Samsung execs shown confidential Apple-Nokia patent license terms, allegedly misused information

In a court order filed as part the ongoing Apple v. Samsung court fight, Magistrate Judge Paul S. Grewal outlined the dire situation over which Apple, and possibly Nokia, are requesting sanctions, reports FOSS Patents' Florian Mueller.

Judge Grewal revealed that some of Samsung's licensing executives got their hands on an non-redacted document containing extremely sensitive information describing certain Apple and Nokia licensing deals meant solely for use in litigation by outside counsel. Due to the nature of such documents' contents, which could be used against another corporation as an unfair negotiation tactic, the information is normally redacted and marked as "Highly Confidential — Attorneys' Eyes Only."

That was apparently not the case with the Apple-Nokia terms, and Samsung executives allegedly leveraged said information against Nokia during a licensing negotiation that took place on June 4, 2013. According to Wednesday's order, Nokia's Chief Intellectual Property Officer, Paul Melin alleges Samsung executive Dr. Seungho Ahn not only mentioned his cognizance of the confidential Apple-Nokia license, but used this knowledge to gain an unfair advantage "by asserting that the Apple-Nokia terms should dictate terms of a Samsung-Nokia license."

From the order:

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.”

The revelation is somewhat shocking, considering Samsung's action breaches the widely respected rule governing protective court orders. In essence, the breach undermines a court's assurance of confidentiality. These protective orders are crucial for a court to adjudicate properly, and with adequate transparency, the full scope of a case.

Judge Grewal points out the onus to uphold the rule, and thereby the sanctity of the court, falls largely on counsel .

"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," Judge Grewal writes. "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."

As for how Samsung execs managed to gain access to the Apple-Nokia deal, the order explains that the document was part of fact discovery produced during the first Apple v. Samsung case between August 2011 and March 2012. In fact, not only did Apple divulge its patent license agreement with Nokia, but also ongoing arrangements with Ericsson, Sharp and Philips.

When the case moved into expert discovery, Samsung's counsel sent the company a draft of a report created by its expert witness Dr. David J. Teece. In said report, which was written in support of Samsung's per-iPhone royalty demands, Teece "included key terms of each of the four Apple license agreements."

The Teece report should have been fully redacted due to its inclusion of "attorneys' eyes only" information, but it was not. It is not known if Samsung's outside counsel, law firm Quinn Emanuel led by partner John Quinn, did so intentionally or by mistake.

From there, the document was posted to an FTP server accessible by Samsung personnel and an email detailing how to access the document was sent out to counsel's client distribution list meant to provide the Korean tech giant's employees updates about the 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.

What happened to the information after the report's dissemination is unclear, though it is at this point in the timeline of events that the above described declaration from Nokia's Melin comes into play. Judge Grewal notes that the meeting between Nokia and Samsung may have occurred much differently than described by Melin, though he can't be sure because Samsung is not cooperating with court requests for further information.

"Unfortunately, the court cannot say, because Samsung has elected not to provide the court with any sworn testimony from Dr. Ahn or anyone else at the meeting," the order reads. "Samsung also has 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. In fact, despite acknowledging that many dozens of individuals at Samsung and its other counsel have knowledge of confidential license terms that they had no right to access, at yesterday’s hearing, Samsung’s counsel repeatedly denied even one violation of the protective order, asserting that such a violation can only occur willfully."

Samsung's counsel still holds that formal discovery into the matter is unnecessary. Further the company is "unable to provide" evidence regarding who had access to the information, what the information was used for, when it was used, where it was used, or how it was used. Judge Grewal's "who, what, when, where, why, and how" example is underlined by Samsung's apparent lack of respect for the legal process.

"In each instance, the only response available seems to be, 'We’re working on it,'" - Magistrate Judge Paul S. Grewal on Samsung's response questions from the court.

"In each instance, the only response available seems to be, 'We’re working on it,'" the jurist writes.

Samsung has agreed to provide Apple with a log of documents generated as a result of the Teece report, though the company plans to use a collection protocol it first negotiated with Nokia in a separate case. Judge Grewal does not approve.

"Rarely is the fox is permitted to investigate without supervision the disappearance of chickens at the henhouse," he said.

Instead, the court has ordered discovery of at least some emails and communication pertaining to the paper trail, as well as depositions from Ahn and other Samsung employees who had access to the document.

Both Apple and Samsung will meet next on Oct. 22 for a hearing on the requested sanctions.