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January 14, 2009 9:00 AM

The Am Law Litigation Daily: January 14, 2009

Posted by Ed Shanahan

Edited by Andrew Longstreth

Commercial / Law Firms
Law360 Study: Federal Court Litigation Increased by 9 Percent Last Year

It's financial reporting season for law firms and, as expected, the news hasn't been pretty. Last Friday, The Recorder disclosed that profits per equity partner at six out of seven Bay Area firms dropped in 2008, with Orrick posting the biggest decline at 21 percent. On Tuesday, The Am Law Daily reported that Cadwalader's profits dropped by 30 percent in 2008, which, believe it or not, was better than the rumors we had heard.

If it weren’t for litigation, last year could have been a lot worse. According to the 2009 edition of the Law360 Litigation Almanac, litigation in federal courts actually rose by 9 percent last year. (The full report, which was released Tuesday, is available for purchase here.) Employment, antitrust, and product safety cases saw the biggest increases, according to the report. Antitrust litigation, for example, was up 27 percent, thanks to plaintiffs firms pursuing cases against chocolate makers, egg processors, and packaged ice distributors, among others.

The firms retained for the most class actions in 2008, according to the report, were Morgan, Lewis & Bockius; Littler Mendelson; Greenberg Traurig; Jones Day; and Gibson, Dunn & Crutcher.

We were surprised at one of the report's findings: IP was one of the few practice areas that didn't see an increase in activity last year. According to Law360, there were 11 percent fewer IP suits in 2008, a decline the report attributes to a drop-off in copyright filings by the recording industry, which in December formally announced that it would no longer pursue its longtime strategy of suing copyright infringers.

Commercial / Elections
Black Tuesday for Randy Mastro: On the Same Day, the Gibson, Dunn Partner Loses Challenges to Both New York State and New York City

As The American Lawyer reports this month, Randy Mastro has a well-deserved reputation for taking on New York City's government (registration required). "It's not a surprising development," the Gibson, Dunn & Crutcher partner told the magazine. "Who better to know when government screws up than a former deputy mayor who happens to be a trial lawyer and a litigator?"

Certainly Mastro's experience can't be denied, but it doesn't guarantee victory. On Tuesday, Mastro had a bad day: He and his clients were handed two defeats challenging New York's city and state governments. In Mastro's suit against New York City, which attempted to reverse a law that would allow Mayor Michael Bloomberg and other elected officials to run for a third term this fall, Brooklyn federal district court judge Charles Sifton didn't buy the argument that the rights of New York voters, who voted for term limits in the nineties, had been infringed. According to The New York Times, Mastro said he and his clients would consider appealing. (We e-mailed Mastro but didn't hear back.)

Mastro also got bad news in a suit he filed in April against New York State on behalf of Amazon.com, challenging a law that requires some Internet retailers to collect taxes from New York residents even if the retailers don't have a physical presence in the state. Mastro's complaint contended that the statute violates the New York and U.S. constitutions. New York Supreme Court justice Eileen Bransten disagreed. In a decision made public Tuesday, she dismissed the Amazon suit. "There is no basis upon which Amazon can prevail," Justice Bransten wrote, according to a Reuters report.

Our call to Mastro about that decision was returned by an Amazon spokesperson, who declined to comment.

Law Firms / Securities
Grant & Eisenhofer Lures Rival Firm's Former Name Partner

Most firms wait until their founding partner dies before removing his name from the door. But not the securities class action shop now known as Barroway Topaz Kessler Meltzer & Check. The firm waited just nine months after its founding partner Richard Schiffrin had retired before it announced its new name.

This week Schiffrin showed his old partners that two can play at the moving on game. After only ten months in retirement--during which he worked as a national fundraiser for Senator Hillary Clinton's presidential campaign and began pursuing a graduate degree in political philosophy from the University of Chicago--Schiffrin is returning to the class action bar as of counsel at onetime rival Grant & Eisenhofer.

Schiffrin conceded Tuesday that from the outside, his move looks a little unusual. He said that he had no intention of returning to the law when he retired, but was intrigued by the idea of working with Jay Eisenhofer, with whom he developed a close friendship during the Tyco class action. Schiffrin told us he still has a lot of friends at his old firm and probably could have gone back there if he had wanted to.

"There are some people there that are probably unhappy" that he's joined Grant & Eisenhofer instead, Schiffrin told us. "But there are going to be opportunities to work together in the future." His old firm, he said, "is going to do just fine."

Schiffrin spoke to us from Copenhagen, where he and Eisenhofer are in the midst of a four-day, four-country European trip to visit old clients and prospect for new ones. Schiffrin said that at Grant & Eisenhofer he'll mostly be involved in client development and litigation strategy.

Darren Check, a name partner at Schiffrin's old firm, told us in an e-mail that he and other partners "remain close friends and colleagues" of Schiffrin, and wish him "nothing but the best of luck."

Appellate / Commercial
Ropes & Gray Wins First Circuit Affirmance of $113 Million Verdict for Research Hospital

It's been a long and winding road for a Massachusetts research hospital seeking compensation for its researchers' contributions to a drug for blindness, but the end is finally in sight. On Monday the U.S. Court of Appeals for the First Circuit affirmed the $113 million jury verdict that the Massachusetts Eye and Ear Infirmary won against the Vancouver-based biotech firm QLT Phototherapeutics, maker of the highly successful Visudyne drug.

MEEI and QLT have been battling over revenues from Visudyne sales for nearly a decade, with MEEI accusing QLT of unjust enrichment and unfair trade practices. QLT said Monday that it's reviewing the First Circuit's decision and considering its options.

In one bright spot for QLT, the appeals court vacated Massachusetts federal district court judge William Young's ruling awarding MEEI $14 million in attorneys' fees. (MEEI had submitted an application for more than $36 million in fees and costs!) But the court left open the possibility that MEEI may still be awarded the fees; it simply asked Judge Young to explain his reasoning for the fee award.

Richard Taranto of the appellate boutique Farr & Taranto argued for QLT. He was joined on the briefs by Donald Ware, Sarah Cooleybeck, and Jeff Bone of Foley Hoag, as well as Aaron Panner of Kellogg, Huber, Hansen, Todd, Evans & Figel.

Kenneth Herman of Ropes & Gray argued the appeal for MEEI. Ropes lawyers James Haley, Jr., Christopher Harnett, Karen Mangasarian, John Donovan, and F. Turner Buford joined him on the briefs.

Appellate / IP
Federal Circuit Upholds Application of Supreme Court's 'Well, Duh!' Ruling

Our colleagues at The Recorder aptly characterize the Supreme Court's 2007 ruling in KSR v. Teleflex, which allows judges to invalidate patents if they're deemed obvious, as the "well, duh" factor. On Monday, in a 14-page ruling, the Federal Circuit agreed that San Francisco federal district court judge William Schwarzer had appropriately applied KSR recedent decision in Friskit, Inc. v. Real Networks, Inc.

Friskit, a San Francisco start-up, claimed that Real Networks infringed its patents relating to a system for creating playlists of songs on a media player. But the Federal Circuit panel wasn't impressed with those patents. "Friskit may have predicted a business that would have proved profitable had its commercial embodiments remained competitive in the marketplace," they wrote. "That, however, is not a sufficient basis to overcome [the] strong prima facie showing of obviousness that was made in this case."

Charlie Verhoeven of Quinn Emanuel Urquhart Oliver & Hedges argued the case for Real Networks at both the trial court and the Federal Circuit. "We're happy to be on the cutting edge of this, helping to keep defendants from being held up with patents that never should have been issued," he told the Recorder.

Munir Meghjee of Robins, Kaplan, Miller & Ciresi argued the case before the Federal Circuit for Friskit.

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