Samsung Lawyers Sanctioned in Apple Patent Fight

The all-out litigation war over smartphone patents now extends to sanctions imposed Thursday on Samsung lawyers Quinn Emanuel over their failure to protect confidential terms of Apple licensing deals in documents improperly sent to Samsung employees.

Magistrate Judge Paul Grewal opened his 19-page order like this:  “A junior associate missing one redaction among many in an expert report is not exactly a historical event in the annals of big-ticket patent litigation.  Even if regrettable, these things can happen, and almost certainly do happen each and every day.  But when such an inadvertent mistake is permitted to go unchecked, unaddressed, and propagated hundreds and hundreds of times by conscious – and indeed strategic – choices by that associate’s firm and the client alike, more significant and blameworthy flaws are revealed.”

Grewal also said the attitude of “share-and-share alike” that allowed leaked information to spread so far means “Samsung is as culpable for this debacle as Quinn Emanuel.”

Apple wanted its pound of flesh, proposing everything from an injunction against Samsung in one case to a 10-year ban on representing any party adverse to Nokia or a suggestion Samsung and Quinn Emanuel should be banned from any situation in which they could make use of licensing information for two years.  Grewal called the proposals “ludicrously overbroad.”

To discourage a recurrence and abrogate the harm, Grewal ordered Quinn Emanuel to pay Apple, Nokia and their lawyers “for any and all costs and fees incurred in litigating this motion and the discovery associated with it.”

Grewal did not determine what that final expense will be, but to put it in perspective, he said he reviewed more than 20,000 pages of documentary evidence, 5,500 pages of declarations, 61 briefs and deposition transcripts covering 50 hours of testimony.  (That should be quite a bill.)

He said the expense coupled with the public findings of wrongdoing is “sufficient both to remedy Apple and Nokia’s harm and discourage similar conduct in the future.”

In order to get the two sides to play nice from now on, he ordered Quinn Emanuel and any other law firm representing Samsung to send redacted versions of documents to Apple’s lawyers for their review and approval.  He also ordered Apple’s lawyers to adopt the same practice.

Lastly, Quinn Emanuel has to collect copies of the improperly redacted expert report with the leaked confidential information and make sure it is deleted, erased, wiped or permanently removed from Samsung’s control in 14 days.

The dispute is an outgrowth of the patent infringement case by Apple accusing Samsung of illegal use of smartphone technology belonging to Apple.  A 2012 jury verdict favored Apple and awarded Apple $930 million in damages.  A second trial on more current smartphone models is set for trial in March.

What Happened

Back in March 2012, an associate of Quinn Emanuel failed to properly redact an expert report by David Teece, and the exposed information just happened to include the terms of Apple and Nokia’s license agreement.  (Nokia is not a party in the patent dispute.)

It was posted by the law firm to an FTP site and emailed to more than 90 Samsung employees with instructions for accessing it.  It exposed terms of several of Apple’s confidential license agreements, including those with Nokia and Ericsson, the order states.

Apple and Nokia argued in an October hearing that Samsung used the information to gain an advantage not only in the Samsung/Nokia licensing negotiations, but also in proceedings before the U.S. International Trade Commission and the U.S. Federal Trade Commission as well as litigation around the world.

Shortly before negotiations between Samsung and Nokia began, a document called “Nokia-Apple License Memo” was widely circulated within Samsung and sent to another outside law firm, according to Grewal.

The information in the Teece report continued to circulate through the last half of 2012 to over 200 people not authorized to see it, the court said.

A Quinn Emanual senior associate emailed Samsung in-house lawyer Daniel Shim a copy of the tainted Teece report in December 2012.  A junior associate spotted the incomplete redaction and immediately warned his superior and a partner.  Shim was asked to delete the email, which he confirmed he did, but “nothing more was done to contain or investigate the damage, and neither Apple nor Nokia were notified there had been a disclosure,” Grewal said.

In January 2013, the senior associate forwarded Shim a “clean” copy of the Teece report as well as an email chain that highlighted for Shim precisely where the confidential information could be found in older versions.

A few months later when Shim emailed Quinn Emanual a copy of the unredacted Teece report, the law firm did nothing in response, Grewal said.

In June 2013, during Samsung and Nokia negotiations on a licensing fee, Nokia proposed a number far above what Samsung thought appropriate and it countered by reciting the terms of Nokia’s parallel license with Apple, stating he learned the terms from his lawyers — because “all information leaks,” the order states.

That was enough for Grewal.

Case: Apple Inc. v. Samsung Electronics, No. 11-1846LHK




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