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Apple Inc. v. Samsung Electronics Co., Ltd.

United States District Court, Ninth Circuit

November 8, 2013

APPLE INC., a California Corporation, Plaintiff,
v.
SAMSUNG ELECTRONICS CO., LTD., a Korean corporation; SAMSUNG ELECTRONICS AMERICA, INC., a New York corporation; and SAMSUNG TELECOMMUNICATIONS AMERICA, LLC, a Delaware limited liability company, Defendants.

ORDER TO SHOW CAUSE WHY SANCTIONS ARE NOT WARRANTED(Re: Docket Nos. 2610, 2622, 2624, 2633)

PAUL S. GREWAL, Magistrate Judge.

Confronted with the serious charge that Samsung Electronics Co., Ltd., et al. ("Samsung") and their attorneys violated this court's protective order, perhaps hundreds of times, the undersigned undertook an in camera review of boxes upon boxes of Samsung's documents. This in camera review was necessary because Samsung raised the equally serious charge that the attorney-client privilege and work-product protections applicable to these documents would otherwise be breached without cause. Having finally crawled out from under the boxes, it appears to the undersigned that if anything was breached, it was this court's protective order, and that sanctions against Samsung and its attorneys are warranted.

Before turning to the underlying facts revealed by the review, a recap of recent procedural events in this matter is appropriate:

• July 1, 2013: Nokia Corporation ("Nokia") filed a motion for a protective order in the "12-0630" case to prevent further disclosure of the terms of its confidential license terms with Apple Inc. ("Apple")which had been produced in discovery.[1]
• August 23, 2013: Apple filed a motion to compel further discovery and for sanctions against Samsung and its counsel for violations of this court's protective order in this case.[2]
• September 21, 2013: Nokia joined Apple's motion for sanctions and further discovery.[3]
• October 1, 2013: The parties appeared for oral argument before the court on the motion for sanctions and further discovery.
• October 2, 2013: The undersigned issued an order authorizing further discovery into Samsung's alleged violations of the protective order and entering a stipulation for further discovery agreed to by Nokia and Samsung, but reserving for a later time the question of sanctions.[4]
• October 15, 2013: The presiding judge affirmed the October 2, 2013 order, noting that the "lack of information after three months [was] inexcusable, and necessitate[d] Court-supervised discovery."[5]
• October 22, 2013: The parties appeared for further oral argument on the motion for sanctions. Based on the evidence and arguments before it, the court ordered Samsung to produce "immediately" for in camera review all documents over which it asserted privilege or claimed work product protections.[6]
• October 24, 2013: The court issued an order setting forth a specific schedule for Samsung's production of the documents requested.[7]
• October 29, 2013: Samsung filed a motion for leave to take discovery regarding the details of the June 4, 2013 meeting and the degree to which Apple and Nokia kept the terms of their license agreement confidential.[8]
• November 7, 2013: Samsung completed its in camera submissions.[9]

Even after this exhaustive process, the court still does not have a complete picture of the events giving rise to this procedural flurry. However, from the arguments and evidence submitted, an outline does emerge suggesting sanctions should issue based on the following violations of its protective order:

1. QE's failure to fully redact sensitive business information ("SBI") from the Initial Expert Report of David Teece, resulting in the pervasive distribution of the SBI to Samsung employees who were not authorized to have access to it.[10]
2. Samsung's wrongful use of the disclosed SBI[11] in preparing for:
a. its negotiations and arbitrations with Ericsson between May 2012[12] and May 2013;[13]
b. its negotiations with Nokia between March 22, 2012 and June 4, 2013;[14]and
3. QE's failure to follow the procedures set forth in Section 16 of the Protective Order after repeated notice of the disclosure of SBI.[15]

Samsung and its counsel are invited to file a brief by December 2, 2013 to show cause why sanctions should not issue for these violations. Apple and Nokia also may submit a brief by this same date proposing appropriate sanctions.[16] The parties shall address both the legal framework and the evidence relevant to any sanction to be imposed. All briefs may be up to twenty-five pages in length.

In order to fully prepare the briefs, Samsung is authorized to take the following, limited discovery:

• Ten (10) hours total of deposition testimony on the following issues:
º To what extent did Apple keep the terms of its license agreements with Nokia, Ericsson, Phillips, and Siemans confidential?
º To what extent did Nokia keep the terms of its license agreement with Apple confidential?
º To what extent did Ericsson keep the terms of its license agreement with Apple confidential?
º What precisely occurred and was said at the June 4, 2013 meeting?

In addition, Nokia shall immediately produce to Samsung the Power Point presentation it used during the June 4, 2013 negotiation. Counsel for Apple, Nokia, and Ericsson may be present for the entirety of all depositions taken in accordance with this order. The court will not tolerate further efforts to deny outside counsel access to discovery not truly subject to privilege or work product protections. On December 9, at 3:00 p.m., the parties shall appear for a further hearing on the matter.

IT IS SO ORDERED.


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