2014 Year in Review O’Melveny & Myers LLP Annual Report
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2014 Year in Review O’Melveny & Myers LLP Annual Report To Our Clients and Friends, Looking back at 2014, we are grateful that you turned to O’Melveny to help advance your most important business goals and tackle your most sensitive legal challenges. In the pages that follow we provide highlights of the successes we have achieved together. For some, we supported your strategies of breaking into emerging markets and industries or executing complex cross-border business. We advised Lending Club’s underwriters’ counsel in the first IPO for an alternative lender and one of the largest technology public offerings of all time; counseled Helios in a record-breaking fundraise for an Africa-focused fund; and represented 1Verge Holdings Ltd. in connection with a US$1.22 billion investment in Youku Tudou, China’s largest online video platform. For others, we fought for you in the face of challenging litigation, no matter the forum or stage of proceedings. We secured dismissal for Marriott of a class action that alleged the use of most-favored-nation clauses and resale price maintenance agreements to fix prices for online room reservations; won a verdict on behalf of Mentor Graphics in a long-running patent dispute in which the jury found infringement and awarded our client US$36 million in damages plus royalties; and on behalf of a Fortune 50 pharmaceutical company, we obtained reversals of a record-setting US$1.4 billion award and a US$330 million judgment. Perhaps even more important, we begin this report with a look ahead at some of the issues and trends that you may face in the year ahead. From the government’s response to cybersecurity threats to the growing financial technology (FinTech) industry to the impact of recent Supreme Court rulings on class-action certification, we are monitoring these and other developments and will continue to be a resource for you in 2015 and beyond. What hasn’t—and won’t— change is the firm’s commitment to you. For us, growth is about building enduring partnerships with our clients. It’s about being in the practices, locations, and sectors where you need us, not just about short-term gain or having the largest number of offices and partners. By taking the long view, we are able to make meaningful investments in our technology, operations, and people to better serve you. We aim to deliver not only what our clients need today, but also what you will need well into the future—and to do so anchored by the dedication to excellence, courage to lead and innovate, and civic responsibility that have characterized our firm for 130 years. No matter what the new year brings, we will hold fast to these values and be there to serve you. Thank you for a great year. Bradley J. Butwin Chair, O’Melveny & Myers LLP Year in Review What’s Next in 2015 Government Response to Cybersecurity Threats Over the past several years, data security breaches have hit a broad array of industries—retail, financial, entertainment, health care. Universities and governments have also fallen victim to cyber threats. In response to the proliferation of these threats, corporate leaders, consumer groups, and intelligence and military leaders have all called for comprehensive cybersecurity and data-breach legislation. But Congress has reacted slowly, sending to the President’s desk only one bill that continued existing efforts without confronting the harder issues presented by these threats. In the face of this legislative inaction, the President has issued executive orders aimed at fostering public-private cooperation on data security issues, while federal and state regulators are moving to fill the legislative void with standards of their own, often in a piecemeal fashion without express Congressional authority. Industry and business groups are forced to address data security challenges without clear lines of authority in the government or a modern set of laws identifying permissible and impermissible data security techniques. The Federal Trade Commission, for example, now describes itself as the “nation’s leading privacy enforcement agency,” aggressively pursuing enforcement actions under Section 5(a) of the FTC Act against companies for allegedly failing to properly manage their cyber risk. Meanwhile, the Department of Homeland Security has the lead in assessing cybersecurity vulnerabilities within the private sector and responding to cyberattacks. The Departments of Commerce, Treasury, and Justice, as well as the Securities and Exchange Commission and financial market regulators, also increasingly are involved in overseeing the intersections between data security, law enforcement, privacy and consumer protection, market disclosure, and systemic risk. “It is generally acknowledged that the government’s efforts have been reactive and disjointed, and many have questioned the wisdom of ad hoc enforcement actions to establish standards and rules in this area. It remains to be seen if the 114th Congress can deliver comprehensive cybersecurity legislation to empower and guide regulatory agencies, enforcement authorities, and corporate America.” Danielle Gray, a partner in the Financial Services practice. O’Melveny is uniquely equipped to provide strategic advice for managing risk in this rapidly changing area. Our team includes a former US National Security Advisor, a former Cabinet Secretary and Senior Advisor to the President, a former White House Counsel, a former Deputy Secretary of Commerce, a former Director of the Federal Trade Commission’s Bureau of Competition, and several former top lawyers in the Department of Justice and Securities and Exchange Commission. Inter Partes Review Now Standard in Patent Cases Since the Leahy-Smith America Invents Act made the inter partes review (IPR) process available in September 2012, it has become an extraordinarily popular defense tactic for responding to patent infringement litigation. The process before the Patent Trial and Appeal Board (PTAB) moves far more quickly than the old reexamination processes, providing certain advantages over district court litigation, including no presumption of validity of a challenged patent and a “broadest reasonable interpretation” standard of claim construction. Both of these advantages make invalidity easier to prove. The IPR process also requires challengers to file petitions quickly and carries estoppel provisions that will bar them from asserting invalidity in district court on any grounds that could have been brought in the IPR once the PTAB issues a final decision. “Every patent litigator, whether on the defense side or plaintiff’s side, needs to be intimately familiar with the inter partes review process. It is part of the strategic thinking now in nearly every patent case we handle.” Darin Snyder, chair of the Intellectual Property & Technology practice. Although the PTAB has instituted review based on IPR petitions in the vast majority of cases, it can be defeated. O’Melveny recently defeated institution of an IPR review by attacking the challenger’s failure to adequately articulate a motivation to combine the asserted prior art references and failure to address the secondary evidence of non-obviousness developed during the original prosecution of the challenged patent. In what the media called a “rare” and “potentially groundbreaking” decision, O’Melveny defeated an effort by Synopsys, Inc. to invalidate patent claims owned by Mentor Graphics. To our knowledge, this was one of the first final decisions in an IPR in which patent claims survived. These claims ultimately served as the foundation for a successful jury trial and a more than US$36 million award to our client. Year in Review How to Prepare for the Chinese Anti-Corruption Crackdown To avoid getting swept up in the Chinese government’s corruption crackdown, as seen in its recent arrests of foreign executives, companies conducting business in China should take immediate action to bolster their anticorruption compliance programs to address issues from Chinese anti-corruption laws, and the intersections between the anti-corruption laws and the FCPA and UKBA. The best plan of action is to identify risk areas and implement a fully functioning anti-bribery compliance program and to conduct effective compliance risk evaluation from time to time. “It is difficult to predict where and when the Chinese government will take aim. This means that any company doing business in China needs to be prepared for the worst.” Bingna Guo, partner in the International Litigation practice. “The government’s increasingly active anti-corruption campaign means that not only are Chinese prosecutors looking for cases in this area, but Chinese companies are conducting their own anti-corruption audits and these too can snare US and other global companies who do business with them.” Steven J. Olson, partner in the White Collar Defense and Corporate Investigations practice. Being prepared can help companies handle a Chinese government investigation quickly, without too much disruption to their business. O’Melveny assisted a leading California-based semiconductor company in successfully navigating the arrest and prosecution of one of their sales executives in China for alleged commercial bribery. The firm conducted a rapid internal investigation, advised the company on strategy—including remedial measures—and coordinated with two Chinese criminal law firms representing the company and the employee. A Look at the Global Regulatory Landscape for Funds O’Melveny is working with US and Asia-based fund managers, as well as EU-based