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Slightly more than a year after a federal judge disqualified Brobeck, Phleger & Harrison from representing a high-tech company in a patent infringement suit against a former Brobeck client, the firm and four lawyers in its Austin office have been hit with a multimillion-dollar suit filed by that former client. Sigma Tel Inc. v. Brobeck, Phleger & Harrison, et al., filed on Feb. 23 in a state court in Austin, alleges that the firm and one of its partners, Carmelo Gordian, advised Sigma Tel that its audio codec chip wouldn’t infringe on similar technology developed by Crystal Semiconductor Corp. As alleged in the suit, Brobeck later represented Crystal in a suit against Sigma Tel claiming the former client willfully infringed the patent that Sigma Tel says Brobeck and Gordian had advised was free of infringement. “That’s a major no-no,” alleges Sigma Tel’s lawyer Broadus Spivey, of Austin’s Spivey & Ainsworth. “They just should not have done it.” The suit alleges that Brobeck — an international firm with offices in London and Munich, Germany, as well as around the United States — breached its fiduciary duty, was negligent and used deceptive trade practices. Named as defendants in addition to the firm and Gordian are S. Michael Dunn, Wayne M. Harding and Kevin S. Kudlac, other lawyers in the Austin office of Brobeck. Spivey says Sigma Tel of Austin seeks $300 million to $400 million in damages from the firm. Allan Whitescarver, spokesman for Brobeck, says the approximately 950-lawyer firm opened its Austin office in 1994 — the year before it represented Sigma Tel. Karen Johnson-McKewan, managing partner in Brobeck’s San Francisco office, says the firm has not done anything wrong and didn’t advise Sigma Tel regarding the infringement issue. “We absolutely deny it. We did not render such advice. We were never even asked for that advice,” Johnson-McKewan says. She says the firm represented Sigma Tel in obtaining financing and did not give the company advice on its business. “I think we’re just being held up,” Johnson-McKewan says, adding that the slump in the high-tech field may have prompted the suit. “Sometimes people use litigation as a way of fund-raising. This may be one of those instances,” Johnson-McKewan says. To that, Spivey replies, “I don’t file suits to hold people up.” Spivey cites the order issued by U.S. District Judge Sam Sparks of Austin in December 1999 that disqualified Brobeck in Crystal Semiconductor Corp., et al. v. Sigma Tel Inc. “Judge Sparks’ order speaks awfully loudly,” he says. IN DISAGREEMENT According to Sparks’ order, Brobeck represented Sigma Tel for less than three months beginning on March 21, 1995. Sigma Tel alleged that the technology at issue in Crystal’s suit was developed during that period through a development and license agreement with Dallas Semiconductor Corp., the order said. Sigma Tel also alleged that during the course of the litigation, Brobeck’s lawyers had “extensive conversations” with Spence Jackson, the company’s chief executive officer and founder, about the design of the technology, Sparks said in the order. The order said Sigma Tel claimed that it agreed to a broad indemnification clause in its agreement with Dallas Semiconductor based on Brobeck’s representations that its technology would not infringe on Crystal’s patents. Brobeck attorneys also assisted Sigma Tel in securing financing and reviewed the company’s records, the order stated. In the order, the judge noted that Brobeck’s billing records reflected that eight of the firm’s lawyers worked on Sigma Tel matters. The records show that at least some of the hours billed to Sigma Tel involved conferring on patent matters, the order said. The order said Brobeck claimed that William Hulsey, an attorney at Baker Botts, did Sigma Tel’s patent work. But Sparks noted that Gordian represented to Austin Ventures, a firm from which Sigma Tel was seeking venture capital, that the technology in question was non-infringing based, at least in part, on Hulsey’s report. “Mr. Gordian’s testimony that, although he was charging Sigma Tel over $200 per hour, he did not suggest that Mr. Jackson obtain a patent analysis and he did not review the Hulsey letter or offer an opinion on its contents but merely acted as a conduit and forwarded the letter to Austin Ventures, is wholly unbelievable,” Sparks wrote. Gordian did not return two phone calls from Texas Lawyer. Steve Zager, managing partner of Brobeck’s Austin office, says Johnson-McKewan is the only one who can speak for the firm regarding litigation. “We vigorously disagree with the judge’s conclusions,” Johnson-McKewan says of Sparks’ order. Johnson-McKewan also says that Brobeck does not believe that the judge’s conclusions are binding against the firm. The order was issued in a case in which the firm wasn’t a party, she says. Spivey says Sparks’ order lays the predicate for Sigma Tel’s allegations. The order said Gordian or Dunn should have reviewed the Sigma Tel files and instructed Harding and Kudlac, who were new to Brobeck at the time, to decline to represent Crystal. By continuing its representation of Crystal after being made aware of the conflict, “Brobeck has willfully violated its duty of loyalty to Sigma Tel,” Sparks said. The suit came as a surprise, Johnson-McKewan says, because if Sigma Tel “had some gripe,” it was resolved when Sparks removed Brobeck from the case. The two high-tech companies at the center of the controversy have concluded their legal fight. Spivey says Sigma Tel and Crystal reached a settlement covered by a confidentiality agreement.

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