Smartphone Industry Scandal: Highly Confidential – Attorney Eyes … Not Only!
‘Inadvertent
disclosures’ happened (Samsung’s counsel[1]).
Inadvertent (Adj.): failing
to act carefully or considerately; inattentive (Collins Online Dictionary).
A
couple of days ago, F. Mueller IP expert (FOSS patent) published an interesting article about
Samsung’s illegal disclosure of confidential information related to the secret
Nokia-Apple patent license. In this case, the United States District Court
(Northern District of California) seemed to be very ‘angry’ with Samsung and
its outside counsel (Quinn Emanuel). From the start, the tone was set: ‘(…) Letting
Samsung and its counsel investigate without any court supervision is unlikely
to produce satisfactory results’ said Magistrate Judge Paul S. Grewal.
What
are the consequences of such a disclosure and what sanctions on Samsung’s
actions might be taken by the Court? Unfortunately, it’s still hard to predict...
The
mere facts of this new Apple Inc. (and
Nokia) vs. Samsung Electronics Co. case can be summarized as follows:
‘During the massive fact discovery in this case between August
2011 and March 2012, Apple produced copies of a number of its patent license
agreements, including a June 2011 license between Apple and Nokia. Apple
marked the Apple-Nokia license as “Highly Confidential --Attorney Eyes’ Only”
as permitted by the court's protective order[2]
[an order that will keep the
information out of the competitors’ hand]. Apple also produced and
marked as “Highly Confidential --Attorney Eyes’ Only” similar patent license
agreements it has reached with Ericsson, Sharp, and Philips.
As fact discovery transitioned to expert discovery, on March
24, 2012, Samsung’s outside counsel sent Samsung a draft expert report by Dr.
David J. Teece. Dr. Teece’s report concerned damages to be awarded for Apple’s
alleged infringement of Samsung’s asserted declared-essential patents. Because
it addressed highly confidential, attorneys’ eyes only information, the report
should have been fully redacted of that information before it was sent.
However, intentionally or inadvertently, it was not. The report as distributed
included key terms of each of the four Apple license agreements.
Samsung’s outside counsel posted the report on an FTP site
that was accessible by Samsung personnel. An email providing instructions
to access the FTP site was addressed to the regular client distribution list
used by counsel to provide Samsung personnel updates regarding this case. The information
was then sent, over several different occasions, to over fifty Samsung
employees, including high-ranking licensing executives. Specifically, on at
least four occasions between March 24, 2012 and December 21, 2012, Samsung's
outside counsel emailed a copy of some version of the report to Samsung
employees, as well as various counsel representing Samsung in courts and
jurisdictions outside the United States.
At this point, things get murky. According to a declaration
from Nokia’s Chief Intellectual Property Officer, Paul Melin, on June 4, 2013, in
a meeting between Samsung and Nokia licensing executives, Dr. Seungho Ahn
informed Nokia that the terms of the Apple-Nokia license were known to him.
Specifically, according to Mr. Melin, Dr. Ahn stated that Apple had produced
the Apple-Nokia license in its litigation with Samsung, and that Samsung’s
outside counsel had provided his team
with the terms of the Apple-Nokia license. Mr. Melin recounts that to prove to
Nokia that he knew the confidential terms of the Apple-Nokia license, Dr. Ahn
recited the terms of the license, and even went so far as to tell Nokia that “all
information leaks.” Mr. Melin also reports that Dr. Ahn and Samsung then
proceeded to use his knowledge of the terms of the Apple- Nokia license to gain
an unfair advantage in their negotiations with Nokia, by asserting that the
Apple-Nokia terms should dictate terms of a Samsung-Nokia license’[3]
(emphasis added).
Of
course, ‘Samsung’s counsel denied even one violation of the protective order,
asserting that such a violation can only occur willfully’ [4].
The
court is still trying to find out more about how the information was disclosed. Because
the Judge had ‘reason to believe the rule has been breached in the present
case’, he ordered Samsung to provide some e-mails and communications about
patent license agreements to Apple; and some depositions too.
In
an e-discovery world where attorneys must review an ever-increasing mass of
information before turning over evidence to the other side, the risks of
inadvertently disclosing privileged material are present. However, in this
case, it seems that the report including key terms of each of the four Apple
license agreements (that should have been fully redacted of highly
confidential, attorneys’ eyes only information) wasn’t sent inadvertently. A
further hearing is scheduled on October 22, 2013.
Follow me on Twitter @tdubuisson or check my
professional profile on LinkedIn: http://www.linkedin.com/in/thomasdubuisson
[2] More precisely, a protective order ‘may
be issued to prevent a disclosure in a legal proceeding that would prejudice
the rights of a party, or prevent the legal process from being used to harrass,
embarrass, or cause someone undue burden or expense’, available at http://definitions.uslegal.com/p/protective-order/
[4] Id.
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