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October 22, 2008 9:30 AM

The Am Law Litigation Daily: October 22, 2008

Posted by Joe Phalon

Edited by Andrew Longstreth

IP
In a Battle of Zombie Killers, Fenwick & West Slays Kenyon & Kenyon

How appropriate that with Halloween approaching we have a litigation tale about zombies. On one side is Fenwick & West's client, the video game maker Capcom. In 2006 Capcom released "Dead Rising," a video game that revolves around a freelance photojournalist on assignment in the fictional town of Willamette, Colorado. The photographer's mission is to unlock the mystery of why the U.S. quarantined the town--which turns out to be populated with zombies. Players help him battle the zombies, survive for three days, and return with the evidence needed to solve the puzzle.

If you think that plot sounds a little like the 1979 indie hit "Dawn of the Dead"--in which a group of people try to survive an epic zombie attack at a surburban shopping mall--you're not alone. According to Capcom's lawyers, MKR Group, which owns the trademarks and copyrights to the movie, threatened to block the release of "Dead Rising" back in 2006. Capcom marketed the game anyway, though with a disclaimer stating that it was not connected with the "Dawn of the Dead."

Apparently still spooked by MKR's threats, Capcom filed a complaint in the Northern District of California against MKR in February 2008, seeking a declaratory judgment that it did not infringe MKR's intellectual property rights. (That's right--even zombies are intellectual property.) MKR, represented by Kenyon & Kenyon, turned around and filed a complaint against Capcom, alleging trademark and copyright infringement, unfair competition, misappropriation, and dilution.

In a decision made public this week, San Francisco federal magistrate judge Richard Seeborg granted Capcom's motion to dismiss all of MKR's claims with prejudice. Judge Seeborg, who has become quite the zombie expert, concluded that there were "profound differences" between the movie and the game, and that "the few similarities MKR has alleged are driven by the wholly unprotectable concept of humans battling zombies in a mall during a zombie breakout." We're guessing that wasn't a sentence Seeborg envisioned writing when he first took the oath of office.

Fenwick & West partner Rodger Cole, who represented Capcom, was not immediately available for comment. He was joined by associates Jennifer Kelly and MaryBeth Milionis. Kenyon & Kenyon's Jonathan Reichman, who represented MKR, declined to comment.

BANKRUPTCY
Ex-Weil Partner Faces Old Firm In Lehman Bankruptcy

The club of lawyers who dominate megabankruptcies is almost as exclusive as Augusta National. So after Martin Bienenstock left Weil, Gotshal & Manges--where he was co-head of the firm's bankruptcy practice--last year, it was a sure bet that he'd eventually come up against his former colleagues.

The collision, fittingly, has come in the biggest bankruptcy in history. Bienenstock, now a partner at Dewey & LeBoeuf, represents The Walt Disney Company in the Lehman Brothers Chapter 11, in which, as we all know, Weil represents Lehman. Earlier this week, Bienenstock filed a motion on behalf of Disney, seeking the appointment of an examiner to investigate how the investment bank moved certain funds before it filed for bankruptcy. In the filing, which you can read here, Disney also asks that the examiner investigate the role Lehman officers and directors played in the movement of those funds.

"When creditors lose money, they deserve to know why and how," Bienenstock said in court papers.

Meanwhile, in other Lehman bankruptcy-related news, the Am Law Daily reports that Goodwin Procter partner Emanuel Grillo has filed a complaint on behalf of a Massachusetts power company, Evergreen Solar, against Lehman and Barclays Capital. In its complaint, available here, Evergreen alleges that after it lent Lehman nearly 30 million shares in June, Lehman turned around and sold 12.2 of the shares to Barclays in a post-bankruptcy transaction. Evergreen claims that Lehman was supposed to return those shares in the event it filed for bankruptcy. Just another headache for the man leading Lehman's bankruptcy, Weil partner Harvey Miller.

IP
American Airlines Sues Yahoo! for Trademark Infringement

American Airlines has already made it clear it doesn't much care for search engines that it believes improperly sell its trademarks. Last year American sued Google for allegedly allowing other airlines to bid on keywords that were the property of American Airlines. In July, the two reached a confidential settlement.

American has now turned its sights toward the other key player in paid search results, Yahoo! Gibson, Dunn & Crutcher, which represented the airline in its suit against Google, has filed a similar action in the Northern District of Dallas. Listed on the complaint are Gibson lawyers Frederick Brown, George Nicoud III, Jason Stavers, and Howard Hogan.

Eric Goldman of the Technology & Marketing Law Blog is skeptical of the suit. Goldman writes that he doesn't think the case makes business sense for American. "I just don't see how American Airlines could possibly be losing enough in 'diverted consumers' to justify the litigaiton expense," he wrote.

Gibson Dunn partner Frederick Brown referred us to American Airlines spokesperson Billy Sanez. We left a message with Sanez but didn't hear back.

WHITE-COLLAR
Ex-Milberg Partner To Be Sentenced Next Week

Sentencing memos can make for sad reading. Take the case of David Bershad, the ex-Milberg partner who pled guilty last year for his role in paying kickbacks to plaintiffs. In anticipation of his sentencing next week, his lawyers on Monday asked Los Angeles federal district court judge John Walter to spare him from prison time and sentence him to probation instead.

Bershad's lawyers paint a picture of man who has been devastated personally and financially. According to their memo, Bershad's wife of 30 years left him after learning of his conduct. (Bershad was alleged to have kept large amounts of cash in his office credenza for payoffs to lead plaintiffs.) Bershad's lawyers also said that their client "faces a barrage of lawsuits from the Milberg Firm, former partners, and others," and that he "faces the prospect of financial ruin."

Bershad has a battery of lawyers working on his defense: Christina Arguedas and Ted Cassman of Arguedas, Cassman & Headley; Robert Luskin of Patton Boggs; and solo practitioner Andrew Lawler. Their goal in the sentencing memo seems to be to distinguish Bershad from the other former Milberg attorneys who have pled guilty in the kickback scheme--Steven Schulman, Mel Weiss, and Bill Lerach. It was Bershad's cooperation, they contend, that brought the case "to a close without the need for a trial."

And their client, unlike Weiss and Lerach, has not received any money from his old firm. "Based upon public accounts and court records," the sentencing memo says, "despite their guilty pleas and sentences, both [Weiss and Lerach] continue to receive generous payments from their former firms, with calculations based upon their equity positions prior to resigning. Mr. Bershad, in contrast, has expressly disavowed any interest in the proceeds of the conduct to which he pled guilty."

Attached to the memo were dozens of letters to Judge Walter from Bershad's colleagues on both the plaintiffs and defense side of the bar. Some of the notable lawyers attesting to Bershad's character included Cadwalader, Wickersham & Taft's Dennis Block; mediator Kenneth Feinberg of the Feinberg Group; Bernstein Litowitz Berger & Grossmann name partner Max Berger; Wachtell, Lipton, Rosen & Katz partner Bernard Nussbaum; and Jenner & Block partner Jerold Solovy.

Although prosecutors asked for a downward departure from the sentencing guidelines, they're recommending that Judge Walter sentence Bershad to three months in prison. (By way of comparison, Mel Weiss was sentenced to two and a half years, and Bill Lerach to two.) For Steve Schulman, who is scheduled to be sentenced the same day as Bershad, prosecutors are seeking a one-year prison term.

APPELLATE
Supreme Court Stars Argue Hypothetical Case: McCain v. Obama

Here's an intriguing scenario. It's November 4, Election Day, and a snowstorm hits Denver. A local election director decides to keep the polls open two hours longer than permitted by state law to accommodate voters detained by the storm. About 50,000 votes are cast in those two hours--and they swing the election to Barack Obama. The McCain camp launches a challenge to those votes that within days lands before the Supreme Court. With the election at stake, McCain turns to conservative legal star Glen Nager of Jones Day. The Obama team calls on former acting solicitor general Walter Dellinger of O'Melveny & Myers to defend its victory.

The scenario is hypothetical, but the moot Supreme Court argument took place on Monday at Georgetown University Law Center. Legal Times's Tony Mauro, who was there to see it, reports that Nager and Dellinger argued as if they were really before the justices, with Nager focusing on equal protection and Dellinger asserting that the case didn't belong in the Supreme Court.

The idea for the event belongs to Edward Foley, an Ohio State University Moritz College of Law professor and election law expert who has written about the handling of complex election disputes. At Georgetown, according to Mauro, Foley suggested an interesting idea in anticipation of the next major election dispute: a shadow court of respected judges who would submit their findings in the form of an amicus brief to the real court. "It might have some persuasive impact," Foley said.

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