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Technology outpacing decades-old laws, global business contract disputes and corporate governance bylaws presented some of the biggest litigation challenges in the past 12 months.
Google argued, among other things, that the pieces of code were not protected because they performed a function, essentially being the building blocks that allow other software and codes to be compatible. A lower court judge agreed.
But with much at stake, Oracle sought to appeal, and turned to Orrick, Herrington & Sutcliffe. The law firm wanted to demystify the technical issues and started with the name of the replicated code, or application programming interface (API). Orrick decided to refer to this as “creative code”.
And then Orrick partner Joshua Rosenkranz brought that touch of magic to arguments to the appeals court panel. If an author named Ann Droid – a play on the name of the Google operating system – wrote a novel that copied the chapter names and topic sentences of each paragraph from the Harry Potter books but summarised the remaining portions, Orrick argued, it would violate copyright protections. The appeals court found for Oracle and sent the issue back to a lower court to be litigated further.
Technology was also at the forefront of a long-running patent dispute case in which billions of dollars in damages were at stake.
Innovatio IP Ventures, a patent holder, sued more than 100 coffee shops, hotels, restaurants and other establishments for offering wireless internet access to their customers in violation of 23 patents it owned, seeking $2,300 for each location.
Cisco Systems and other makers of routers used by the retailers countersued. Kirkland & Ellis, lawyer for the device makers, argued that the patents were “standard essential” to WiFi technology and therefore Innovatio was obliged to license such patents on a “reasonable and non-discriminatory” basis.
Kirkland recommended that, rather than focus on damages, the courts should first decide whether the patents were “standard essential” and then place a value on them, before ruling whether any laws had been violated.
The aim was to streamline the litigation in an age when disputes over patents are on the rise. So-called “patent trolls” that manufacture no products but buy portfolios of patents and then seek payments from users have attracted scrutiny from regulators.
Judge James Holderman found that all the patents were “standard essential” and adopted Kirkland’s methodology, setting a licensing fee of 9.56 cents per WiFi chip – and cutting billions of dollars of potential damages had the scope of the action been widened beyond the parties in the original suit. The parties ultimately settled.
With more than 97 per cent of takeovers resulting in shareholder lawsuits in 2013, the lawyers at Skadden, Arps, Slate Meagher, & Flom devised a plan four years earlier for client CommonWealth REIT to counter such a threat.
In 2009 CommonWealth, a Maryland-based real estate investment trust, turned to Skadden to protect itself from a surge in costly shareholder litigation. Skadden advised the board to amend its bylaws to mandate that all shareholder disputes would be arbitrated, disallowing litigation. It was not challenged until 2013, when two activist investors launched a hostile takeover for the company and filed lawsuits claiming that the bylaw was invalid because it had not been approved by shareholders.
No public company had previously defended a board-backed arbitration bylaw. Skadden decided to fight, and the bylaw was upheld by a Maryland court. The decision could have become a way for boards to prevent frivolous shareholder lawsuits, but few companies have amended their bylaws to include mandatory arbitration clauses. Still, it is an example that the boards of companies, especially those based in Maryland, can follow.
Globalisation was a hot issue in legal disputes last year. In one case, the place of the US as the home of international arbitration came under threat in a fight between BG Group and Argentina concerning a change to tariffs from US dollars to pesos, which would have diminished BG’s investment in Argentina’s gas sector.
Freshfields Bruckhaus Deringer advised BG to pursue arbitration in Washington DC, despite a clause requiring 18 months of mediation in Argentina, and BG was awarded $185m in damages. However, Argentina appealed and the DC court of appeals found that the case should have gone through the Argentina litigation provisions.
Freshfields collected amicus briefs from a network of international arbitrators and courts to persuade the US Supreme Court to hear the appeal. In the end, the Supreme Court said that arbitration deserved deference.