In Re Urethane Antitrust Litigation
On May 15 a federal district court judge trebled a $400 million verdict in a class action in which customers had alleged that The Dow Chemical Company fixed prices for the chemical urethane. The $1.2 billion award, by U.S. District Judge John Lungstrum in Kansas City, Kansas, was by far the largest this year as of press time; the runner-up may be a $524 million verdict in April against a Nevada insurance company accused of failing to supervise the doctor at the center of a hepatitis C outbreak.
The plaintiff class of direct purchasers, led by Cohen Milstein Sellers & Toll; Fine, Kaplan and Black; Freedman Boyd Hollander Goldberg Urias & Ward; and Kellogg, Huber, Hansen, Todd, Evans & Figel, also defeated Dow's bid to decertify the class. Dow, looking to David Bernick at Boies, Schiller & Flexner and Hamilton Loeb at Paul Hastings, tried to make use of a March 27 decision by the U.S. Supreme Court in Comcast Corp. v. Behrend. In that decision, the justices refused to certify a class of Comcast subscribers who alleged anticompetitive pricing by the company. The court ruled that the plaintiffs' expert witness—the same expert witness used by the Dow plaintiffs—failed to show that damages could be proved on a classwide basis.
But Judge Lungstrum held in his 30-page decision that the Comcast decision didn't apply. In the Dow case, trial testimony had been limited to a single theory of impact—overcharges due to price-fixing; and Lungstrum found that the plaintiffs' expert had provided a proper causal link between the direct purchasers' theory of liability and the classwide impact.
Dow contends that the verdict can't stand because the claim was not upheld by the jury for the full five-year alleged conspiracy, and the same expert's model upon which the claim is based has been rejected by a Kansas jury and the Supreme Court in Comcast.
For plaintiff Direct Purchaser Class
Cohen Milstein Sellers & Toll: Christopher Cormier, Richard Koffman, Kit Pierson, and asso­ciates Laura Alexander and Sharon Robertson. (Cormier is in Palm Beach Gardens, Florida; Robertson is in New York; and the rest are in Washington, D.C.) The firm was co–lead counsel.
Fine, Kaplan and Black: Paul Costa, Gerard Dever, Matthew Duncan, Roberta Liebenberg, and Donald Perelman. (They are in Philadelphia.) The firm was co–lead counsel.
Freedman Boyd Hollander Goldberg Urias & Ward: Joseph Goldberg. (He is in Albuquerque.) Goldberg was co–lead trial counsel.
Kellogg, Huber, Hansen, Todd, Evans & Figel: Rebecca Beynon, Michael Guzman, and associates Alexander Edelson, Michael Nemelka, and Justin Presant. (They are in Washington, D.C.) Guzman was co–lead trial counsel.
For defendant The Dow Chemical Company (Midland, Michigan)
In-House: Managing counsel Lynn Looby.
Boies, Schiller & Flexner: David Bernick, Scott Grant, and associate Gary Studen. (Bernick and Studen are in New York; Grant is in Washington, D.C.) Bernick has represented Dow on a variety of matters and was retained for this matter shortly after joining Boies Schiller.
Paul Hastings: Jeremy Evans, Stephen Kinnaird, Donald Morrow, and Hamilton Loeb. (Morrow is in Costa Mesa, California; the rest are in Washington, D.C.) The firm was cocounsel.
Stinson Morrison Hecker: Brian Markley and Sara Welch. (They are in Kansas City, Missouri.) The firm was local counsel. —Jan Wolfe, with Tom Coster
Versata Software et al. v. SAP AG et al.
In one of the largest patent verdicts ever to survive a Federal Circuit challenge, the U.S. Court of Appeals for the Federal Circuit affirmed a $345 million verdict that Versata Software Inc. won in 2011 in a software patent case against SAP AG. The appeals court also mostly affirmed an injunction barring SAP from distributing its infringing software.
The 24-page opinion comes just a month after the same appeals court reversed the biggest patent verdict of 2011, a $593 million award against Johnson & Johnson.
McKool Smith partner Scott Cole represented Versata at trial in 2011, and name partner Mike McKool handled the oral argument at the Federal Circuit. J. Michael Jakes of Finnegan, Henderson, Farabow, Garrett & Dunner argued for SAP.
Versata sold business software in the 1990s, before SAP came to dominate the market. Versata brought suit in 2007 in U.S. district court in Marshall, Texas, claiming that SAP willfully ripped off its ideas. McKool Smith took the case on a contingency fee basis.
In 2009 a jury awarded Versata $138 million in reasonable royalties. (Reasonable royalties are the minimal damages amount a patentee can recover for infringing sales that cannot be proved, determined as if a royalty agreement had been in place.) In the following months, however, the Federal Circuit issued a string of decisions reining in damages awards, prompting a magistrate judge to vacate the verdict and order a new trial on damages.
Undeterred, Cole and his colleagues at McKool Smith won a $345 million verdict in a do-over trial in May 2011. The jury awarded $85 million in reasonable royalties and another $240 million in lost profits. The $85 million in reasonable royalties was particularly impressive: A judge had disqualified a key Versata expert witness right before trial.
SAP appealed, arguing that Versata's methodology for calculating lost profits was flawed.
For appellant SAP AG (Walldorf, Germany) et al.
In-House: vice president–head of global litigation Kevin Hamel.
Finnegan, Henderson, Farabow, Garrett & Dunner: J. Michael Jakes, Michael Morin, John Williamson, and associate Jennifer Robinson. (They are in Washington, D.C.) The firm gave oral arguments.
Ropes & Gray: James Batchelder and associate Lauren Robinson. (Both are in Palo Alto.)
Paul, Weiss, Rifkind, Wharton & Garrison: David Ball and Kenneth Gallo. (They are in Washington, D.C.)
Fish & Richardson: Justin Barnes, Katherine Lutton, John Thornburgh, and associate Craig Countryman. (Lutton is in Redwood City, California; the rest are in San Diego.) The firm, Paul Weiss, and Ropes & Gray were of counsel on the brief.
For respondent Versata Software Inc. (Austin)
In-House: At parent Trilogy Inc.: senior vice president and general counsel Lance Jones.
McKool Smith: Douglas Cawley, Scott Cole, Mike McKool, and Joel Thollander. (Cawley and McKool are in Dallas; the others are in Austin.) The firm has represented Versata in several patent lawsuits and appeals over the past eight years. —J.W., with T.C.
Appriva Shareholder Representatives v. Ev3
A state court jury in Delaware awarded Appriva Medical Inc.'s former shareholders $175 million in damages on May 1, finding that the company that acquired Appriva more than a decade ago, Ev3 Inc., had breached its contract with shareholders in failing to pay them so-called milestone payments related to regulatory approvals for a cutting-edge device for reducing stroke risk. The verdict could be worth as much as $265 million with tacked-on interest.
Shareholders looked to Eric Leon, Joeseph Serino, and Jay Lefkowitz at Kirkland & Ellis. Duane Morris's Matthew Taylor and Oppenheimer Wolff & Donnelly's Jeffrey Bouslog and Bret Puls represented Ev3, now owned by the medical device company Covidien plc.
The dispute dates back to Appriva's development of its heart implant. On the basis of the implant's promise, Ev3 entered talks to buy Appriva in 2002. The parties eventually arrived at a deal in which Ev3 paid just $50 million up front, plus $175 million down the road if its implant hit four regulatory approval milestones.
Instead of a big payday for its shareholders, in 2005 two suits were filed in Delaware Superior Court, claiming that Ev3 failed to pay the milestone amounts. Ev3 countered that it had no obligation to pay, because the device, they alleged, never reached the milestones in question.
After years of procedural skirmishes, Kirkland filed an amended and consolidated complaint in 2009. In the end, jurors sided with Appriva, awarding the shareholder plaintiffs the missed milestone payments, plus interest.
For plaintiff Appriva Medical Inc. Shareholders
In-House: At New Enterprise Associates: chief legal officer Louis Citron.
Kirkland & Ellis: John Del Monaco, Jay Lefkowitz, Eric Leon, Joseph Serino, and associates Max Cooper, Katherine McDaniel, and Ross Weiner. (Cooper is in San Francisco; the rest are in New York.) Leon was tapped by NEA after successfully representing a fellow portfolio company of NEA in a nonpayment of milestones suit.
Goodin MacBride Squeri Day & Lamprey: Robert Goodin and Francine Radford. (They are in San Francisco.) The firm originally handled the matter and remained involved in the case.
Morris, Nichols, Arsht & Tunnell: Jon Abramczyk and Matthew Clark. (They are in Wilmington.) The firm was local counsel.
For defendant Ev3 Inc. (Irvine, California)
Duane Morris: Seth Goldberg, Matthew Taylor, counsel Matt Neiderman, and associate Benjamin Smyth. (Goldberg and Taylor are in Philadelphia; Neiderman and Smyth are in Wilmington.)
Oppenheimer Wolff & Donnelly: Jeffrey Bouslog, Bret Puls, and associates Dennis Hansen and Cynthia Wingert. (They are in Minneapolis.) The firm did not comment. —J.W., with T.C.