial for the company.) According to Dickstein Shapiro's web site, Judge Ward (yep, him again) denied all of Boston Scientific's post-trial motions on July 9. Its argument, Ward ruled, "makes up in creativity what it lacks in merit." Ouch.

BANKRUPTCY

Baker Botts Wins Fraudulent Transfer Ruling Against Grupo Mexico

Let's say you're the biggest mining company in Mexico, the third-largest copper producer in the world. One of your U.S. subsidiaries is in big trouble. It owns a valuable interest in a couple of Peruvian copper mines, but it's crippled with environmental liability from its operations at 20 federal Superfund sites. So what do you do?

If you're Grupo Mexico, you pay the U.S. subsidiary, Asarco, $765 million for control of the Peruvian mines, transfer that interest to another subsidiary, and leave Asarco to slide into bankruptcy. Was the copper mine sale legitimate? Or was it a scam to grab Asarco's only assets before creditors could get their hands on them? On August 30 Brownsville, Texas federal district court judge Andrew Hanen ruled that the Peruvian copper deal was indeed "an actual fraudulent transfer," made with "full knowledge that Asarco's creditors would be hindered or delayed."

The 190-page ruling (PACER subscription required) is so complicated that Reuters called it a win for Grupo Mexico but Baker Botts claimed victory for its client, the court-appointed directors of bankrupt Asarco. Asarco filed the fraudulent transfer suit against Americas Mining Corporation, the Grupo Mexico subsidiary that now owns the copper mine shares, in 2007. Americas Mining was represented by Milbank, Tweed, Hadley & McCloy and Haynes and Boone. Fulbright & Jaworski represented Asarco's unsecured creditors.

Judge Hanen did not rule on damages, though he denied Asarco's request for punitives. According to Bloomberg, the judge has asked both sides to file briefs on damages by September 15. Baker Botts partner G. Irvin Terrell told Bloomberg that Asarco plans to ask Judge Hanen for $1.85 billion in lost dividends in addition to the value of the Peruvian copper mine interest, which could be as much at $7 billion.

And for anyone who's wondering how a guy like Terrell, who's best known for his work for George W. Bush in the 2000 election recount litigation, fared in dusty Brownsville during the two-month Asarco trial, check out the Houston Chronicle's account of Baker Botts's $65,000 transformation of an office across the street from the courthouse. "The lawyers on the other side were five blocks away," Terrell told the Chron. "They had to walk back and forth in the hot sun."

IP
More Lawyer-Inventors Are Filing Patent Infringement Suits
At the Litigation Daily, we rarely run across a lead paragraph that piques our interest more than this one from the September issue of IP Law & Business: "Looking at a patent recently asserted against a client, Silicon Valley patent litigator Chris Graham had a moment of disbelief. The Dechert attorney saw that the named inventor on the patent, which was being used to sue online resume-posting sites like his client Monster.com, was an attorney he knew--San Jose lawyer Michael Powell, now an associate at Quinn Emanuel Urquhart Oliver & Hedges."

That's right--it's a story about lawyers who not only file for patents on their inventions, but then sue giant companies for supposedly infringing those patents. IPL&B's Joe Mullin reports that at least 10 law firm lawyers have filed infringement case to protect their own patents in recent years, even as critics tag them as patent trolls out to collect nuisance payoffs. In addition to Powell of Quinn Emanuel, Mullin found a partner at Wilmer who has filed his own patent infringement cases, as well as former Perkins Coie lawyer.

The biggest problem these lawyers face, aside from those nasty patent troll accusations, is conflicts; the patron saint of IP lawyer-litigants, Scott Harris, was ousted from Fish & Richardson after he sued Google, a client of the firm. According to Mullin, Quinn Emanuel's Powell was careful not to name the Tribune Company, a Quinn client, in his suit against a company partially owned by the Tribune.

The Dechert lawyer defending Monster from Powell's infringement claim doesn't fault him filing suit--but he doesn't much like what his fellow lawyer is up to. "Lawyers have a trusted and special role in society," Graham told IPL&B. "We have a responsibility to restrict our own activities."

APPELLATE
Bill Lee Strikes Again! Federal Circuit Overturns $49 Million Verdict Against Call Company
Who knew that a free call could cost $49 million? That was the 2007 patent infringement and tortious interference judgment against Targus Information Corporation, one of the two companies that compete to route 1-800 calls to local service centers. Again, who knew? The beneficiary of the judgment, which included a $25 million jury verdict and a $24 million add-on by Orlando federal district court judge Patricia Fawsett, was Targus's rival, 800 Adapt. Fawsett was so emphatic in her finding against Targus that she even awarded 800 Adept attorneys fees. But alas for 800 Adapt, the U.S. Court of Appeals for the Federal Circuit had a different view of the case. In an August 29 ruling, the court concluded that Fawsett had erred in a critical claim construction ruling. The appeals court wiped out the entire damages ruling, right down to attorneys fees.

And as if that weren't enough, the appellate judges also threw out Fawsett's ruling that two Targus patents were invalid, remanding the case for a new trial on 800 Adept's alleged infringement of those patents. The appropriate question now is: Who was Targus's lawyer? The answer: None other than Bill Lee of Wilmer, Cutler, Pickering, Hale and Dorr, who's been on quite a roll lately. Stephen Milbrath of Orlando's Allen, Dyer, Doppelt, Milbrath & Gilchrist argued for 800 Adept. For a thorough dissection of the appellate ruling, check out this post at Patently-O.

APPELLATE
Three Texas High Court Wins for Susman Godfrey in One Day
We weren't the only ones who wanted to clear the decks in advance of the long Labor Day weekend. On Friday, the Texas Supreme Court issued 22 opinions. Susman Godfrey, the Houston-based litigation boutique, quickly spread the news that three of those rulings were wins for the firm--including a case involving radioactive rhinoceroses. Susman, we were a little sad to hear, represented not the rhinos but the alleged contaminators.

In Forest Oil Corporation v. James Argyle McAllen, McAllen, a rancher, claimed that the oil company donated pipe contaminated with radiation for a corral to hold two endangered African black rhinos. The rhinos suffered "strange illnesses and skin lesions," and one eventually died. In 2005 McAllen sued Forest but there was a catch: He had signed a 1999 deal with Forest in which he agreed to arbitrate any personal injury, environmental, or wrongful-death claims against the oil company. McAllen, represented by San Antonio solo Jon Christian Amberson, claimed he'd been fraudulently induced to sign the deal because Forest already knew his property was contaminated. The trial court agreed with him and said the suit could proceed. Forest Oil lawyers, led by Geoffrey Harrison at Susman Godfrey, eventually appealed the ruling to the Texas Supreme Court.

In a twist that was first reported by our sibling publication Texas Lawyer, (subscription required) McAllen hired former Texas supreme court justice Craig Enoch, now a partner at Winstead, to argue the appeal. A decade before the rancher brought him aboard, Enoch wrote the opinion in a crucial 1997 precedent-setting fraudulent inducement case. Susman's Harrison was also intimately familiar with the 1997 case--his client was on the losing side.

Not this time, though. On Friday, the Texas Supreme Court held that the McAllen case was "relevantly similar" to the earlier case and ordered the trial court to compel arbitration. The decision "stands for the broader principal that Texas courts will uphold unambiguous contracts," Harrison told us. We're just sorry the Texas Supreme Court won't ever get to consider the merits of the irradiated rhino claim.

Compelled arbitration was the issue in another of Susman's Friday state supreme court wins on Friday. The high court agreed that a trial court had not abused its discretion in granting the motion of Susman's client, Poly-America, to send a case to arbitration. Erica Harris was lead counsel. And in the third case, Susman won for Nokia in an insurance coverage claim; Nokia will be able to hit its insurers for the millions in legal fees and expenses it spent to defend a series of class actions. Eric Mayer argued the appeal for Nokia. Susman Godfrey lawyers Brian Melton, Ian Crosby, and Lexie White also worked on the case.

APPELLATE
On the Docket in D.C.
With all the non-stop campaign coverage you'd think that there was nothing happening in Washington, D.C., but a presidential race. Here at the Litigation Daily we're more concerned with plaintiffs and defendants than with Democrats and Republicans. So we were glad to see that our Beltway sibling, Legal Times, hasn't forsaken litigators in favor of yet another Sarah Palin expose. In its current issue, Legal Times previews the fall docket at the U.S. Court of Appeals for the D.C. Circuit, which is "brimming with constitutional and corporate law cases." Here's a quick summary of four of them:

In United States vs. Phillip Morris, Altria (formerly Philip Morris) is appealing a district court verdict that found it conspired with other big tobacco companies to deceive the public about the health risks of smoking. After a bench trial in 2005, D.C. federal district court judge Gladys Kessler found in favor of the government and ordered remedies that included barring the use of the words "low tar" and "light" in advertising. But Kessler didn't impose any monetary penalties, which was a blow to government lawyers who originally sought $280 billion in damages. The Justice Department wants the appeals court not only to uphold Kessler's conspiracy ruling, but also to award monetary penalties to the government. That won't be easy: Legal Times notes that two of the appellate judges who will hear arguments in the case on October 14--Chief Judge David Sentelle and Justice David Tatel--previously ruled against the government's pursuit of tobacco billions. David Eggert of Arnold & Porter drafted the brief for Philip Morris. Gibson Dunn partner Miguel Estrada and Jones Day partner Michael Carvin are expected to argue for the tobacco company. Justice Department attorney Alisa Klein is on tap for the government.

In a case stemming from last year's lobbying reform efforts, the National Association of Manufacturers is challenging a law that requires private associations to reveal the name, address, and principal place of business of "active" members who have contributed more than $5,000 per quarter toward lobbying. Wilmer, Cutler, Pickering Hale and Dorr partner Thomas Kirby is expected to argue the case for the manufacturing group. Justice Department lawyer Nicholas Bagley will argue for the government.

On its face, Zivotofsky v. Secretary of State is a dispute over whether a boy born in Jerusalem can claim Israel as his birth country on his U.S. passport, since the United States does not recognize Jerusalem as belonging to any country. But this case also touches on the controversy over signing statements that nullify legislation passed by Congress. Do presidents have the authority to ignore parts of laws that they disagree with? Arguments are scheduled for October 17. Nathan Lewin and Alyza Lewin if Lewin & Lewin are representing the plainfiff. Justice Department lawyer Lewis Yellin will argue for the government.

Can federal judges force the government to give detainees, their lawyers, and the court 30 days' notice before any transfer from a military base? This is the latest Guantanamo question before the court, in a case called Kiyemba v. Bush. DOJ's Robert Loeb will argue that the Supreme Court's decision in Boumediene v. Bush, which gave detainees habeas rights to challenge their detention, does not pertain to ancillary issues such as transfer. Cleary Gottlieb associate Chris Moore will argue for the petitioners, Chinese Muslims who want advance notice of transfers so they have time to raise objections.

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