A few days before the Apple v. Samsung limited damages retrial in the Northern District of California, there is again some news concerning the "Patentgate" scandal over improper disclosures of highly confidential business information from Apple's license agreements with other parties including Nokia, Ericsson, Sharp, and Philips by Samsung's lawyers to their client. It now appears likely that Samsung and its ouside lawyers from the Quinn Emanuel firm will be sanctioned, but only after the retrial: a further hearing has been scheduled for December 9, 2013. Originally the court aimed to resolve the matter ahead of the retrial. If any of the sanctions relate to the use of licensing information at a trial, the retrial, which is only about Samsung's infringement of Apple's patents and not about the standard-essential patent (SEP) licensing issues relevant to many of Samsung's asserted patents, is less important anyway than the trial that will be held in the second litigation between these parties in the same district starting March 31, 2014.
After Samsung's chief licensing executive Dr. Ahn allegedly told Nokia in a licensing negotiation in Korea in June that his lawyers had disclosed to him the terms of the Apple-Nokia settlement, Nokia complained to the California court. Apple moved for sanctions and further discovery, and Nokia joined that motion. In early October an order by Judge Grewal on this matter and a hearing transcript brought the affair to light. Samsung appealed the order to Judge Koh, who totally supported Judge Grewal. Judge Koh, who will also preside over the impending retrial, criticized the conduct in question even more harshly, finding the disclosures "improper" and Samsung's lack of cooperation "inexcusable".
A couple weeks later, after Samsung provided some sworn declarations, especially one by Dr. Ahn contradicting Nokia's representation of the June meeting all the way, another hearing was held. At that hearing, Judge Grewal said he was not yet convinced that sanctions were warranted, and decided that the next step should be an in camera ("in chambers") review of documents over which Samsung had claimed privilege but of which Apple doubted that they were legitimately withheld from its lawyers.
Meanwhile, Samsung and Nokia announced the extension of some patent license agreement, but as I wrote in my coverage of that post, I believe it was a SEP-only license deal and the parties probably still have to sort out non-SEP licensing issues. Also, I'm not aware of Nokia having withdrawn its support for sanctions against Samsung over the Patentgate disclosures, though I wouldn't rule out that this could happen as a result of the recent Nokia-Samsung deal.
Judge Grewal's latest order (published further below) came down on Friday evening local time. These are the most interesting parts:
The question at this stage appears to be what sanctions the court should impose on Samsung and Quinn Emanuel:
"Having finally crawled out from under the boxes [full of material submitted for in camera review], it appears to [Judge Grewa] that if anything was breached, it was this court's protective order, and that sanctions against Samsung and its attorneys are warranted."
"[F]rom the arguments and evidence submitted, an outline does emerge suggesting sanctions should issue based on the following violations of its protective order: [...]"
Judge Grewal agrees with Apple that Samsung's assertions of privilege were overreaching. At the very least, the court wants Samsung to provide until November 15 (next Friday) more of a justification for privilege because "the court thus far is unpersuaded that the generic statements in the [privilege] log meet the burden required to claim that protection". Samsung is given another opportunity for briefing only "out of an abundance of caution". Also, "[t]he court will not tolerate further efforts to deny outside counsel access to discovery not truly subject to privilege or work product protections". Judge Grewal notes that "[b]y maintaining these seemingly unwarranted [privilege] claims, Samsung significantly burdens not only Apple and Nokia's ability to address the sanctions issue, but also the [judge]'s ability to tell the full tale of what he has seen". As you might imagine, I'm eager to see "the full tale of what [Judge Grewal] has seen" and to share it with you soon.
Samsung failed to meet the court's deadlines for submitting material for the in camera review. Footnote 9 says "Samsung submitted the last of its documents only [the day before the order, i.e., Thursday]".
There will be some further inquiry by the court into what happened at the June 4 meeting between Nokia and Samsung. Among other things, Nokia will have to produce to Samsung the Powerpoint presentation it used in that meeting.
A previously unknown fact is that Samsung made what the court considers "wrongful use of the disclosed [information] in preparing for [...] its negotiations and arbitrations with Ericsson between May 2012 and May 2013".
Ericsson appears to be increasingly interested and involved in this issue. The order also says that "[c]ounsel for Apple, Nokia, and Ericsson may be present for the entirety of all depositions taken in accordance with this order."
One of Judge Grewal's questions relates to the extent to which Apple kept the terms of its license agreements with Nokia, Ericsson, Philips and "Siemans" (sic) confidential. So far I thought this was about license agreements with Nokia, Ericsson, Philips, and Sharp. Now Sharp is not mentioned, but Siemens is. Maybe a future order will shed light on this.
"Samsung and its counsel are invited to file a brief by December 2, 2013 to show cause why sanctions should not issue for [the identified] violations. Apple and Nokia also may submit a brief by this same date proposing appropriate sanctions. The parties shall address both the legal framework and the evidence relevant to any sanction to be imposed."
This doesn't look good for Samsung. After Judge Grewal recently declared himself unconvinced of the need for sanctions, I thought Samsung and its lawyers might get away with what they've done, but now they are under reasonably serious pressure again. The Northern District of California is not the only venue in which the Patentgate affair could lead to sanctions. An Apple motion for sanctions is also pending at the ITC, and Justice Annabelle Bennett of the Federal Court of Australia recently appeared to be losing her patience with Samsung in this context.
Here's the Friday order:
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