February 10, 2009 9:00 AM

The Am Law Litigation Daily: Feb. 10, 2009

Posted by Andrew Longstreth

IP
Obama Poster Case Is Rematch for Ex-Bingham Partner Falzone and O'Melveny's Cendali
When an artist creates an iconic poster using a photograph taken by someone else, who owns the work? Shepard Fairey, the artist and guerilla marketer who designed the ubiquitous, two-toned "Hope" poster of President Barack Obama, has an answer: the artist. On Monday, Fairey sued The Associated Press in Manhattan federal district court, seeking a declaratory judgment that his use of an Obama photograph taken by AP photojournalist Mannie Garcia falls within fair use boundaries.

Last week the AP published (in a story about the Fairey poster) a statement contending that Fairey's portrait infringed the news agency's copyright. The AP, the statement said, believed it should be compensated for the use of its photograph.

The case will be a rematch for Fairey's counsel--former Bingham McCutchen partner Anthony Falzone, who's now executive director of Stanford Law School's Fair Use Project--and AP lawyer Dale Cendali of O'Melveny & Myers. Last spring the two were on opposite sides of a trial involving a Harry Potter fan's attempt to publish a Potter lexicon. (Cendali, representing Potter author J.K. Rowling, successfully blocked publication.)

This time around Falzone will also have Stanford Law professor Mark Lemley (of the newly formed IP litigation boutique Durie Tangri Lemley Roberts & Kent) with him. O'Melveny partner Claudia Ray is working with Cendali.

On a side note, Fairey was arrested Friday in Boston on his way to an opening party for a retrospective of his work. Not for copyright violations, though: He had two outstanding warrants for cases involving illicit posting of street art featuring Andre the Giant and the word "obey." Jeffrey Wiesner of Boston's Stern Shapiro Weissberg & Garin is representing Fairey in the criminal case.

--Ross Todd

Antitrust
Justice Department Releases Edited Versions of Amnesty Agreements
What does a successful antitrust amnesty agreement look like? Until last week, that was a bit of a mystery. The government's policy used to be that it would share only a "model letter" that discussed the principles it applied in antitrust amnesty deals. But on Thursday, according to Sue Reisinger at Corporate Counsel, the Justice Department released 100 antitrust agreements as part of a Freedom of Information Act suit brought by White & Case.

No seismic shocks will come from the documents. The best details, including the names of the parties, have been redacted, reports Reisinger. But White & Case partner J. Mark Gidley, who negotiated the FOIA settlement, told Reisinger that antitrust lawyers can glean good information from the agreements, which he said "show deviations from the model amnesty letter in terms of privilege waivers and coverage of subsidiaries."

Other antitrust attorneys, however, wonder if the White & Case FOIA suit may backfire on practitioners. Jones Day partner John Majoras told Reisinger he worries that the release of the agreements may end up stifling prosecutorial discretion. "If DOJ now says, 'We're just using the model letter,' then that's unfortunate for a company," he said.

Appellate / Product Liability / Mass Torts
Should Chief Justice (and Pfizer Shareholder) John Roberts Recuse Himself in Wyeth Preemption Case?
While we anxiously wait for a decision from the Supreme Court in the biggest business case of the term, Wyeth v. Levine, Tony Mauro of Legal Times poses an interesting question: Should Chief Justice John Roberts, Jr., recuse himself from deliberations? After all, Roberts owns stock in Pfizer, which recently agreed to buy Wyeth for $68 billion.

Roberts has stepped aside in previous Pfizer cases, according to Mauro. But the Court heard arguments in Levine back in November, and the chief justice may have made up his mind before the Pfizer acquisition was announced. Moreover, Pfizer's Wyeth deal won't be completed until July 31 at the earliest, according to a recent letter submitted by Wyeth's lawyer, Seth Waxman of Wilmer Cutler Pickering Hale and Dorr. In that letter (available here, via the Drug and Device Law blog), Waxman said that the proposed merger did not require Wyeth to update the corporate disclosure statement it made to the Court last year.

Mauro speculates that Roberts could shed his Pfizer stock to avoid the recusal issue. Or he could stay on the case. "Either way," Mauro writes, "it will be an interesting test of whether news of an acquisition--even before it occurs--will affect justices' recusal practices."

Securities
UBS and the Foreign Plaintiffs: An 'F-Cubed' Class Action Story
The Litigation Daily admits to an unaccountable (and possibly unhealthy) fascination with the F-cubed issue in securities class actions. So we're closely following the UBS AG case in Manhattan federal district court, in which investors, in the wake of the bank's $48.6 billion write-down on its mortgage-backed securities, claim that UBS issued false and misleading statements about its risk management controls, its exposure to risky assets, and the value of the securities on its books. Last week the plaintiffs filed a response to UBS's motion to dismiss claims brought by foreign plaintiffs who purchased UBS shares on foreign exchanges.

UBS, represented by Robert Giuffra of Sullivan & Cromwell, had argued that the court lacked subject matter jurisdiction over the foreign plaintiffs. The bank pointed to the Second Circuit's decision last year in Morrison v. National Australian Bank, Ltd., in which the court affirmed the dismissal of a securities fraud suit brought by foreign plaintiffs who purchased shares on a foreign exchange.

In their response, lawyers for the plaintiffs argue that the foreign plaintiffs should be included in the proposed class because, among other things, UBS's alleged activity in the U.S. "directly caused foreign plaintiffs' losses." They also tried to distinguish their case from NAB, arguing that the UBS foreign plaintiffs, unlike their NAB counterparts, did not rely exclusively "on the falsity of financial statements prepared in [a foreign country] by a foreign issuer," they wrote.

Co-lead counsel for the plaintiffs are Barroway Topaz Kessler Meltzer & Check; Grant & Eisenhofer; and Motley Rice. Coughlin Stoia Geller Rudman & Robbins is liaison counsel.

Securities
Kasowitz Benson Files Auction-Rate Securities Suit for American Eagle Against Citigroup
Long live the auction-rate securities scandal! Just as state and federal regulators appear to be wrapping up their investigations into banks that promoted the securities as safe and liquid investments even as the market for them had dried up, private litigation continues. The latest entrant is American Eagle Outfitters. The apparel company filed a suit in Pittsburgh federal district court last week against Citigroup, alleging that the bank induced it to buy auction-rate securities when Citigroup knew the market for them was collapsing.

American Eagle's complaint cites internal Citigroup e-mails and memos showing that as the market for auction-rate securities imploded in December 2007, Citigroup sought to "offload" them to its customers, including American Eagle. According to the suit, Citigroup allegedly made internal plans to stop supporting the auction-rate securities market at the same time it was promoting the securities to its customers.

The retailer claims that it holds approximately $258 million of the illiquid securities. A Citigroup spokeswoman declined to comment to The Associated Press.

American Eagle is using Kasowitz, Benson, Torres & Friedman in the ARS suit, proving once again that this is a good time to be a litigation boutique that's free to sue big banks.

Appellate / Sports
Watch It Live: Barry Ostrager and Maureen Mahoney to Argue America's Cup Case
As Litigation Daily readers know, another of our unaccountable passions is the litigation surrounding the 33rd America's Cup. (Click here and here for our previous coverage.) On Tuesday at 2 p.m., we'll be able to watch it unfold live. The New York Court of Appeals (the state's highest court) is planning to Webcast oral arguments in the case of Golden Gate Yacht Club v. Société Nautique De Genève, which will determine the challenger of record for the next America's Cup, scheduled for 2010.

Given the legal talent involved, it should be worth watching. Appellate ace Maureen Mahoney of Latham & Watkins will be arguing for the Golden Gate Yacht Club, whose BMW Oracle Racing team claims that it is the rightful challenger for the Cup. Barry Ostrager, head of the litigation department at Simpson Thacher & Bartlett, will be arguing for the current holder of the Cup, Société Nautique de Genève, whose Alinghi syndicate chose Club Nautico Espanol de Vela as the challenger of record for the 2010 race. David Rivkin of Debevoise & Plimpton, who represents Club Nautico Espanol, will also be allotted time during oral arguments at the court of appeals. Right now, Ostrager and Rivkin have the upper hand: In July the New York State Supreme Court issued a 3-to-2 ruling in favor of SNG.

For a nice backgrounder on the fiercely fought litigation, check out this piece from Monday's International Herald Tribune.

Edited by Andrew Longstreth

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