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Upcoming Webinar: COVID-19 and the Case for Force Majeure in California

Join us as two California business trial lawyers present “COVID-19 and the Case for Force Majeure in California”

The webinar will take place on Wednesday, May 27 at 10:00 AM – 11:00 AM Pacific Time. Register now.

Businesses throughout California are suffering the crippling economic consequences triggered by the COVID-19 pandemic. Looking for relief, many have been stymied by force majeure (so-called “Act of God”) clauses. Our speakers will discuss how to determine if you have a legitimate claim, and explore critical questions about force majeure in California, including:

  • What is a force majeure?
  • What constitutes force majeure in California?
  • How to determine when to assert force majeure?
  • Does force majeure trigger business interruption insurance?
  • What are the practical considerations for addressing force majeure in the
    COVID-19 Pandemic?

Our speakers include:

  • Stan Gibson, Partner, Jeffer Mangels Butler & Mitchell LLP

Stan is an experienced business trial lawyer and is the Chair of JMBM’s Patent Litigation Group. Among his numerous successes is the $570M breach of contract and patent infringement verdict for his client in Medtronic v. Michelson, which is listed in the National Law Journal’s Hall of Fame, a list of the 100 highest grossing verdicts since 2003.

  • Jessica Newman, Associate, Jeffer Mangels Butler & Mitchell LLP

Jessica Newman is an associate in JMBM’s Litigation Group and a member of its Patent Litigation and Art, Wine & Collectible Assets Groups. Her practice focuses on general commercial litigation, corporate defense and investigation matters, and intellectual property litigation.

 

Register Now

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Force Majeure in California: Does the COVID-19 Pandemic Qualify?

A Three Part Series

By Stan Gibson and Jessica Newman

Part 3 – Practical Guidance: Force Majeure and the COVID-19 Pandemic

 

See Part 1 – What Constitutes a Force Majeure

See Part 2 – Asserting Force Majeure

See Part 3 – Practical Guidance

Practical Guidance for Addressing Force Majeure in the COVID-19 Pandemic

Parties on both sides of a contract must weigh their options when faced with a force majeure event and should take steps to ensure that they have a clear understanding as to their obligations, the claims being made by the other contracting party, and what steps they can take to mitigate their losses and/or protect their rights.

There are a number of steps a party can and should take to limit any potential liability in the midst of the current COVD-19 Pandemic.

Review the Terms of Your Contract

First, review the specific terms of your contract. Parties may contract around certain risks that might otherwise be viewed as a force majeure event. You will need to know what your obligations are under the contract and whether you, or the other contracting party, will still be expected to perform even in the face of these unprecedented circumstances. For example, a contract may include specific provisions that a strike or national emergency does not relieve a party of its obligations under the contract.

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Force Majeure in California: Does the COVID-19 Pandemic Qualify?

A Three Part Series

By Stan Gibson and Jessica Newman

Part 2 – Asserting Force Majeure

 

See Part 1 – What Constitutes a Force Majeure

See Part 2 – Asserting Force Majeure

See Part 3 – Practical Guidance

When to Assert Force Majeure

As discussed in Part I, the party claiming inability to perform must be able to show that its performance is impossible or unreasonably difficult due to unforeseeable circumstances beyond its control. Typically, a claim of force majeure is made as an affirmative defense to a claim for breach of contract.

Where a force majeure event is claimed the party faced with the claim has two options. The party may “treat the repudiation as an anticipatory breach and immediately seek damages for breach of contract, thereby terminating the contractual relationship between the parties, or [they] can treat the repudiation as an empty threat, wait until time for performance arrives, and exercise [their] remedies for actual breach if a breach does in fact occur at such time.”[1] Although California law “authorizes the injured party to immediately seek damages” it does “not require the injured party to seek damages or lose the right to treat the repudiation as an anticipatory breach.”[2] If, however, a party “continues to accept the [repudiating party’s] performance, [it] may be deemed to have waived the breach.”[3]

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Force Majeure in California: Does the COVID-19 Pandemic Qualify?

A Three Part Series

By Stan Gibson and Jessica Newman

Part 1 – What Constitutes a Force Majeure

See Part 1 – What Constitutes a Force Majeure

See Part 2 – Asserting Force Majeure

See Part 3 – Practical Guidance

Introduction

The ongoing COVID-19 Pandemic is disrupting day-to-day operations, supply and delivery chains and general contractual obligations around the world and throughout California. Many companies and individuals are facing unprecedented situations and demands. In the midst of all this you may be wondering what effect, if any, the COVID-19 Pandemic will have on your, and other parties’, contractual obligations. You may have heard people throwing around the term “force majeure” as a reason for excusing performance or terminating a contract. But what does that term mean? And how does it work in California? The purpose of this series of articles is to answer these questions and more.

Although these are unprecedented times, the disruption caused by the COVID-19 Pandemic alone, may not be sufficient to excuse performance under a contract. Before making or responding to any claims of impossibility of performance due to the current situation you should carefully review the terms of your contract. Bear in mind that you, or another party, will not be excused from performance simply because performance is more difficult or expensive than anticipated. If faced with a claim of inability to perform by another party, you should ask yourself whether you are willing and able to continue performing your own contractual obligations before asserting that they are in breach. A party suing for breach of contract must be able to show that it was capable of holding up its end of the contract.

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Los Angeles—Jeffer Mangels Butler & Mitchell LLP (JMBM) Patent Litigation Chairman Stanley M. Gibson was recently recognized by the National Law Journal for the verdict achieved for his client in Medtronic v. Michelson, a patent infringement trial decided in 2004. The $582,000,000 verdict is number 51 on the NLJ’s Hall of Fame, a list of the 100 highest grossing verdicts since 2003.

Gibson and former JMBM partner Marc Marmaro defended Dr. Gary K. Michelson, a Los Angeles inventor, against medical technology company Medtronic in a case involving more than 100 patents. After a five-month jury trial in Tennessee, Dr. Michelson was awarded $110 million in damages, $60 million in patent infringement damages and $400 million in punitive damages. Medtronic subsequently acquired Dr. Michelson’s patents and technology for $1.35 billion.

“The Michelson trial was a complex case that I’m proud to have defended and won for Dr. Michelson,” said Gibson. “I’m pleased to see it recognized by the National Law Journal.”

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In this patent infringement action, Plaintiffs Brian Horowitz and Creative Outdoor Distributors USA Inc. (the “Plaintiffs”) filed a motion for sanctions against Defendant Yishun Chen (“Yishun”) and his counsel, David Lin (“Lin”) for alleged misconduct that took place during the depositions of defendants. The court had previously granted a motion to compel a further deposition, noting “that Lin and Yishun left the room while questions were pending, Lin improperly instructed Yishun not to answer questions, Lin made frequent speaking objections to coach Yishun, and that Lin was disrespectful and personally attacked opposing counsel.”

The court ordered the video transcripts filed so that it could review the depositions for itself. After reviewing the transcripts, the court determined that there were several instances of inappropriate behavior by the Defendants and their counsel. For example, the court explained that:

The court also found that an off-the-record conference between the attorney and Yishun was also troubling. The Court explained as follows: “Gibby asked Yishun when he gave Defendant Kevin Xia the right to protect his patents, to which Yishun replied, “2016, the end of the year, or perhaps it was at the beginning of 2015 when I first started working with him.” Gibby asked, “So, either the end of 2015 or the beginning of 2016,” prompting Lin to object, “I don’t think that’s what he said. I think he said the end of the year, 2016,” and Yishun to answer, “That’s what I remember.” Gibby then asked, “When you gave Kevin the right to protect your patents at the end of 2015 or the beginning of 2016, did you put the right for him to do that in writing at that time?” Lin objected, “I think that misstates his prior testimony. His prior testimony, I believe he said,” causing Gibby to protest that Lin was coaching. Continue reading

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Earlier this month, I participated in a roundtable discussion, hosted by Financier Worldwide, on the topic of “Resolving Patent Disputes.” The roundtable participants comprised seven experienced patent lawyers, and we each responded to the questions below.

  • In your opinion, what have been the key trends and developments shaping patent disputes over the last 12 months or so?
  • To what extent have you observed an increase in the number of patent disputes in today’s business world? What are the most common causes of conflict?
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Jeffer Mangels Butler & Mitchell LLP (JMBM) is proud to announce it has been ranked as an Orange County Metropolitan Tier 1 2019 “Best Law Firm” for Patent Litigation. This distinction was announced by the national publication U.S. News & World Report. The “Best Law Firms” annual announcement of the top rankings of law firms are based upon client input and professional references.

blf-badge-2019-300x300“Achieving this recognition is especially gratifying as it reflects the perspective of our clients and peers,” said Stan Gibson, Chair of JMBM’s Patent Litigation Group. “Our patent litigators are committed to solving problems and achieving clients’ objectives.”

Additionally, Gregory Cordrey, a partner in JMBM’s Patent Litigation Group was designated by Best Lawyers® as Orange County’s Patent Litigator of the Year for 2019.

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The Patent Litigation Group at Jeffer Mangels Butler & Mitchell LLP is pleased to announce that its Chair, Stan Gibson, will be speaking at PLI’s Electronic Discovery Institute 2017: What Corporate and Outside Counsel Need to Know.

Stan’s panel will focus on the “Preservation of Electronically Stored Information (ESI).”

The program is designed for corporate counsel, outside counsel, and other attorneys or risk management professionals who advise corporations on electronic discovery and document retention issues. This program is designed to provide participants with critical information on the latest developments in the law governing e-discovery.