Wednesday, October 16, 2013

Patentgate: Judge denies Samsung motions, finds disclosures "improper", cover-up "inexcusable"

Yesterday I wrote that Judge Koh appeared "underwhelmed" by a couple of Samsung motions designed to delay the investigation into the Patentgate scandal and predicted a denial of those motions. Indeed, the denial came down later that day by local time. And it's not just that Samsung's motions failed: Judge Lucy Koh's order makes things worse for Samsung because this federal judge, who was actually rather lenient on Samsung's past failures to comply with court orders, is no less convinced of wrongdoing than Magistrate Judge Grewal and has written an order that ups the ante for Samsung's previously announced mandamus petition to the Federal Circuit.

Here's the order (this post continues below the document):

13-10-15 Order Denying Samsung Motions Relating to Patentgate Scandal by Florian Mueller

Judge Grewal had said in his order last week that "[t]here is reason to believe the rule [that confidential information made available only to outside counsel won't be disclosed to the party itself] has been breached in the present case", and at the related hearing he suggested to Samsung's counsel again and again and again that the occurrence of violations could and should be admitted because the facts are so very clear. Samsung then brought a set of motions asking Judge Koh to overrule Judge Grewal because some of his findings were allegedly erroneous and contrary to law. Judge Koh, however, has concluded that Judge Grewal's related decision was "eminently reasonable".

Samsung and the law firm representing it in this case now face an even bigger problem than before because Judge Koh's order makes clear that there has been some wrongdoing:

Footnote 1 (page 9):

"Samsung's exhibits to its motions for relief show that Quinn Emanuel did in fact improperly disclose information about the other Apple licenses to Samsung's employees."

Page 14:

"[A]n issuance of a stay will 'substantially injure' the interests of all parties whose confidential information Quinn Emanuel improperly disclosed to Samsung's employees. These parties' interests require the determination of the full extent of the improper disclosures and the full extent of the improper uses of the improper disclosures and the immediate termination and remedying of such improper disclosures and uses."

She also condemns Samsung's unwillingness to shed light on the extent and use of these improper disclosures:

Page 9:

"Despite the fact that three months had passed since the alleged violation came to Quinn Emanuel's attention, Samsung and Quinn Emanuel still had no answers for Magistrate Judge Grewal at the hearing regarding the extent of the disclosures, to whom they were made and what was disclosed, and how the disclosed information has been used and is currently being used. [...] Samsung's lack of information after three months is inexcusable, and necessitates Court-supervised discovery."

Improper disclosures. Inexcusable unwillingness to shed light on the matter. And, still worse, if it turns out that the use of improperly-disclosed information influenced the ITC investigation of Samsung's complaint against Apple, which is what Apple appears to be convinced of, then this would be "particularly egregious" in the judge's opinion:

Page 10:

"Of further concern to the Court is that not only is there evidence that Samsung employees received confidential information and used it in their licensing negotiations with Nokia in violation of the protective order, but also this information may have been used by Samsung's lawyers in other courts. Apple's counsel noted at the hearing that 'information from these disclosures was used to craft arguments at the ITC . . . . The ITC issued an opinion on the licensing negotiations that specifically accepted Samsung's argument in which this confidential information was used.' [...] Such use of this information, if true, is particularly egregious, given that the protective order states that 'Protected Material designated under the terms of this Protective Order shall be used by a Receiving Party solely for this case, and shall not be used directly or indirectly for any other purpose whatsoever' and that '[a]ll Protected Material shall be used solely for this case or any related appellate proceeding, and not for any other purpose whatsoever, including without limitation any other litigation, patent prosecution or acquisition, patent reexamination or reissue proceedings . . . .'."

Judge Koh also mentions that this matter involves license agreements between Apple and other parties than Nokia (i.e., Ericsson, Sharp, and Philips). She explains toward the end of her order that there are two trials coming up between these parties in her court and the issue of protective order violations must be resolved swiftly. While it's very likely that Samsung will now file a petition for writ of mandamus with the Federal Circuit, I doubt that the appeals court will grant Samsung the stay it requested. Unless the U.S. government shutdown somehow affects the court's plans, I believe next week's Patentgate hearing will indeed be held, and it could become deeply embarrassing for Samsung and its lawyers.

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