updated 11:30 pm EDT, Tue October 22, 2013
Partial license terms of Apple and Nokia deal known to many Samsung execs
Samsung and its attorneys in its smartphone patent battle with Apple were grilled today by Federal Court Judge Lucy Koh over alleged mishandling of confidential Apple and Nokia documents. Apple calls the misuse of the documents released by law firm Quinn Emanuel a "massive unauthorized disclosure of highly confidential information" that gives Samsung an edge in negotiations with some of Apple's business partners, including Nokia itself.
The breach was made public in a hearing in the beginning of October, yet occurred in December of 2012. The firm was informed of the breach, when Apple discovered that an associate at Quinn Emanuel sent an improperly un-redacted document to a Samsung official. Quinn Emanuel did nothing about the breach for months after being informed of the problem. As a result of the breach, at least 220 Samsung employees now have knowledge of Apple's confidential data.
When the court informed Samsung of the leak, the Korean manufacturer provided heavily redacted -- and nearly useless -- documents to the court, according to Apple attorneys. Apple attorney William Lee said of the documents provided by Samsung in response to the court order that it was "remarkable that the answer to all of this is, 'we're not going to give you the documents'."
Senior partner and co-founder at Quinn Emanuel John Quinn was at the hearing today in the Northern District of California, apologizing for the data leak. Quinn claims that sanctions are not necessary, as he claims the firm did not intentionally leak Apple's business data. Additionally, Quinn believes that there is no evidence that Samsung did anything with the data which amounted to a few lines of confidential information in an expert's report provided to the law firm by Apple during the last omnibus patent trial.
This is in spite of testimony that Samsung executive Seungho Ahn reportedly told Nokia that he was aware of Apple's terms with the company, and used them to his advantage during patent licensing negotiations. Ahn swore to the court that he did not recall seeing any Apple documents, and believed that he had learned the specific terms of the Apple/Nokia deal from other news and public information sources.
Still, Quinn characterized the entire breach as a trivial accident with no consequences that Apple is simply trying to exploit. "For them, it's a free shot," Quinn said to Magistrate Judge Paul Grewal. "They can keep us occupied, run up the expenses and at some point ask your honor, 'Make them pay our fees.'"
Lee told the court that Apple is "getting phone calls and emails from our other license partners that say, 'Did you produce our information during discovery? What has Samsung done with it?' We don't have an answer."
Judge Grewal described Nokia's version of the patent licensing meeting in a court filing. He wrote that "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."
Samsung's court filing regarding the meeting differs greatly from Nokia's version of events. Dr. Seungho Ahn wrote that "I am certain that I did not tell Mr. Melin at the June 4, 2013 meeting that I received Apple/Nokia licensing terms from my outside counsel in the Apple/Samsung case, because it is not true, and because it would be a very foolish thing to say."
He added that "It would be incredibly reckless for me to have made such a comment to Nokia. It would amount to my admitting to an adversary that our outside counsel and Samsung had violated a protective order protecting the adversary's information and that I was attempting to use the information gained by such a violation to negotiate license terms. The idea that I would violate a protective order is simply wrong, and the idea that I would tell my adversary that I and my outside counsel had violated it and furthermore were violating it in that very instance by trying to profit from its use is preposterous."
In response to Apple attorney Lee declaring that he thought that Ahn's explanation was unlikely, Samsung attorney Quinn stated that "I prefer to think there's a miscommunication here rather than somebody's lying." Quinn noted that Ahn wasn't a native English speaker as a possible explanation for his inconsistencies, despite the seemingly contradictory fact that Ahn had graduated from California's Santa Clara University and was a member of the California Bar for 10 years, nor was any translator involved in negotiations with Nokia when the statement about Samsung having Apple's data was made.
Patent analyst Florian Mueller noted the difference between the two statements. Mueller declared that "I'm not going to speculate on who's more or less likely to tell the truth here. It's just hard to imagine how they could both be right at the same time ..."
"That information is in the head of every single Samsung licensing executive now," Lee said. "We need to come up with a remedy that will address that." The data leak matter is under legal investigation in Australia and Italy as well as the US court system.
This leak isn't the first example of potential judicial misconduct my Quinn Emanuel in the Apple versus Samsung case. Samsung appeared to defy the judge's order to exclude its contention that Apple copied the iPhone design from Sony by releasing specifically excluded slides to the press before the Apple versus Samsung trial in 2012, along with an inflammatory statement that questioned the court's impartiality and implied that Judge Koh was deliberately withholding exculpatory evidence from the jury. Senior Samsung attorney John Quinn admitted authorizing the release, but claimed it was sent only to media outlets that requested it. Quinn Emanuel wasn't censured or fined, but sternly rebuked by the judge for the stunt before the trial.