McDermott Will & Emery to face malpractice case after losing patent trial

SANTA ANA -- In a case recently bolstered by two U.S. Patent Trial and Appeal Board rulings, an Orange County judge has confirmed a March trial date in a legal malpractice lawsuit against McDermott Will & Emery.

The firm is accused of botching a federal patent case in Texas in which its client CEATS Inc., an internet technology company founded by retired professional baseball player Doug DeCinces, sued major online ticket sellers for patent infringement.

A jury in March 2012 found for 12 defendants, including Ticketmaster Entertainment Inc., after concluding the patents were obvious and anticipated.

That finding invalidated CEATS' four patent claims and prevented the company from "recovering a judgment for patent infringement in the hundreds of millions of dollars," according to a recent status report by CEATS' lawyer, David W. Affeld of Affeld Grivakes LLP.

Superior Court Judge Peter J. Wilson said Friday the case will "need more management and preparation" than typical lawsuits and set a strict discovery schedule.

"This case is going to get very active going forward," Wilson said.

McDermott is represented by Munger, Tolles, & Olson LLP, including senior partner Brad D. Brian. Brian didn't attend Friday's status conference, but Munger partner Stuart N. Senator told Wilson he'll be lead trial counsel.

Senator, who appeared Friday with partner Bethany W. Kristovich, told Wilson he's "frankly, floored" by Affeld's statement that he'll need to depose 39 witnesses, including 11 McDermott attorneys and four attorneys who defended companies in the 2012 trial.

"It seems like the idea is 'let's just do over the whole case. ... The case didn't work the first time. Now let's try it again but try it again against the lawyers,'" Senator said. "That's just not what the malpractice tort is for."

CEATS sued McDermott in 2014, accusing the firm of failing to disclose its representation of American Airlines and Orbitz, which could have been defendants in the patent litigation, and of failing to perform the quality work attorneys promised.

The firm budgeted $750,000 for the case, but after trial, the costs "had somehow exploded to more than $3 million," according to the 15-page complaint. CEATS Inc., v. McDermott, Will & Emery LLP, 2014-00725880 (O.C. Super. Ct., filed May 30, 2014).

The complaint also details failed litigation strategies that included a false assurance that damaging evidence about a prior art defense wouldn't be admitted.

Several defendants settled before the 2012 trial, including TicketNetwork Inc., which obtained rights to certain CEATS patents in a licensing agreement that included royalties for CEATS. TicketNetwork moved to terminate the agreement in 2014 after the U.S. Court of Appeals for the Federal Circuit affirmed the jury verdict, but CEATS refused.

The U.S. Patent and Trademark Office's Patent Trial and Appeal Board in May 2018 rejected TicketNetwork's petition to institute a covered business method patent review.

Then in May, the board rejected arguments from TicketNetwork, Inc. and Ticket Software, LLC, that CEATS' patents are invalid because they cover claims that should be considered obvious. Attorneys in the malpractice case were awaiting those rulings "because of the potential impact of those challenges on this case," according to CEATS' status report.

DeCinces did not attend Friday's hearing, but he discussed CEATS in January 2018 while testifying as a federal prosecution witness following his conviction for criminal insider stock trading. He said CEATS has 24 patents, including some from 1998 or 1999. He became CEO in 2000 but told the jury, "I had to remove myself as CEO when my legal problems started regarding why we're here."

The retired third baseman for the Baltimore Orioles and the team formerly known as the California Angels is scheduled to be sentenced Aug. 12 for 14 felony counts of tender offer fraud. United States v. DeCinces et al., 12-CR00269 (C.D. Cal., filed Nov. 28, 2012).