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Ninth U.S. Circuit Court of Appeals Judge Harry Pregerson defended himself Tuesday against accusations that stock he owned created a financial conflict of interest in a pair of trademark cases he ruled on last year. A company called M2 Software Inc. had sought to vacate the rulings, but the 9th Circuit issued an order Tuesday denying the petitions, and Pregerson, who again sat on the panel, attached a concurrence noting that his financial interest in both suits is “remote in nature” and that his impartiality should not be questioned. The rulings are M2 Software Inc. v. Madacy Entertainment and M2 Software Inc. v. M2 Communications LLC. Los Angeles’ M2 Software filed a motion to vacate the two trademark rulings in July. The company, which makes online billing software for Internet music downloads, alleged that Pregerson violated judicial ethics rules in failing to recuse himself from the trademark suits because he held Time Warner stock at the time he considered the cases. M2 said Time Warner is the owner of one of the companies involved in the case and is a manufacturer of one of the alleged infringing products. But Pregerson said his Time Warner holdings should not prompt his recusal from the trial because the company was not party to the suit. According to Pregerson, Time Warner had an option, which it never exercised, to purchase up to 19.9 percent of Warner Music. Warner Music owns Warner Special Products, which manufactured, produced and licensed music for a division of Madacy, one of the parties to the suit. “I had an interest in a company (a) that had an option to purchase 19.9 percent of a company (b) that owned a company (c) that manufactured, produced, and licensed music for a corporate division of a party to this suit. Such an indirect interest does not require recusal,” he wrote in a concurrence appearing with both orders. Ninth Circuit Senior Judge Robert Beezer, another member of the panel, wrote a concurring opinion that did not address Pregerson’s stock ownership directly but concluded there was no reason to grant the petitions. “Nothing presented by M2 Software suggests perpetration of fraud, gross misconduct or that enforcement of the judgment would be manifestly unconscionable,” Beezer wrote. M2 attorney Mark Pettinari criticized the order. “The court disregards that Time Warner fully owned the music division prior to March 1, 2004, including during the periods of alleged infringement,” he wrote in a detailed e-mail on Tuesday. He also wasn’t comfortable with the same panel that had the alleged conflict deciding that it didn’t. “The court does not explain why they did not allow a new impartial judge or a different panel to decide this recusal motion,” he wrote. “If they are so certain that there is no conflict that required recusal, they should have had the motion addressed by a different judge or panel of the court – a procedure that is written into the statute (Section 144) at the district court level.” He later added that M2 is “definitely exploring the option of seeking rehearing en banc in both cases.” According to court briefs, M2 filed the motion to vacate Pregerson’s rulings because of a story in the Washington Post that revealed that Pregerson owned stock in Time Warner. The April 18 story named Pregerson as one of several judges who presided over lawsuits in which they had financial interests. The Post article used as an example a 2004 case Pregerson adjudicated involving AOL/Time Warner as defendant. Pregerson told the Post that he did not realize he had a conflict in the case because he originally bought stock in AOL before it merged with Time Warner. Pregerson’s 2004 and 2005 financial disclosure statements showed he owns up to $15,000 in stock in Time Warner. This article originally appeared in The Recorder, a publication of ALM.

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