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While a trade secrets lawsuit between two Silicon Valley semiconductor companies awaits review by the California Supreme Court, a key piece of potential evidence remains in legal limbo as attorneys fight over whether it’s protected by the attorney-client privilege. At issue is whether the high court’s decision to hear the case automatically reinstates an earlier trial court’s preliminary injunction against using the evidence — even though an appeal court later overturned it. The dispute stems from an August 2001 voicemail message that a group of high-ranking Marvell Semiconductor Inc. officials — including the firm’s general counsel — left on the answering machine of a Jasmine Networks Inc. executive. The two rival companies were in the middle of a sales deal in which Marvell was offering to buy some of Jasmine’s technology and acquire a group of engineers. But after leaving a phone message, Marvell officials failed to hang up, and Jasmine’s voicemail system continued to record the conversation. Jasmine sought to use the voicemail recording in its trade secrets case against Marvell in Santa Clara County Superior Court, arguing that it detailed a plot by Marvell to steal information and hire away employees. “If we took that IP on the pretense of just evaluating it, and put it in our product … ” a Marvell engineer is heard saying on the tape, according to a transcript included in court documents. “ Once the deal closes, it’s fine, but if they realize what they’re doing, they could hold out for more. Use it as leverage, use it as blackmail.” In response, Marvell argued that the content of the recording was protected by attorney-client privilege. In January 2002, Superior Court Judge Thomas Cain eventually ruled in favor of Marvell, writing, “There exists an overriding interest in protecting the privileged communications that overcomes the right of public access to the records.” Cain sealed the transcript as well as 46 other documents, including Jasmine’s original trade secrets complaint. In the midst of the dispute in 2003, Michael Malter, a partner with Binder & Malter, helped Jasmine file for bankruptcy. Then, to the delight of the Jasmine legal team, the 6th District Court of Appeal threw out the preliminary injunction in April 2004, writing that “even if the attorney-client privilege were not waived in this case, the voicemail is not protected because it falls within the crime-fraud exception.” The crime-fraud exception asserts that “there is no privilege … if the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit a crime or a fraud,” 6th District Presiding Justice Conrad Rushing wrote for a unanimous panel. Shortly after the opinion was released, Marvell’s legal team appealed to the California Supreme Court, which agreed in July 2004 to review the case. That review is pending a decision in another case, Rico v. Mitsubishi Motors, S123808, which deals with a similar issue. Still riding high from the favorable 6th District ruling, Jasmine in April of this year incorporated the voicemail transcript in its bankruptcy filings in order to show that its dispute with Marvell drove the company to financial collapse. To support this, Malter also included a declaration from McManis Faulkner & Morgan associate Marwa Elzankaly, who had been helping Jasmine with its trade secret case against Marvell. But the use of the transcript drew the wrath of Marvell, which filed contempt charges against Jasmine, Malter and Elzankaly in August. Marvell’s lead attorney, Buchalter Nemer partner Peter Bertrand, said that the Supreme Court’s decision to review the case not only makes the 6th District’s opinion uncitable, but also nullifies the court’s ruling, requiring Jasmine to heed the trial court’s original preliminary injunction. “They seem to think that the law doesn’t apply to them,” he said. “We don’t believe they are above the law.” But James McManis, a partner in Elzankaly’s firm, disagrees, saying Marvell’s charges were “premature” and insisting that the 6th District decision still applies until the Supreme Court makes a ruling. “Marvell’s attempt to somehow stop this unsealing of the record was denied by the court of appeal,” McManis said during an Aug. 29 hearing before Santa Clara Superior Court Judge William Elfving. “This is simply another effort on their part to try and cover up this evidence of criminal wrongdoing.” Legal experts fall on both sides of the argument on how the Supreme Court’s pending hearing affects the preliminary injunction. Daniel Smith, a plaintiff appellate specialist from Kentfield, said that in his 30 years of legal practice he has never come across a situation quite like the one facing Jasmine and Marvell. Still, Smith says that while the 6th District’s opinion has a note stating it is “not citable — superseded by grant of review” it doesn’t say it’s nullified. A Supreme Court review “doesn’t relieve [the 6th District's opinion] of its binding effect on the parties,” he said. On the other hand, Jon Eisenberg, of counsel to Horvitz & Levy, said that once the high court got involved, the 6th District’s opinion has “no binding effect.” “It depublishes it and nullifies it,” he said. But Eisenberg also wondered why Marvell went through the trouble of filing contempt charges when it would have been “much faster” to simply ask the Supreme Court justices to seal the transcript until they could make a ruling. Bertrand, however, said he preferred to keep the issue in superior court where it started, adding that asking the high court for another preliminary injunction would cost too much money. Jasmine officials and Malter are scheduled to appear before Elfving on Dec. 12, when they will defend themselves against the contempt charges. Cooper, White & Cooper partner William Norman, who is representing Malter on the contempt issue, said Marvell’s accusations are “absolutely wrong,” adding that they are “litigation tactics” there to “cause a lot of delay and misery.” Elzankaly’s attorney, Ruby & Schofield partner Allen Ruby, said he would move to dismiss the contempt charges, or, barring that, stay them until after the Supreme Court makes a ruling on the matter. Elzankaly’s trial is set for March 20. In late October, two months after Marvell filed its contempt charges, Elzankaly’s firm, McManis, was dismissed by Jasmine from representing it in its trade secrets case. The Official Committee of Unsecured Creditors, which is overseeing Jasmine’s legal matters now that the company is in bankruptcy proceedings, has hired McGrane, Greenfield, Hannon & Harrington to represent the tech firm’s interests. While McGrane partner Bernard Greenfield confirmed that his firm was hired to represent Jasmine, he did not return phone calls requesting comment on why Elzankaly’s firm was dismissed. The superior court case is Jasmine Networks v. Marvell Semiconductor, 1-01-CV801411. The Supreme Court case is Jasmine Networks v. Marvell Semiconductor, S124914.

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