© 2017 The Texas Lawbook.
By Mark Curriden
(June 20) – A federal court hearing scheduled to debate the validity of a $500 million jury verdict in a trade secrets and patent infringement case against Facebook erupted into allegations of lying to the judge, cheating and violating court-ordered discovery, and cries for $40 million in sanctions.
Lawyers for Facebook asked U.S. District Judge Ed Kinkeade of Dallas to throw out a Feb. 1 jury decision that the social media giant and a company it purchased illegally uses patented source code in its virtual reality headset technology.
Bill Dawson, a Dallas lawyer representing Facebook, said that the jury verdict needs to be tossed and the case dismissed because the evidence does not support the decision.
“There is no evidence of consumer confusion, no evidence of investor confusion … and no evidence of harm to the plaintiffs,” Dawson argued. “To show lost profits, you must show that the plaintiffs would have received profits.” He said no such evidence has been presented.
Lawyers for ZeniMax, which owns Richardson software developer id Software, argued that the trial record clearly supports the judgment against Oculus and that Facebook should not be allowed a “do over.”
Skadden Arps partner Anthony Sammi told Judge Kinkeade that the case took three years to get to trial, involving eight law firms and 1.8 million pages of documents. He said the three-week trial included seven expert witnesses, 300 exhibits and a 90-page jury charge.
“Everyone at the table got what they wanted – a jury trial,” Sammi said. “Now, they want to wipe it all away or get a do over.
“The defendants show no intent to change their ways,” argued Sammi, who requested that the judge issue an immediate injunction against Facebook. “ZeniMax is having to compete in a marketplace against its own technology, and that’s not fair.”
ZeniMax lawyers from Skadden Arps and Haynes and Boone argued that the judge should add $40 million in legal fees and $54 million in prejudgment interest to the $500 million verdict. They also asked Judge Kinkeade to treble the damages because the jury found that the conduct by Oculus and its officials was intentional and knowing.
But the two-hour hearing on the 16th floor federal courthouse in Dallas turned personal when Beth Wilkinson, a Washington, DC lawyer representing Facebook, accused opposing counsel of lying to the federal judge and hiding evidence.
“They said [during the trial that] we engaged in all this bad behavior, that we destroyed evidence and did not produce evidence,” Wilkinson told Judge Kinkeade. “What we did now know is that they were violating your discovery order.”
Wilkinson, who was one of the federal prosecutors in the Oklahoma City bombing cases against Timothy McVeigh and Terry Nichols, reminded Judge Kinkeade that he instructed jurors that Oculus violated discovery orders but declined to do so against ZeniMax. She said ZeniMax withheld critical documents that she could have used to effectively cross-examine the plaintiff’s witnesses.
“You were wrong because you believed them,” she said. “They lied to this court. You can tell them to go to hell or you can put them there.”
“I was here,” Judge Kinkeade responded. “If you want to beat me over the head with it,” go ahead.
Wilkinson said the judge should find two partners at Skadden Arps and an executive with ZeniMax in contempt and sanctioned.
“I don’t think they are entitled to attorneys fees,” she told the judge. “They cheated.”
Wilkinson said that granting a new trial for Facebook and Oculus is not an appropriate remedy because it sends the message to young lawyers that “the worst thing you are going to get is a new trial.”
Sammi, a partner at Skadden, told Judge Kinkeade that Wilkinson’s comments were unfair and unjustified. He said that his client had provided all the documents that were required within the scope of Facebook’s discovery request.
In the end, Judge Kinkeade warned both sides that they should seriously consider settling the case before he issues his ruling.
“I am not a split-the-baby kind of judge,” he said. “I encourage you to resolve this. Yes, you both have a lot to gain; but you both have a lot to lose, too.”
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