with as much sarcasm as he just leveled at Goldman Sachs six weeks ago?
1. Duties to Former Clients?
Fenwick & Westwas the attorney for Leader Technologies in 2002—thepivotal period that Facebook contested in Leader’spatent infringement lawsuit
Leader v. Facebook
, 08-cv-862 (D.Del 2008). They sought no conflicts waiver.
2. Inequitable Conduct?
Fenwick & West listedLeader Technologies’ US Pat. No. 7,139,761 as related-technology “prior art” references on two MarcAndreessen social networking US Pat. Nos. 7,756,945and 7,603,352, yet never disclosed Leader’s patent inany Facebook filings.
3. Material Nondisclosure?
Fenwick & Westmakes no mention in the S-1 of the
Leader v. Facebook
lawsuit that was just heard on March 5, 2012 inWashington D.C. at the Federal Circuit Court of Appeals —the second highest court in the land. The result of thiscase could result in billions of dollars in damages paid toLeader, and even an injunction (shut down Facebook?).Fenwick evidently does not consider such risks asmaterial.
4. Breach of Fiduciary Duty?
Ironically, Fenwick& West were the attorneys responsible for the Facebookpurchase of Instagram. No wonder the deal took only
to complete over a holiday weekend! Thereweren’t any members of the deal who
have avested interest in making it happen! Since Facebook hasbeen judged to be “literally infringing” 11 of 11 Leaderpatent claims, and in my opinion, argued a pretty flimsycase on appeal; shouldn’t Fenwick now reconsider theirfiduciary responsibilityto properly handle funds that mayultimately belong to their former client, LeaderTechnologies?
5. Related Party Transaction?
Fenwick & Westattorney, Greg Roussel, was quoted in a
article talking about the ease of operationin the Facebook-Instagram deal.
– Even our children know that school sportsreferees cannot make bets on games they call.Why not the adults involved in Facebook? Oh yes,the M-O-N-E-Y. Source:
Donna Kline Now!
: “Was that wrong?”
Just last month Facebook’s IPO advisorGoldman Sachs was smacked down in DelawareChancery Court for “disturbing behavior.” JudgeStrine described Goldman’s conduct as “taintedwith disloyalty.” They made secret arrangementswith the CEO of the selling company for fees onthe
while also holding stock in the
company. Their attempt at addressingthe conflict by bringing in Morgan Stanley wasexposed as a charade since Morgan onlyreceived fees IF the transaction went through! Inother words, their vested interest was infollowing Goldman’s wishes.While the court did not grant the injunctionfor other legal reasons, it concluded thatGoldman "concealed" motives and financialinterests. Judge Strine said Morgan Stanley gave“questionable” valuation advice. His opinion
dripped with sarcasm
—citing Emerson anddoubting Goldman’s capacity to serve the clientwhile simultaneously maybe pocketing"
" as a stockholder in the buyingcompany.
In re El Paso Corporation Shareholder Litigation
, C.A. No. 6949-CS, Del. Ch. Feb. 29,2012). Source:
Donna Kline Now!
a member of theGovernanceCommittee, theirresponsibilitiesinclude:
“reviewingrelated partytransactions”“reviewingproposed waiversof the code ofconduct”
Facebook S-1, p.100.
“Related partytransaction” meansthe party stands tobenefit on the
side of atransaction. Forexample, you ownstock in CompanyA that is looking toget a contract/dealfrom Company B.However, you are
involved inthe hiringdecisions atCompany B. Oftenin such situationsthe person would“recuse” himself, or in other words, step away and not beinvolved in that decision. Did Thiel and Andreessen and James Breyer do that with the Instagram transaction? Didthe replacement committee ask the tough questions aboutvaluation and advisability of the transaction? Hm. Doubtful.
3. Facebook isa “ControlledCompany” . . .or not?
The S-1 onpage 99 saysthat Facebookis a“ControlledCompany”where MarkZuckerbergmakes all thedecisions andwhere “we arenot required tohave a majorityof our board of directors beindependent.”However, inthe nextsection titled“BoardCommittees”the S-1 describes normal and customary organization of board committees, namely audit, compensation and wake of Instagramcontroversy/// Instagram-scam?/// Facebook’sOrwellian (black-is-white) definition of “clear andconvincing”evidence/// Facebookcountersues Yahoowith bogus patents?Confirms recklessmindset./// Facebook “Liked”Leader’s sourcecode … before itdidn’t/// Proof Fenwick &West LLP did notdisclose Leader asprior art toFacebook/// MF Global + JPMorgan + GoldmanSachs + HarvardGrads + Politics =A big mess/// What Facebook,Accel Partners,Goldman Sachs andFenwick & Westdon’t want us“muppets” to know/// Make up yourmind, Fenwick &West LLP/// Muppet Mania/// Haughtiness inthe face of “literalinfringement”/// Facebook
pharma users toallow comments, yetwill not returnphone calls now/// First thoughtsafter leavingcourthouse March 5,2012/// Judges Selected/// San FranciscoCBS-TV KPIXCoverage/// NBC-TV4(Columbus)Interview withLeader founderMichael McKibben
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