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November 26, 2008 9:00 AM

The Am Law Litigation Daily: November 26, 2008

Posted by Ed Shanahan

Edited by Ben Hallman

IP
In Game of Deal or No Deal with Samsung, InterDigital Takes the Deal

The wireless tech company InterDigital will probably never know how the International Trade Commission would have ruled in its patent infringement case against the oft-sued Samsung. Late Monday, the day before the ITC was to issue a determination on InterDigital's claims, the company announced a licensing deal with Samsung that will end the litigation when Samsung makes its first payment in January. The two companies didn't disclose the terms of the deal, but The Wall Street Journal quoted an analyst who estimated its value for InterDigital to be $400-500 million over the next five years.

And believe it or not, Samsung considers that a very good outcome. "From Samsung's perspective, they're quite happy with the arrangement," said Samsung counsel Matthew Powers of Weil, Gotshal & Manges. Powers told the Litigation Daily that the July 2008 evidentiary hearings on InterDigital's claims "went extremely well for Samsung." (We checked: Neutral observers agreed with that assessment.)

So with the ITC determination scheduled to be released November 25, Samsung had some leverage in negotiations with InterDigital--especially because InterDigital has a similar case against Nokia pending at the ITC. With Monday's settlement, InterDigital avoids the possibility of an adverse ruling that could affect the Nokia litigation.

InterDigital spokesman Jack Indekeu told us the company "feels very comfortable with our decision." In InterDigital's press release, CEO William Merritt said the settlement "reflects well on the strength of our patent portfolio and our ability to design flexible deal structures." (For an in-depth look at InterDigital's patent strategy--which Merritt designed when he was the company's GC--check out this story from IP Law & Business.)

InterDigital's lead counsel on both the Samsung and Nokia cases is Finnegan, Henderson, Farabow, Garrett & Dunner. Wilson Sonsini Goodrich & Rosati; Wilmer Cutler Pickering Hale and Dorr; and Volpe and Koenig were also involved in the Samsung litigation, along with in-house lawyers Larry Shay and Andy Isztwan.

Samsung's counsel, in addition to Powers, included Weil lawyers Steven Cherensky, Anne Cappella, Sonal Mehta, and David Southard. According to Powers, Monday's settlement, if it is executed as expected in January, will resolve all of Samsung's litigation with InterDigital.

In InterDigital's ITC case against Nokia, which is scheduled for an evidentiary trial in the spring of 2009, Nokia is represented by Alston & Bird. Quinn Emanuel told us it also "represents Nokia" but declined to specify its role in the ITC litigation.

--Alison Frankel

FCPA
Violators Gonna Feel the SEC's Sting

A few weeks ago we told you about our trip out of the office to a provocative panel discussion about one of the fastest-growing areas of litigation: Foreign Corrupt Practices Act investigations. The panel moderator, Bruce Yannett of Debevoise & Plimpton, caught our attention when he said that one of the scariest aspects of the FCPA is a provision that gives the SEC global jurisdiction over companies listed on exchanges in the United States.

This week The National Law Journal reports on another trend likely to give Yannett and his fellow FCPA practitioners night sweats: The SEC is promising to slap violators with larger penalties. "The dollar amounts in cases that will be coming in the next short while will dwarf the disgorgment and penalty amounts that have been obtained in prior cases," Scott Friestad, the SEC's deputy director for the enforcement division, told the NLJ. Scary, right?

Another twist, according to the NLJ: Friestad recently told a group of attorneys gathered for an SEC presentation that a "significant" number of new cases involve violations not self-reported by the defendant companies, a shift from how cases have usually begun in the past.

What does the SEC mean when it says big money? FCPA lawyers are paying particularly close attention to the German conglomerate Siemens A.G., which in 2006 disclosed that it had paid more than $1 billion in bribes to help the company win orders. (Global correspondent Michael Goldhaber wrote an American Lawyer story about the investigation in May.) Siemens recently said it is putting aside $1.3 billion in preparation for settling the case--a sum that would easily surpass the record-setting $44.1 million FCPA fine that oil and gas company Baker Hughes Inc. paid last year.

ENVIRONMENTAL
Federal Judge to Auto Industry: You're Outta Here!

As if the auto industry didn't have enough problems, on Tuesday a federal judge in Providence dismissed the carmakers' challenge to state vehicle emissions laws in Rhode Island. The ruling follows similar defeats in California and Vermont last year.

In a 28-page opinion, Judge Ernest Torres struck down claims filed by General Motors, Chrysler, and two trade organizations--the Association of International Automobile Manufacturers (AIAM) and Alliance of Automobile Manufacturers (AAM)--on the grounds that they had already had their day in court in California and Vermont.

Last week, as The Am Law Daily reported, environmental lawyers said automakers shouldn't receive the $25 billion in federal bailout money they sought unless they dropped civil suits claiming that state emissions laws are preempted by federal clean air standards. Yesterday those lawyers cheered the Rhode Island ruling. "The automakers have now lost three cases in a row in their nefarious campaign to drive up greenhouse gas emissions," said Matthew Pawa, who is outside counsel to three environmental groups--the Environmental Defense Fund, National Resources Defense Council, and Sierra Club--involved in the state emissions suits.

Kirkland & Ellis partner Andrew Clubok and Gibson, Dunn & Crutcher partner Raymond Ludwiszewski (a former general counsel of the Environmental Protection Agency) were lead counsel for the auto industry in Rhode Island. Neither was immediately available for comment.

--Brian Baxter

ALIEN TORTS
Jury to Decide Whether Chevron Is Liable in Deaths of Nigerian Villagers

Will a U.S. oil giant be held liable for human rights abuses carried out by the military of a foreign government? That was the question before a jury as it began deliberations yesterday in a case in San Francisco federal district court.

According to Daphne Eviatar at The Am Law Daily, the Nigerians, represented by Dan Stormer of Hadsell, Stormer, Keeny, Richardson & Renick of Pasadena, allege that Chevron, in conjunction with the Nigerian government, was involved in assaulting and torturing protesters challenging the company's hiring practices and environmental record. Chevron, represented by Jones Day partner Robert Mittelstaedt, claims that the supposed protesters were actually engaged in a scheme to extort money by holding Chevron employees hostage.

The suit--based on the Alien Tort Claims Act--has potentially wide-reaching implications for corporations operating in politically explosive regions around the world. Federal district court judge Susan Illston, in an earlier ruling in the case, said the plaintiffs had presented sufficient evidence that Chevron personnel "were directly involved" in the attack on protesters because they transported Nigerian soldiers despite knowing that the soldiers were "prone to use excessive force." Illston ruled that the evidence could lead a jury to conclude that Chevron was complicit in the military's scheme to break up the protest.

In addition to Hadsell Stormer, the Nigerian plaintiffs are represented by a broad swath of private firms and public interest organizations, including The Center for Constitutional Rights; EarthRights International; Traber & Voorhees; Siegel & Yee; Schonbrun DeSimone Seplow Harris & Hoffman; and the Law Offices of Judith Brown Chomsky.

REGULATORY
Pardon Me? Meet Ronald Rogers, Justice's Pooh-bah of Pardons

Historians will write that George Bush sought to expand the power of the executive branch to a degree never before seen in American history. But when it has come to exercising at least one constitutionally guaranteed power--the almost unfettered and occasionally abused right to pardon anyone convicted by U.S. law--Bush has shown remarkable restraint.

According to Department of Justice statistics, Bush has pardoned 171 people since he took office, less than half the number of pardons Bill Clinton granted during his presidency. (Bush has also commuted six sentences, including that of former Dick Cheney aide Scooter Libby). Among the 171 pardons are a handful Bush issued this week to 14 mostly undistinguished felons, including John Edward Forté, a Grammy Award-winning Fugees producer who was arrested at Newark International Airport in 2000 holding a briefcase containing 31 pounds of liquid cocaine. Forté, who was sentenced to 14 years in prison, will instead be released next month. ("For the heads, we ain't sellin' cocaine today / So refrain and let my family reign okay"--Fugees, "Family Business.")

How did Forté win a pardon? According to news reports, he found powerful allies in Senators Ted Kennedy and Orrin Hatch, and an advocate in pop singer Carly Simon. But for his name to reach the president's desk, he also had to follow protocol, and that means starting with the gatekeeper--Ronald Rogers, the pardon attorney for the Department of Justice. Rogers has served as a Justice prosecutor since 1999, though he has been on the job as pardon attorney since just March. His previous role was director of the criminal division's narcotic and dangerous drug section. (Not exactly the resume of someone who would approve of voiding an intent-to-distribute charge, one would think, but what do we know?)

So far, more than 8,000 individuals have applied for a Bush pardon. (Guidelines for applying for a pardon or clemency can be found here.) Forté, to our knowledge, is the only hip-hop impresario on the list, but there are plenty of the usual assortment of political and corporate ne'er-do-wells. They include: Randy "Duke" Cunningham, a former Republican congressman from California who was jailed for eight years in 2005 after he pleaded guilty to taking more than $2 million in bribes; Edwin Edwards, the four-time Louisiana governor who was sentenced to ten years in 2001 for racketeering; Michael Milken, the billionaire financier responsible for the demise of Drexel Burnham, who served two years in prison from 1989 after admitting securities fraud charges; and Conrad Black, the media tycoon who is serving six years in a Florida jail for fraud and obstructing justice.

Recent history shows that the pardons process can be fraught with danger for Justice careerists. We took the opportunity to crow a little bit last week when news broke that Covington & Burling partner Eric Holder would be nominated attorney general in the Obama administration--you know by now that we predicted as much in a June cover story. But in the unlikely event that Holder's nomination is spiked, a pardon will be to blame. In an opinion piece in Saturday's New York Times, former Washington Post reporter George Lardner, Jr., urged more scrutiny of Holder's role in the pardon of fugitive financier Marc Rich. "[Holder] brokered one of the most unjustifiable pardons that an American president has ever granted," wrote Lardner.

So will Bush take a chance that a pardon will damage the reputation of someone in his administration? We aren't offering odds, but we do have one sure bet. Since 1989, the sitting president has issued a formal pardon to the Thanksgiving turkey given to the White House by the National Turkey Federation. Instead of being carved for dinner, the turkey is sent to a park in Virginia. This is good for the turkey that is spared, but as Governor Sarah Palin of Alaska--remember her?--recently learned, most turkeys aren't so lucky. (Warning: This video of Palin at the turkey farm is not for the squeamish.)

So there you have it. At least one turkey will go free. It's up to Bush to decide whether to pardon any more. Happy Thanksgiving.

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You have it backwards with IDCC and SAM.

Samsung was on the ropes. Having lost every legal battle against IDCC, the ITC battle would have been no different. You don't seem to understand that IDCC has the IP and the legal wherewithal to make everyone pay.

If Samsung could have delayed any longer, they would have. That is all that they've been doing for 5+ years. A strategy of legal delay in hopes that IDCC would go out of business, but with Apple, Research In Motion (BlackBerry), LG, the US Government, every Japanese cell phone manufacturer recognizing and paying IDCC, it was just a matter of time before IDCC had Samsung against the ropes where they could not possibly delay any longer.

No, IDCC didn't take the deal. Samsung was forced to take the deal or have their phone banned from the US.

Not too well informed, are you?

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