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Litigation Roundup: IBM Settles One Trial, Bucks up for Appeal of Another; Pretrial Begins in F1 Patent Case

August 14, 2022 Natalie Posgate

In this week’s roundup, we have a mid-trial settlement, a new securities fraud lawsuit regarding a SPAC transaction, an anticipated patent trial inching closer to the jury and an eight-figure attorneys’ fees award. 

One litigant, which happens to be the world’s largest IT company, made it into the roundup twice this week. 

Have a new development in a case that you think is worthy of a mention in the Litigation Roundup? Email us at tlblitigation@texaslawbook.net.

SOUTHERN DISTRICT OF TEXAS

BMC Scores $21M in Attorneys’ Fees for Bracewell Trial Team

Lawyers for IBM are now on the 30-day clock to file a notice of appeal of a $1.6 billion judgment awarded this spring against the IT giant in May in its long-running dispute against BMC Software. 

On Aug. 9, U.S. District Judge Gray Miller issued an amended final judgment after awarding BMC $21 million in attorneys’ fees and expenses the previous day. The attorneys’ fees are a 10 percent discount from what BMC originally asked for, but not quite the 25 percent reduction IBM pushed for. 

In March, BMC and IBM faced off for a two-week bench trial before Judge Miller that was the culmination of a nearly five-year legal battle over whether IBM committed fraud, misappropriated trade secrets and breached at contract with BMC when it replaced BMC mainframe software on mutual client AT&T’s systems with its own during a 2016 outsourcing project. 

On Memorial Day, Judge Miller summoned the lawyers away from their swimming pools when he issued his ruling: IBM, in fact, had committed fraud and must pay BMC $717.74 million in actual damages, $168.23 million in prejudgment interest and $717.74 million in punitive damages. 

BMC’s trial team was led by Bracewell partner Sean Gorman and included Chris Dodson, Tim Geiger and Andrew Zeve. 

IBM’s legal team included Paul Yetter, Tim McConn, Reagan Simpson and Grant Martinez of Yetter Coleman and Richard Werder, Rachel Epstein and Donald Reinhard II of Quinn Emanuel. 

The cause number is 4:17-cv-02254. 

HARRIS COUNTY

More Investors Sue Riverstone’s Alta Mesa Resources/Silver Run for Securities Fraud

Another group of investors have sued Alta Mesa Resources, Silver Run Acquisition II and its sponsor, Riverstone Holdings, in a securities fraud lawsuit – this time, in Houston state court. 

The lawsuit, filed Aug. 10, follows a similar lawsuit filed Aug. 3 in Houston federal court. Like the federal suit, the new state suit alleges the defendants knowingly made materially false statements in order to encourage Silver Run shareholders to vote for the approval of its merger with Alta Mesa and Kingfisher Midstream. Instead of a return on their investment into Silver Run, a special purpose acquisition company the plaintiffs allege they lost money when the stock value plummeted after problematic events following the merger, including a federal investigation and a bankruptcy filing. 

“The SEC and market commentators have warned that SPACs have the potential to defraud public investors while at the same time enriching company insiders and promoters,” says the lawsuit, filed by the Alyeska Master Fund LP and two similarly named limited partners. “Defendants’ conduct, as alleged herein, is a paradigmatic example of the abusive SPAC conduct that the SEC is seeking to deter.”

The Alyeska plaintiffs are represented by New York attorneys Richard Bodnar, Lawrence Rolnick, Marc Kramer, Steven Hecht and Matthew Peller of Rolnick Kramer Sadighi. No one has appeared for the defendants yet. 

The cause number is 2022-48754 and has been assigned to Judge Brittanye Morris of the 333rd District Court.  

WESTERN DISTRICT OF TEXAS

Trial Date Inches Closer in Formula One Patent Litigation

Waco federal judge Alan Albright on Aug. 11 issued a scheduling order that reserves Oct. 6 through Oct. 14 for a jury trial involving a patent infringement suit over safety technology used in Formula One racing. 

Separately, the first pretrial conference will be held over Zoom this Thursday at 9 a.m., while two more will occur Oct. 4 and Oct. 5 at 1:30 p.m. in-person. Jury selection will begin Oct. 6 at 9 a.m. before U.S. Magistrate Judge Derek Gilliland. 

The technology at issue involves patented technology for the “Halo” and “Aeroscreen” devices used in Formula One race cars. The technology was designed to protect drivers’ heads and necks during any accidents while racing. 

The lawsuit, brought by Jens Nygaard, pits the inventor against a number of Formula One entities and holding company Delta Topco, governing motoring organization Federation Internationale de l’Automobile (FIA), racing team Red Bull Racing and Red Bull Technology. In April, Judge Albright approved a joint motion by the parties to try the plaintiff’s claims against Red Bull separately, but a date for that trial remains to be set. 

Filed in 2020, the lawsuit originally named many more defendants who were later dismissed in the litigation, including racers Lewis Hamilton and Charles LeClerc, Mercedes-Benz Grand Prix, Ferrari and Daimler AG. 

Nygaard’s lawyers are Ahmed Davis, Bailey Benedict, Jacqueline Moran, Julianne Campbell, Nicholas Gallo, Brian Strand, W. Thomas Jacks and Danielle Healey of Fish & Richardson’s Houston, Austin, Atlanta and Washington, D.C., offices. 

The FIA’s lawyers are Claudia Frost, Jeffrey Johnson, Travis Jensen, Jeffrey Quilici and Ryan Wooten of Orrick, Herrington & Sutcliffe’s Houston, Austin and Menlo Park, California offices as well as Austin lawyer Darryl Adams of Slayden Grubert Beard. 

Formula One’s lawyers are Doug Kubehl, Rich Harper, Bethany Salpietra and Harrison Rich of Baker Botts’ Dallas and New York offices. 

Red Bull’s lawyers are New York lawyers Edgar Huag, Jason Kanter, Mark Chapman and Roman Khasidov of Huag Partners and Tyler lawyer Deron Dacus of The Dacus Firm. 

The cause number is 6:20-cv-00234-ADA. 

IBM and SunStone End Patent Trial Sans Jury Verdict

IBM and SunStone Information Defense on Aug. 12 ended a jury trial underway in Waco federal court when they announced on the record that they had reached a settlement. 

The fate of the trial, which began Monday, was about to be in the jury’s hands, Bloomberg Law reported. At issue was whether IBM infringed two SunStone-owned patents related to cybersecurity technology. 

IBM hired Quinn Emanuel to represent it at trial. The team includes Joshua Scheufler of the firm’s Houston office, Evan Pearson of the firm’s Austin office and David Nelson, Valerie Lozano, Alexander Rudis, David Du LeRay and John McKee of the firm’s Chicago, New York and San Francisco offices. Local counsel includes Charles Ainsworth and Robert Bunt of Tyler firm Parker, Bunt & Ainsworth. 

SunStone’s primarily Austin-based trial team includes Christopher Hanba, Caleb Green and Joshua Jones of Dickinson Wright and Kevin Kudlac of Radulescu. Zachary Pelton and Ariana Pellegrino of Dickinson Wright’s Detroit office are also involved. 

The cause number is 6:20-cv-01033 and the trial was before U.S. District Judge Alan Albright in Waco. 

Natalie Posgate

Natalie Posgate covers pro bono work, public service and diversity within the Texas legal community.

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