Legal Pad

Valley's Lateral Market Finally Heats Up

Chaikovsky

We have been hearing that after a long recession, Silicon Valley law firms are once again going hard after their competitors to hire lateral partners.

After IP litigator Yar Chaikovsky quietly (hah!) left Sonnenschein for McDermott Will & Emery, we have more proof. Two IP litigators from Mintz Levin in Palo Alto are headed over to K&L Gates. Bryan Sinclair and Karineh Khachatourian are joining the enormous merger-happy nation of a law firm that is K&L Gates, our sources tell us. The pair of IP litigators joined Mintz in 2008, leaving behind the dying Silicon Valley office of Buchanan Ingersoll & Rooney.

Sinclair and Khachatourian are currently working on a furniture trademark case over the famous Barcelona chair, as well as some contract cases for Phoenix Technologies, according to a brief search of the local docket. Khachatourian is also president of the Women’s Intellectual Property Association.

The new hires will bring K&L Gates’ Palo Alto office to 18 lawyers. The attorneys involved in the move said they couldn’t comment.

— Zusha Elinson

Sonsini, Feldman to Host Shindig for Carly Fiorina's Senate Run

GOP kingmakers? Sonsini, Feldman.

Don’t think that Wilson Sonsini is just a bunch of Democrats run amok, what with John Roos becoming Obama’s ambassador to Japan. The most powerful man at the firm, Larry Sonsini himself, is an out-and-out Republican. And tonight he and another powerful Wilson partner, Boris Feldman, will be hosting a fundraiser for Carly Fiorina, former HP CEO and apparently the Republicans’ best chance at taking down three-term California Senator Barbara Boxer.

Sure, Fiorina is richer than God, but doesn’t seem like she’s got much of a chance against Boxer, a California fav who usually wins by a landslide. Still it can’t hurt to have friends like Sonsini and Feldman. Says a Fiorina campaign staffer: “Both are long-time friends of Carly’s, and she is grateful for their support.”

Feldman, a securities litigator and the Annie Leibovitz of Silicon Valley, has always been a staunch Republican. Sonsini has too, donating money to the presidential campaigns of W, Rudy Giuliani and, finally, John McCain. But Sonsini also has a soft-spot for local Democratic congresswoman Anna Eshoo. As in many previous years, he has once again turned his pockets inside out for her. And Eshoo has always repaid the kindness. Remember the congressional hearings on the HP pre-texting scandal?

— Zusha Elinson

Blogger Files Suit Claiming Theft of Gizmo Idea

Loud Silicon Valley blogger Mike Arrington has now filed a lawsuit against the company that took his allegedly brilliant idea for an Internet-surfing tablet called the CrunchPad.

The suit, filed by Winston & Strawn's Andrew Bridges, can be viewed right here (.pdf). Earlier this week, we told you about the dispute between the TechCrunch blog founder and Fusion Garage, a Singapore company that was working with Arrington to build the device, but then cut Arrington out right before launching it under the name Joo Joo.

The suit levels accusations of trademark infringement and misappropriation of "business ideas" as well as fraud and deceit. Legal observers told Legal Pad that Arrington would have a hard time winning the case if there was no contract between the parties, as Fusion Garage's founder claimed in interviews. And indeed, the complaint doesn't mention any contract between the two to develop the CrunchPad.

But Bridges told us that there are other documents that do the job: "The complaint certainly refers to written materials that discuss agreed terms," Bridges said.

Those would be emails between Arrington and Fusion Garage CEO Chandrasekar Rathakrishnan talking about how they would soon be officially merging. Chandrasekar also spent time working with the TechCrunch people right in the blog's office.

Bridges said he didn't know whether Fusion Garage had retained a lawyer.

— Zusha Elinson

Fenwick Lawyer Trolls For Change at Federal Circuit

It was a good Friday for Fenwick & West’s Charlene Morrow, who got client Hewlett-Packard out of a jam and caused the Federal Circuit — the high court of patent case appeals — to move the needle a little toward companies who want to squash patent trolls before they get started.

Morrow was arguing that a declaratory judgment action her client HP had filed against patent holder Acceleron shouldn’t have been tossed by the district court in Delaware. What happened is that Acceleron sent a vaguely threatening letter to HP about a patent it had (the letter can be read, along with the opinion, here: (.pdf )

HP filed an action in Delaware, asking the court to rule that it didn’t infringe on Acceleron’s patents and that the patents were invalid. But Acceleron protested that it hadn’t even really threatened HP, so there was no reason to judge anything declaratorily. “At the time HP filed its complaint, Acceleron could not have asserted its rights in the ’021 patent against HP because it had not even determined if it had a basis to assert the patent against HP,” Acceleron’s lawyers from Alston & Bird wrote. Delaware Judge Sue Robinson agreed and tossed the suit.

Then the reversal, suggesting trolls have less appeal …

Canopy Could've Been Saved With a Little Less Conversation

Who turns out to be the hero in the Canopy Financial mess? The young general counsel, Daniel Stevenson, who’d recently quit Wilson Sonsini to join what seemed like a promising startup.

The SEC office in Chicago charged Canopy and its COO, Jeremy Blackburn, yesterday for forging financial statements to impress potential investors like Spectrum Equity, which pumped $75 million into the healthcare savings account software company.

But the really interesting part of the complaint is where it talks about Stevenson’s somewhat accidental role in uncovering the fraud. The SEC says in its complaint (.pdf) that this month Stevenson began a search for a chief financial officer and contacted a buddy at accounting giant KPMG about possible candidates. The GC sent along what “he understood were the KPMG Audit Report and “Canopy’s audited financial statements” to his KPMG acquaintance.” But, it turned out that KPMG didn’t actually do the audit! (Cue Paul Hastings for the internal investigation!)

The accounting firm sent Canopy a “cease-and-desist” letter Nov. 3, saying it hadn’t been hired by Canopy, nor done the audit. Instead, the SEC alleges, the audit report was the handiwork of Blackburn — and the SEC says it has evidence showing that Blackburn told another Canopy exec to lie about the report.

The moral of the story is this: Your accountant friends may be kinda boring, but it’s good to keep them around. Because in Silicon Valley, everything comes down to who you know.

— Zusha Elinson

Shut-Out Corporate Lawyer from Fish Finds New Job at McDermott

Prospects weren’t looking so good for life sciences attorney Paul De Stefano at his old firm, but he's found a new one in McDermott, Will & Emery.

Fish & Richardson, his home base for the past six years, has been telling its corporate lawyers that it was returning to its roots in IP litigation. By September, it was official: The corporate practice was out.

He says the writing was on the wall before that, though, after the jump ...

Mess with Apple, Get Bitten for $2.7 Million

The fight between Psystar — maker of "Hackintoshes," or Mac clones — and Apple has been mostly settled.

The sides announced in court papers (Apple.pdf) (Psystar.pdf) yesterday and today a partial settlement with Psystar agreeing to a $2.7 million judgment. 

The dispute centered around whether Psystar can sell its cheap computers loaded with Mac’s operating systems. Apple claimed it was a copyright violation, while Psystar claimed that Apple is cornering the market on Mac software by only allowing it to be used on Macs. Those antitrust claims didn't go so well.

The judgment will be entered against Psystar on copyright infringement and breach of contract. Although the two sides are still fighting about an injunction.

The winning lawyer? Townsend and Townsend and Crew chairman Jim Gilliland. The loser? Kiwi Camara, who is famous for having lost the first file sharing case to go to jury (update: sorta; see first comment below).

— Zusha Elinson

Paul Hastings to Look Under the Canopy ...

The Canopy Financial startup scandal that broke just before Thanksgiving is continuing to unfold after taking a break for some turkey and cranberry sauce.

Legal Pad has learned that Paul Hastings is doing the internal investigation at Canopy, a once-promising healthcare software company that’s accused of making up financial statements.

Ismail Ramsey: The lawyers were "duped," too, after the jump …

Trademark Fight Draws a Line on Sand Hill Road

A legal battle for the trademark rights to the very heart of Silicon Valley is under way. Sand Hill Advisors, the Palo Alto wealth management company, is suing Sand Hill Advisors, the commercial real estate company in Los Altos, for trademark infringement. Confusing!

For the three people who are still unaware, Sand Hill Road is the iconic stretch of pavement near which the sainted feet of venture capitalists tread daily to their places of work.

Sand Hill Advisors, the wealth management one, claims it’s been using the mark since 1995 and that its alleged namesake has been profiting off the use of the name since 1999. The complaint (.pdf) was filed by Shartsis Friese lawyers in San Francisco.

Well, Sand Hill Advisors may have picked the wrong Sand Hill Advisors to pick a fight with because Sand Hill Advisors, the commercial real estate one, is NOT GOING TO SETTLE.

Fight! Fight! Remember, folks, absolutely no wagering! Just click for the jump …

Bruce Sewell Picked an Interesting Time to Quit Intel

Former Intel GC Bruce Sewell left his company at perhaps the most important moment in his company's legal history.

Negotiations in today's historic $1.25 billion settlement between chip rivals AMD and Intel started getting really serious after Labor Day. And then just two weeks later, Sewell was out the door to take the highly coveted position as Apple's GC.

Lawyers involved in the negotiations on the AMD side said that Sewell leaving didn't create any major problems — and they even praised Sewell for his work while at Intel. But AMD's outside counsel, Chuck Diamond at O'Melveny & Myers, said it was a sign of how bad Intel's case was.

"If Bruce was confident that he was going to come out OK at the other end, I don't think he would’ve left," Diamond said.

Sewell's replacement is an antitrust expert from WilmerHale, Doug Melamed. CalLaw has stories going up tonight about the settlement and Melamed’s hiring.

— Zusha Elinson