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Defunct law firm Kenyon loses $9 million on appeal in fight against Napster-era charges

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(Reuters) – A New York state appeals court on Tuesday rejected a law firm’s bid to recover more than $9.3 million in attorney fees from a former client who invented a system for downloading music and movies from the Internet.

New York’s First Department Appellate Division ruled that the lower court had “properly” dismissed the claims of Kenyon & Kenyon, a former intellectual property firm now part of Hunton Andrews Kurth.

According to the notice, Kenyon began representing its former client SightSound Technologies Inc in an intellectual property dispute in 1999. As SightSound racked up $1.77 million in unpaid attorneys’ fees, the company and firm entered into an agreement that gave Kenyon a security interest in SightSound’s intellectual property.

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In 2004, SightSound sued music download pioneer Napster for patent infringement, but the case was stalled for years at the US Patent and Trademark Office. Cash-strapped, SightSound – with Kenyon’s blessing – struck a deal with General Electric Co in 2005, ensuring that GE would fund its patent litigation efforts.

The Napster litigation restarted in 2011, and the companies settled the case for $3.1 million in 2012. SightSound told Kenyon the settlement proceeds would go to GE, and the law firm raised no objection up to 16 months later, according to the opinion.

Kenyon & Kenyon sued SightSound, GE and DMT Licensing LLC, the GE-owned entity that funded SightSound’s Napster litigation, in 2014, claiming its unpaid fees reached $9.3 million. But New York Supreme Court Justice Andrea Masley ruled in May that the 16-month delay had been fatal to the company’s lawsuit.

Kenyon collapsed and was partially absorbed by Andrews Kurth in 2016. In 2018 Andrews Kurth Kenyon merged with Hunton & Williams to become Hunton Andrews Kurth. Despite these changes, the litigation continued under Kenyon’s name.

Brian Wheelin, a partner at Robinson & Cole who represented GE, DMT Licensing and SightSound Technologies, said GE was pleased with the court’s decision.

A lawyer for Kenyon and a spokesperson for Hunton Andrews Kurth did not respond to requests for comment.

The case is Kenyon & Kenyon LLP v. SightSound Technologies LLC, New York Appellate Division, First Department, Appeal No. 15144.

For Kenyon & Kenyon: Louis DeLucia of Ice Miller

For SightSound Technologies Holdings LLC: Matthew Sheppe of Reiss Sheppe

For SightSound Technologies LLC, DMT Licensing LLC and GE: Brian Wheelin of Robinson & Cole

Read more:

Late Kenyon and Kenyon lose $9 million battle with former IP client

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David Thomas

David Thomas reports on legal activity, including law firm strategy, hiring, mergers and litigation. He is based in Chicago. He can be reached at [email protected] and on Twitter @DaveThomas5150.