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Getting in on one of the hot intellectual property issues of the day, San Francisco’s Brobeck, Phleger & Harrison won a beauty contest to represent Streamcast Networks Inc. in litigation with the entertainment industry. Eight movie studios and 20 record labels sued Streamcast, creator of the peer-to-peer file-sharing software Morpheus, for copyright infringement in October. Andrew Bridges, a partner at Wilson Sonsini Goodrich & Rosati in Palo Alto, Calif., had represented Streamcast until May when he filed a motion to withdraw from the case. “Streamcast told me they could not afford the burn rate on the litigation,” Bridges said. “I withdrew for financial reasons.” A spokeswoman for Franklin, Tenn.-based Streamcast said attorney fees were projected to exceed more than $1 million per month. She said Brobeck’s litigation expertise — particularly in IP — made the firm attractive. Looking for new counsel, the company asked several firms to make a presentation on their ability to tackle the case. They selected the Brobeck team led by Austin, Texas, partner Charles Baker. Baker said cost was a major concern for Streamcast. “We were very flexible on this,” he said. “We wanted the case. It’s cutting-edge, high-profile.” While the firm is charging its normal hourly rate, he said Brobeck has a “creative arrangement with the client.” He declined to say what the arrangement is, but added that Brobeck has worked out creative terms in the past, especially with technology clients. David Hayes, head of Fenwick & West’s IP group, said it’s not unusual for firms to work out an alternative pay arrangement. In the past, he said, firms have done such things as take equity in a client as part of the fees or have the client pay a piece of the billable rate — and if they win the case, then pay a premium. Sometimes if a firm is not involved in a particular area of law, Hayes said, such arrangements are “a way to have a visible case they think is hot.” The entertainment industry filed suit against Streamcast (which was then named MusicCity.com Inc.), Grokster Ltd. and Consumer Empowerment BV claiming that, like Napster Inc., they were providing the means for copyright infringement. The case, Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., 01-8541, is pending in U.S. District Court in Los Angeles before Judge Stephen Wilson. The suit has been consolidated with a class action against the companies by music publishers and songwriters. Streamcast claims that its software is protected under the Sony Betamax case — Universal City Studios Inc. v. Sony Corporation of America Inc. — in which the U.S. Supreme Court found that the Betamax videocassette recorder did not infringe copyright since it was capable of substantial non-infringing uses. Wilson decided to hear arguments on the Betamax defense. Baker said the judge also indicated that he might be willing to certify the question to the 9th U.S. Circuit Court of Appeals so that either side may immediately appeal his ruling on the issue. A trial date on the case is set for Oct. 2. The Streamcast suit is one of several copyright disputes that have arisen since the advent of the Internet. On one side are companies like Napster and Streamcast, which provide software to enable consumers to swap music files online. On the other side are record companies, music studios and other content owners who say technology is being used to steal their copyrighted works. Baker said he has previously handled software copyright disputes and was able to “put together a package of lawyers” attractive to Streamcast. The legal team includes Brobeck IP litigator John Benassi, in the firm’s San Diego office.

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