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Apple asks for sanctions after Samsung executives improperly looked at Apple's licensing agreement with Nokia


During the course of Apple's original patent lawsuit with Samsung, the South Korea-based tech conglomerate routinely raised the ire of Apple's legal team for engaging in behavior that was ethically questionable at best. Apple, for instance, accused Samsung of purposefully destroying evidence it was required to hand over during discovery. Notably, this wasn't the first time Samsung was accused of engaging in such behavior, having been hit with sanctions in 2004 for willfully destroying emails in its lawsuit with MOSAID Technologies.

Now, Samsung is at it again, with Apple requesting sanctions after finding out that Samsung executives were improperly given access to secretive documents from Apple and Nokia's 2011 licensing agreement.

During the discovery phase of litigation, great pains are made to ensure that sensitive information -- whether it be social security numbers of employees, future business plans or in this case, confidential licensing information -- does not fall into a competitor's hands. It is only with the "Highly Confidential" designation that a company can confidently hand over documents that would otherwise be detrimental if released to the public.

Now the documents seen by Samsung executives were marked "Highly Confidential -- Attorneys' Eyes Only." As the marking so bluntly indicates, the documents in question should have never been accessed by anyone not on Samsung's legal team, which in this case was the law firm of Quinn Emanuel.

Not only did Samsung employees at large have access to documents from Apple marked "Highly Confidential," they also seemed to gloat about it.

Here's what we know based on a court order from Magistrate Judge Paul Grewal who writes that the rules of confidentiality may have, in fact, been breached by Samsung.

During the course of discovery between Apple and Samsung, Apple produced a number of documents pertaining to its June 2011 licensing agreement with Nokia. Again, these documents were designated "Highly Confidential -- Attorney Eyes' Only." Further, Apple also produced confidential licensing agreements it had signed with Ericsson, Sharp and Philips.

Sometime later, in March 2012 to be exact, Samsung's legal team sent Samsung a report on damages put together by expert Dr. David J. Teece. Teece's report referenced the aforementioned highly confidential documents and as such should have been marked "Highly Confidential -- Attorney Eyes' Only" as well. It, however, was not. Nor were confidential aspects of the report redacted.

Grewal's order reads in part:

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.

Now, flash forward to June 2013. In a meeting held between Nokia and Samsung licensing executives, Samsung executive Dr. Seungho Ahn told Nokia's Paul Melin (Nokia's Chief Intellectual Property Officer) that he knew specifics from Nokia's licensing deal with Apple.

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.

This, of course, is merely how events transpired according to Melin. Is it possible that Samsung has a different take as to how things went down? It's hard to say because Samsung, not surprisingly, has been conveniently quiet on the matter.

Not only have they chosen not to provide sworn testimony from any Samsung executives who attended the meeting, they've also "failed to supply the court with any evidence at all regarding other uses of the Apple-Nokia license, or those of the other confidential licenses."

Why might this be the case?

Because Samsung, believe it or not, asserts that it's done nothing wrong.

Even though Samsung concedes that "dozens of individuals" accessed Apple's confidential licensing agreement, they content that a violation of the protective order can only occur if done willfully.

For anyone who closely followed Apple and Samsung's trial from the summer of 2012, the following excerpt from Grewal's order might sound eerily familiar.

Counsel further denied the need for any formal discovery into the matter, even though three months after the breach was brought to its counsel's attention, Samsung is unable to provide evidence on even the most basic questions, such as: who has now had access to the confidential licensing information? For what purpose? When? Where? How? Has Samsung relied on any of the confidential information in taking any position before any other court or jurisdiction? Exactly what steps has Samsung taken to prevent dissemination and use of the confidential information in the future? In each instance, the only response available seems to be, "We're working on it."

While Grewal stops short of saying that Samsung should be slapped with sanctions, he notes that Samsung's solution -- compile a log of all documents that reference Teece's damages report -- is wholly insufficient. And with Apple and Samsung set for another patent infringement trial in months, Grewal writes that time is of the essence.

Consequently, Grewal writes that Samsung has until October 16 to produce pertinent documents. They must also make Dr. Ahn and other Samsung employees available for deposition.

Lastly, Grewal writes that "Nokia shall be allowed access to and full participation in all of the above discovery."

A hearing on the matter is set for October 22, 2013.

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