Judge Takes Action Over Leaked Apple Licenses

SAN JOSE, Calif. (CN) - A federal judge said late Wednesday that Samsung sent Apple's confidential licensing agreements to dozens - if not hundreds - of its employees and attorneys worldwide.

U.S. Magistrate Paul Grewal said that during the massive discovery ahead of last year's iPhone-Galaxy patent trial, Samsung's outside counsel sent unredacted key terms of Apple's licensing agreements with Nokia, Ericsson, Sharp and Philips to Samsung headquarters despite a protective order.

Samsung's outside counsel posted the information on an FTP site accessible by Samsung personnel and emailed employees with access instructions for the site, according to Grewal. Then the lawyers emailed the agreements - marked "Highly Confidential, Attorney Eyes Only" - several times to over 50 different Samsung employees and high-ranking licensing executives.

"Specifically, on at least four occasions between March 24, 2012 and Dec. 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," Grewal wrote.

Word of the leaks came out in a meeting between Nokia and Samsung licensing executives.

"According to a declaration from Nokia's chief intellectual property officer, Paul Melin, on June 4, 2013, in a meeting between Samsung and Nokia licensing executives, Dr. Seungho Ahn informed Nokia that the terms of the Apple-Nokia license were known to him," Grewal wrote. "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."

The magistrate acknowledged that the encounter between Melin and Ahn may have gone differently, but noted that Samsung has so far declined to provide sworn testimony from Ahn regarding his version of events - or any other details of the leak except a denial of wrongdoing.

"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," Grewal continued. "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. 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.'"

Samsung's proposed remedy involves hiring an outside firm to forensically analyze equipment to create a transmission log of the Apple-Nokia licensing documents. However, the South Korean tech giant indicated it has no intention of interviewing its employees or attorneys, and will not address the leaks of Apple's agreements with Ericsson, Sharp and Philips at all.

"This is insufficient," Grewal wrote.

He continued: "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 is 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."

Grewal ordered Samsung to produce all relevant emails and other communications - sent or received - from employees who had access to Apple's licensing agreements since March 24, 2012. He also ordered the South Korean tech giant to make Ahn available for deposition, to provide an expert witness to speak to Samsung's use of Apple's agreements, and to provide five other employees to testify about what they know - all by Oct. 16.

A hearing on the matter is set for Oct. 22.

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