updated 01:53 am EDT, Wed October 16, 2013
Three Samsung motions meant to delay investigation of breach shot down
The presiding judge in the ongoing Apple-Samsung trial (the first stage of which ended with a complete victory for Apple and over $1 billion in damages awarded by a jury) is, to put it mildly, unhappy about Samsung's stonewalling of an investigation into the disclosure of confidential terms of an Apple-Nokia deal to Samsung executives. Rather than admit culpability, the company and its legal firm attempted to persuade the judge that the whole thing was a blameless accident. It didn't work.
Judge Lucy Koh on Tuesday denied all three Samsung motions (order below) that were intended to delay the investigation of the improper disclosure. Samsung executives learned of the terms of Apple and Nokia's patent licensing deal through documents intended to be seen only by an expert witness and outside counsel, who were not allowed to reveal their contents. Magistrate Judge Paul S. Grewal, investigating the matter, found that Samsung's counsel Quinn Emmanuel disclosed the sensitive information and that Samsung executives later used the knowledge to gain an advantage over Nokia in patent licensing negotiations last June.
The motions from Samsung asked for both relief and a motion to stay the case, but in addition to denying the motions, Koh noted the Korean handset maker's "unwillingness to cooperate in discovery, which would help the court determine how the ill-gotten information was used and to what extent." There is a suspicion, forwarded by Apple, that Samsung used its knowledge of the Nokia deal to bolster its claims in an unrelated ITC case.
Were that claim to be proven true, Judge Koh remarked, it would be seen as a "particularly egregious" use of the confidential data, meaning Samsung executives could directly be held liable for abusing the information alongside Quinn Emmanuel. Judge Grewal had recommended that Samsung's counsel just own up to the breach, but instead lawyer Susan Estrich, representing the firm, claimed there was no wrongdoing -- though she admitted that the breach shouldn't have happened. Her argument was that the law firm did not intentionally divulge the terms, and that Samsung executives acted on the information but didn't know it was obtained illegally -- thus, nobody is actually to blame for anything.
Koh ruled that Quinn Emmanuel "did in fact improperly disclose information about the other Apple licenses to Samsung's employees." She supported Judge Grewal's findings of culpability by Quinn Emmanuel and is likely to issue sanctions against the firm, and potentially Samsung itself. Samsung already finds itself with a higher bar to allow Samsung's recent petition to the Federal Circuit to succeed as a result of the actions, and if it was betting that Judge Koh would be more accepting of the firm's misbehavior than Judge Grewal -- as evidenced by the motions -- the company received a rude awakening.
"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," Judge Koh wrote in her order. "Samsung's lack of information after three months is inexcusable, and necessitates Court-supervised discovery."
Patent case analyst Florian Mueller notes that Samsung is now unlikely to succeed with any further pleas for a stay, in this court or any other. Judge Koh has set time for a hearing on the matter sometime next week, and has made it clear that any hint of the confidential information showing up in the arguments used by Samsung at the ITC or in two unrelated cases involving other tech companies (specifically Ericsson, Philips and Sharp) would be viewed poorly by the court.