Phoenix Technologies Ltd. v. VMware Inc.

Copyright Infringement and Breach of Contract

Northern District

U.S. District Judge Haywood S. Gilliam Jr.

Defense Lawyers: Arturo J. Gonzalez, Michael A. Jacobs, Alexis A. Amezcua, Diana B. Kruze, Christopher L. Robinson, Christopher J. Wiener, Morrison & Foerster LLP

Plaintiff’s Lawyers: Michael Attanasio, Whitty Somvichian, Amanda A. Main, Drew Koning, Aarti Reddy, Cooley LLP

Arturo J. Gonzalez, a partner with Morrison & Foerster LLP, was faced with a difficult trial requiring jurors to interpret the meaning of decades-old contracts between his client, VMware Inc., and a company it licensed technology from, Phoenix Technologies Inc.

Phoenix alleged that VMware had secretly been appropriating its technology and augmenting it in the hopes of eventually eliminating the contract entirely and replacing it with their own version. Phoenix Technologies Ltd. v. VMware Inc., 15-CV1414 (N.D. Cal., filed March 27, 2015).

“Ultimately, we persuaded the jury that the plaintiffs knew all along exactly what was happening,” Gonzalez said of the June defense verdict. “This wasn’t a situation where a party suddenly learned something new and realized they had been duped.”

The posture of the case was difficult for the defendants initially, but Gonzalez and his team were able to track down a former CEO of Phoenix who contradicted the company’s narrative, testifying that Phoenix knew VMware was modifying its technology and even helped.

Gonzalez convinced the jury that the real motivation for the case was a new group of investors who purchased Phoenix and hoped to make a quick buck by bringing intellectual property claims against its own customers.

“This was an investor who bought a company expecting to make a lot of money and when they didn’t they tried to find another way to recoup their investment,” he said.

The kicker was when the jury answered the first question on the verdict form with a “no,” effectively ending the case, and then went on to answer “no” on the second question, even though they had been instructed that they didn’t need to keep going if the plaintiffs lost on the first question.

Gonzalez said it was an extremely rare move for a jury to make and seemed to emphasize their distaste for the plaintiff’s conduct.

“I’ve never seen it in more than 30 years of practice,” he said.

— Joshua Sebold