Apple v. Samsung: Court Orders Investigation into Potential Protective Order Violation by Samsung

As Apple and Samsung head toward yet another trial, Apple filed a motion for sanctions, accusing Samsung of violating the protective order in the case. Apple's motion asserted that Samsung's counsel had improperly shared information under the protective order with executives at Samsung.

The court began its analysis with a discussion of the importance of protective orders: "Time and again in competitor patent cases, parties resist producing confidential information to their adversaries' lawyers. They fear, among other things, that the lawyers will insufficiently shield the information from the competitors that they represent. Yet time and again, the court assuages these fears with assurances that a protective order will keep the information out of the competitors' hands. A casual observer might reasonably wonder what magic a protective order works that allows outside counsel access to confidential information to advance the case without countenancing untoward uses by the client. The answer is not a magical one at all: confidential information remains confidential because counsel and clients alike follow court orders. If parties breach this basic rule, the court's assurances become meaningless. There is reason to believe the rule has been breached in the present case."

The court then explained that during the fact discovery, 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.

During expert discovery, Samsung's outside counsel sent Samsung a draft expert report and the report addressed "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."

After that, the information was sent to over 50 different Samsung personnel, including several high ranking executives. Apple contended that Samsung executives had then disclosed to Nokia that they had the confidential information. The court then noted that "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.'"

The court found that Samsung's efforts to investigate were insufficient. "Whether the actions of Samsung and its counsel are worthy of sanctions, and what those sanctions might be, the court cannot yet say. However, it can say that letting Samsung and its counsel investigate this situation without any court supervision is unlikely to produce satisfactory results. Rarely is the fox permitted to investigate without supervision the disappearance of chickens at the henhouse. It is equally intolerable to allow this situation to fester for weeks, let alone months, with a second trial rapidly approaching. That would be just as unfair to those who may ultimately be shown to be innocent of any wrongdoing as to those who may have been significantly harmed by improper conduct."

Accordingly, the court ordered Samsung to produce emails from a number of its employees as well as make certain of its employees available for deposition. The court scheduled a hearing for later in the month after the discovery was completed.

Apple Inc. v. Samsung Electronics Co., LTD., Case No. CV 11-01846 LHK (N.D. Cal. Oct. 2, 2013)