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Wednesday, July 24, 2024 | Back issues
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Associate’s Goof Ends in Sanctions for Samsung

SAN JOSE, Calif. (CN) - Faulting law firm Quinn Emanuel for its "650 lawyers wide and one lawyer deep" structure, a federal magistrate slapped the firm and Samsung with sanctions for leaking Apple's licensing agreements to hundreds worldwide.

U.S. Magistrate Paul Grewal made the decision late Wednesday after privately examining hundreds of documents related to an expert report that was inadvertently posted to an FTP site by a junior associate at Quinn Emanuel during discovery ahead of last year's Apple-Samsung patent trial .

The report, marked "Highly Confidential, Attorney Eyes Only," contained key terms of Apple's licensing agreement with Nokia. While access instructions initially went to 90 Samsung employees, the report circulated throughout the company and ultimately more than 200 people saw it, Grewal said.

Nokia became suspicious of the leak during its down licensing negotiations with Samsung. According to court documents, one of Samsung's in-house lawyers recited the terms of the Apple-Nokia agreement during those talks, acknowledging that the information came from other Samsung attorneys with the justification that "all information leaks."

Grewal said that - on its own - a junior associate's mistake in publicly posting a confidential document does not warrant sanctions. But the "breadth and volume of violations and the fact that Samsung and its outside counsel made a conscious decision to set up a system that would allow violations of that scope" made the associate's error unforgivable, albeit predictable, he added.

"Mr. Quinn himself candidly and tellingly described his firm in court as '650 lawyers wide and 1 lawyer deep,'" Grewal wrote. "In cases of this complexity, relying on such a structure to manage highly confidential information from both parties and non-parties is akin to a trapeze artist flying high without a net: 99.99 percent of the time, no net is required. But in the 0.01 percent of the time when the trapeze fails, the net is not there, and the fall causes much more damage than it otherwise might.

"The information traded by Apple and Samsung in this case was considered sufficiently valuable by both parties to merit an interlocutory appeal to the Federal Circuit to keep it protected from the public, the vast majority of whom have absolutely no interest in it and no ability to use the information even if they were to discover it," he continued. "It is sufficiently valuable to merit hundreds and hundreds of pages of sealing motions, with thousands of pages more in supporting declarations. If keeping this information from the public is worth all of that, then surely, logically, it would be worth a second, or even a third, round of review before producing it to a competitor corporation, who would know exactly how to exploit it. Yet this basic precaution was not put in place. Because of this 'one lawyer deep' structure, a single inadvertent mistake led to confidential information being widely distributed within Samsung. This is unacceptable."

Quinn Emanuel compounded its errors by failing to alert Apple when it discovered the disclosure, a requirement of the parties' own protective order agreement. Grewal noted that the firm first discovered its error in December 2012 and in July 2013 "independently negotiated with Nokia hoping that would make the problem go away."

The magistrate nevertheless rejected Apple and Nokia's proposed sanctions as "ridiculously overbroad," citing a lack of concrete evidence that the South Korean company did anything truly nefarious with the document.

"What began as a chorus of loud and certain accusations had died down to aggressive suppositions and inferences, and without anything more, Quinn Emanuel and Samsung cannot reasonably be subject to more punitive sanctions," Grewal wrote.

In addition to reimbursing Apple and Nokia for the costs associated with litigating the discovery break, Grewal ordered Quinn Emanuel to ensure all copies of the expert report are removed from Samsung's control within 14 days. He also ordered lawyers from both sides to approve all redacted documents before filing or distribution until the end of their extensive litigation.

A second trial for more patent infringements begins March 31.

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