Case Studies
Our attorneys are routinely called upon to tackle the most challenging legal issues confronting our clients. Here are a few examples of the kinds of matters we deal with every day:
Financial Powerhouse
The Charles Schwab Corporation has turned to Howard Rice as primary counsel in corporate matters for many years. Initially, we helped to form the current company as part of our representation of the management of Charles Schwab & Co. in their leveraged purchase of the nation's leading discount broker from Bank of America Corporation. We then represented The Charles Schwab Corporation in its initial public offering, and continue to provide counsel on a full range of corporate structuring, tax, securities, regulatory advice, and periodic reporting issues. We have acted as their counsel in numerous merger and acquisition transactions, including the acquisitions of U.S. Trust Corporation, a wealth management firm; CyBerCorp, Inc., an electronic trading technology and brokerage firm; SoundView Technologies Group, Inc., a securities firm that provides research on technology companies; and the private asset management business of State Street Bank Corp. of Boston. We also advised the company in connection with the sale of its capital markets business to UBS Securities LLC and UBS Americas Inc.
History Making IPOHoward Rice’s relationship with PlanetOut Inc., the leading gay, lesbian, bisexual and transgender (LGBT) online community, began in 2003. In 2004, we helped PlanetOut become the first company exclusively serving the LGBT community to go public when we assisted them with their precedent-setting $42 million initial public offering and listing on Nasdaq under the symbol “LGBT.”
Over the next two years, we represented PlanetOut in acquisitions that created the largest global media and entertainment company exclusively serving the LGBT community. We first represented them in the $31 million acquisition of LPI Media Inc., a leading publisher of print publications for the gay and lesbian market (including The Advocate and OUT). In 2006, we represented PlanetOut in their acquisition of RSVP Productions, a leading provider of travel services to the gay and lesbian community.
Most recently, we represented PlanetOut Inc. in its January 2009 merger with Here Networks and Regent Entertainment Media, which resulted in a public holding company called Here Media Inc.
During the six years we acted as primary outside counsel to PlanetOut, we assisted them with everything from corporate and securities compliances issues to general advice, intellectual property and labor and employment issues.
High-Stakes Biotech DisputeHoward Rice was part of the legal team that persuaded the California Supreme Court to review and decide a case involving the largest punitive damages award ever upheld in a published appellate decision in California. The case involved Genentech, Inc., the biotechnology industry pioneer, and the City of Hope Medical Center. City of Hope claimed that Genentech owed it millions of dollars in royalties under an agreement the parties signed in 1976; however, Genentech believed that no additional royalties were due.
In 2002, a jury awarded City of Hope a half a billion dollars ($300 million in compensatory damages, for unpaid royalties, and $200 million in punitive damages). After the Court of Appeal affirmed the judgment in 2004, Howard Rice (and the rest of Genentech’s legal team) successfully persuaded the California Supreme Court to review the Court of Appeal’s decision. Howard Rice Director Jerry Falk argued the case to the Supreme Court. In 2008, the California Supreme Court unanimously overturned the $200 million punitive damages award.
The principal issue at hand was whether the failure to pay royalties due under a commercial royalty agreement is not only a breach of contract, but also a tortious breach of fiduciary duty that can support an award of punitive damages. The case attracted more than a dozen amicus briefs from biotechnology companies and high-tech companies, such as Microsoft and Google.
The Supreme Court held that City of Hope's breach of fiduciary theory was unsound. The duty to pay royalties in these circumstances is imposed by contract, but does not impose fiduciary duties. Accordingly, no tort damages--and no punitive damages--could be awarded.
Landmark BankruptcyAmong our high-profile representations, Howard Rice has served as lead bankruptcy counsel to Pacific Gas and Electric Company in the utility's much-publicized Chapter 11 case, which culminated in the successful implementation of a reorganization plan in spring 2004. The PG&E Chapter 11 case, which was precipitated by the California energy crisis, was one of the largest bankruptcy cases in U.S. history and, by any measure, one of the most challenging and complex reorganizations ever undertaken. Successful resolution of the case required careful consideration of the interplay between bankruptcy law, on the one hand, and non-bankruptcy federal and state regulatory law applicable to the Company, on the other, and accordingly raised a wide range of novel reorganization issues. Following lengthy contested confirmation proceedings, PG&E ultimately confirmed a plan that paid in full over $9 billion of allowed claims, restored the Company to investment grade credit status, and ensured the Company's continued operations.
China ConnectionHoward Rice, as primary outside counsel, recently advised PalmSource, Inc., the developer and licensor of the Palm operating system for mobile information devices, in its acquisition of China MobileSoft, Ltd., a leading mobile phone software company in China. Initially, the firm represented PalmSource during its spin-off from Palm, Inc., and has continued to advise the company on a broad range of issues common to public technology companies, from creating and protecting intellectual property to complying with public company reporting requirements. The firm has also represented the company in its follow-on offering of common stock, and negotiated strategic development and distribution agreements with Research In Motion that brought Blackberry functionality to the Palm platform.
First Amendment ProtectionTogether with the ACLU of Southern California, a team of Howard Rice directors successfully represented Thomas Forsythe, an artist who had been sued by Mattel, Inc. over the use by Forsythe of Barbie dolls in certain artistic photographs in Mattel, Inc. v. Walking Mountain Productions. The artist's photographs critiqued what the artist believed were the sexist and shallow consumerist values that the doll represents. This case raised issues of fair use, parody, and free speech in the context of a trademark and copyright infringement action. After a year and a half of hard fought litigation, our team gained a complete victory for the artist in the trial court, with a Federal District Court granting summary judgment to the artist. This award came after our team defeated Mattel's motion for preliminary injunction and successfully defended that ruling on appeal before the U.S. Court of Appeals for the Ninth Circuit.
Death and TaxesIn Cory v. White and California v. Texas, landmark cases presented before the Supreme Court of the United States, Howard Rice's appellate attorneys represented the State of California in a federal interpleader action against the Howard Hughes' estate and the State of Texas to establish California's right to levy a death tax on the Hughes estate. Howard Hughes died in 1976 without a will and left an estate worth an estimated $2 billion. Both California and Texas asserted the right to levy state death taxes on the Hughes estate, with the taxing officials of each state claiming that Hughes was a legal resident at the time of his death. It took several years to settle his affairs with his heirs paying millions of dollars in death taxes.
Movie TrademarksHoward Rice represents The Saul Zaentz Company, developing and managing its worldwide trademark portfolio relating to J.R.R. Tolkien's The Hobbit novel and The Lord of the Rings trilogy and to represent it in its related licensing deals. In anticipation of the December 2001 release of the first film of New Line Cinema's trilogy, our trademark attorneys filed more than 1,500 trademark applications worldwide to secure and protect the company's rights in the names of the books' characters, places, items, and events. The firm continues to assist the company in the expansion, management, exploitation, and enforcement of these rights. Our substantial licensing work for the company has included agreements relating to film, stage, video game, board game, and other merchandising rights.
Ground-breaking IP LitigationIn the seminal case Nintendo v. Galoob, we took over representation of Lewis Galoob Toys, Inc. from another law firm after a preliminary injunction had been entered against the company preventing the marketing of its "Game Genie" video game accessory. We successfully turned matters around at trial, ultimately obtaining a judgment dismissing the complex claims of copyright liability. The judgment was affirmed on appeal (also handled by Howard Rice) in a landmark opinion clarifying the meaning of the Copyright Act's derivative work provision. After prevailing on the liability issues, we obtained a $15 million damages judgment after a second trial to recover the injunction security. The second judgment was also affirmed by the Ninth Circuit.
Broken PromisesHoward Rice successfully represented The Oakland Raiders in its multi-million dollar fraud and breach of contract suit against the City of Oakland when the jury returned a $34.2 million dollar verdict for the Raiders. The jury found that the Oakland coliseum officials failed to deliver on promises of sold-out stadiums when they lured the team back from Los Angeles. The firm has represented the Raiders from the day the City of Oakland and the County of Alameda first sued the Raiders in September 1997, through the filing of the Raiders' cross complaint in June 1998 to the successful five-month trial ending in August 2003 with the jury's $34.2 million award. Howard Rice also represented the Raiders in its sweeping victory when the 9th Circuit Court of Appeals reversed virtually every aspect of a U.S. Tax Court ruling, which resulted in tax refunds exceeding $14 million. In addition, Howard Rice continues to represent the Raiders in intellectual property, employment, litigation, tax and business matters.
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