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The Wednesday before Thanksgiving attorney David Doyle rushed to court in an effort to help a troubled client. San Diego-based WebSide Story, which offered businesses a way to measure Internet use of their Web sites, had come to him in distress. A bigger rival had decided to offer the same kind of online service. But WebSideStory complained the other company did it the easy way by filching WebSideStory’s proprietary online measuring system straight from the Internet. Indeed, the theft had been so complete and so brazen, WebSideStory alleged, that even a few meaningless codes individual mistakes had been copied and incorporated seamlessly into the other company’s Web text.
So, on that Wednesday evening, while most other San Diegans were celebrating the start of the long weekend, Doyle met in chambers with U. S. District Court Judge Barry Moskowitz and persuaded him to issue a temporary restraining order. The competitor’s Web site came down until the case was settled. For Doyle, an attorney with Morrison & Foerster, the WebSideStory case exemplifies the challenges facing companies in pioneering fields and the attorneys breaking legal ground right along with them. Their clients may be high-tech, biotech or Internet companies, many of them corporate youngsters with products never contemplated when business laws were written. But even corporate pioneers find themselves facing legal problems with a long and familiar history, from trade and patent disputes to copyright infringement. In the digital age, though, the problems can be volatile, looming at the speed of the Internet. “Because of the increasing technological finesse with which things are able to be occurring online, there is sometimes a disconnect between what companies want to do with the available technology and what the laws will allow them to do,” says Michael Rhodes whose clients include Internet music pioneer MP3.com and the e-bay auction site. “So you have business models that have emerged really focused on the technology side of the equation, and what you have is the established offline business world challenging those business models using offline legal principles.” Rarely was that more apparent than when Rhodes represented MP3.com, the company that pioneered the commercial use of the speedy transmission of music files on the Internet. MP3.com’s service proved an instant hit with a public delighted at its potential for virtually free, high-quality music. But when it expanded to offer music owners online access to listen to their own personal CDs, it outraged and threatened the established music industry. While four of five big record labels reached a licensing agreement with MP3.com, Universal went to court and won, although Rhodes says an appeal will be filed in the case. A third trial for MP3.com is scheduled this month.
The legal issues rippling from emerging companies coupled with traditional business disputes are generating more work for business litigators, especially those with expertise in complex, high-tech matters. Rhodes, for instance, opened the San Diego office of his law firm, Cooley Godward, in 1992 with seven attorneys. The office now has about 85 lawyers. The nature of business lawyering is changing as well, as it turns increasingly contentious. Doyle notes that prior to 10 years ago, patent litigation was a “gentlemen’s club. The litigation was handled in a cordial, not particularly adversarial manner.” Often the parties reached an agreement, and submitted it as a fait accompli to the court. These days, he says, a dispute is much more likely to wind up going to trial. In fact, some of San Diego’s business litigators earned their reputations as trial attorneys. Among them is Michael Attanasio, who graduated from Grossmont High School in 1983, studied public policy and international affairs at Princeton, then got a law degree from Stanford University. He earned his legal spurs as a prosecutor, taking a job in the U.S. Department of Justice’s public integrity section. His path to business litigation followed an unlikely route through Houston, Texas, where he prosecuted a high profile corruption case involving a Houston councilman and a lobbyist. During the lengthy trial, Attanasio met Susan Lennon, then a television reporter covering the story. And when the two married, they decided to move back to San Diego, where his father, Tony Attanasio, continues to work as a sports agent representing professional baseball players. She got a job as an anchor at television station KUSI. He found a position at Luce Forward Hamilton & Scripps where he turned from crimefighting to patent and copyright fighting. He says his experience as a criminal prosecutor gave him valuable trial skills. “Litigation skills in that context are very applicable to any piece of litigation,” he says. With the increase in trials, lawyers have had to develop strategies for conveying highly complex technological issues in brand new fields to a jury. For example, Douglas Olson, a partner in the law firm Brobeck, Phleger & Harrison, says he looks for ways to humanize scientists and technical experts for the jurors. In one case, the University of California went to court against one of Olson’s clients, a scientist who developed a process for using DNA to identify bacteria which was used by the biotech company Genprobe. The university claimed the scientist invented his method while at the university. The nervous scientist was about to take the stand and claim otherwise, when he went to pour himself a glass of water and dumped it all over himself. The jurors decided in his favor, a conclusion which Olson believes was somewhat influenced by their ability to identify with his humiliation.
Of course, lawyers must do more than garner sympathy. “The main thing is to get the juries to understand what’s going on,” notes Olson, who earned bachelor’s and master's degrees in chemical engineering at the University of Wisconsin before studying law at George Washington University. During a different trial on a DNA issue, Olson used colored bars on a chart to illustrate key concepts. He knew he had the jurors’ attention, he says, when on Halloween, they showed up in the courtroom wearing clothes that matched the colored bars on his chart. But trials can be serious, high- stakes affairs, with outcomes that influence entire industries as well as companies. Olson recalls the bitter fighting that marked Hybritech vs. Monoclonal Antibodies Inc., a patent infringement case. He presented the winning arguments for Hybritech, which had figured out a way to use monoclonal antibodies for cancer and pregnancy problems. The biotech company obtained a patent, then objected when its corporate neighbors tried to follow suit. Four other companies also applied for monoclonal antibody patents about the same time. Olson argued that it was no coincidence that all four happened to be on the same block as Hybritech or that a Hybritech person shared a car pool with someone working at a competing company. “It was like gladiators going into the coliseum,” Olson says, recalling the trial. “Two parties go into the arena. Only one party leaves. They went out of business.” Such drastic consequences for the loser and sometimes for the winner when the litigation becomes a lengthy, expensive distraction lead many ttorneys to favor settlements whenever possible. “It’s satisfying to win cases,” says David Kleinfeld, who practices with the firm of Heller Ehrman White & McAuliffe. “It’s even more gratifying when you realize benefits beyond what a courtroom victory can achieve.” Kleinfeld seemed destined to be a business litigator from the early days of his career. After getting his law degree from New York University, he worked on a case in which his New York law firm’s clients, Universal Studios and MCA, wanted to stop the vending of phony items based on the movie “E.T.” He is still fighting for clients who claim unfair competition, but at a higher technological level. In San Diego, he represented the family of tennis star Serena Williams, who wanted to keep a “cybersquatter” from using her identity on the Internet. One of his notable settlements in a major case involved his client Qualcomm, which was locked in a cell-phone technology dispute with Motorola. The case was settled in March. The agreement ended three years of complex litigation comprising seven separate federal court cases. They had alleged claims and counterclaims for patent infringement and misappropriation of trade secrets, among other complaints.
“That was a case where effective and strong litigation efforts helped to achieve a business resolution that promoted the company’s objectives beyond what could simply be achieved by a litigation outcome,” says Kleinfeld, who says the settlement will hasten widespread acceptance of Qualcomm’s CDMA cell phone technology. “It helped provide a basis to pursue negotiations that not only resolved the litigation but created additional benefit and opportunity.” But whether lawyers settle cases by jury decision or settlement, they are not the only ones breaking legal ground for high-tech companies. Legislatures also are trying to keep up with the breathless pace of change and the turmoil it sometimes brings. “I think over time we will see both judicial and legislative responses that will affect the way people can do business in the future,” says Rhodes. “I don’t predict that the big guys will win all the wars.” |
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