As the parties in the ongoing Apple, Inc. v. Samsung Electronics Co. patent litigation recently learned, perfection is not required in discovery, but safeguards are essential.
In January, U.S. Magistrate Judge Paul S. Grewal sanctioned Samsung and its law firm for a series of violations involving the disclosure of a document containing confidential information in contravention of the court’s protective order. The document had been designated as “highly confidential” and “for attorneys’ eyes only” given the pricing and licensing information it contained. A junior associate was supposed to redact these details but overlooked the terms of an agreement in which Apple licensed its intellectual property to other companies, including Nokia and Ericcson. The firm subsequently uploaded the improperly redacted document to an FTP site and e-mailed more than 90 Samsung employees with directions on how to access the document. The document was then “downloaded and distributed widely.”
The junior associate’s “inadvertent mistake” was discovered nine months later when another junior associate received a copy of the file from a Samsung employee. This junior associate notified a senior associate and a partner of the problem, but they only asked the Samsung employee to delete the message and took no further steps. Nearly six months later, a Samsung employee e-mailed a copy of the unredacted report to the law firm, but its lawyers still did nothing. Nokia finally learned of the disclosure during negotiations with Samsung, when a Samsung representative referred to the terms of Nokia’s licensing agreement with Apple.
The judge found the junior associate’s redaction mistake did not warrant sanctions: the harm was “too small and speculative to punish.” Moreover, “[i]n a case of this size and scope, it would be completely unreasonable to expect every person on every team to perform perfectly at all times.” However, allowing the mistake “to go unchecked, unaddressed, and propagated hundreds and hundreds of times by conscious—and indeed strategic—choices by that associate’s firm and client alike” did require punishment. Samsung and its outside counsel “made a conscious decision to set up a system that would allow violations of that scope to ensure from a mistake that small and, frankly, predictable.” Therefore, the court ordered the law firm to reimburse Apple, Nokia, and their counsel for the costs and fees involved in litigating the matter, totaling in the millions.
This mistake and the accompanying penalties could have been avoided had the lawyers taken steps to mitigate the damage once they learned of the mistake:
Determine the extent of the disclosure and stop further dissemination of the document.
Take responsibility for the error and notify the parties and the court of the disclosure.
Avoid the need for costly, extensive discovery by providing more than a “scant explanation or evidence” of the situation.
Add more than one layer of review for highly confidential information; here, the judge compared the firm’s structure that was “650 lawyers wide and 1 lawyer deep” to a “trapeze artist flying high without a net.”
Create a distribution list for sensitive information, limiting clients’ internal disclosure of documents to recipients who have a business need to know.
Measures such as these can show courts that parties take their discovery responsibilities seriously, demonstrate good faith efforts to comply with the court’s orders, and increase the defensibility of parties’ actions.