Samsung Given Access to Confidential Apple Licensing Terms in Violation of Court Orders

| Analysis

Hold on for this shocker: Samsung's outside counsel provided Samsung executives, internal attorneys, and even external attorneys working on other cases with details of a highly confidential licensing agreement between Apple and Nokia despite a court order not to do so. Better yet, Samsung then further shared those details, on several occasions, with more than 50 internal employees.

This could lead to sanctions for Samsung.

Sanctions

Orders and Secrecy

At the heart of the issue is a licensing deal reached between Nokia and Apple. Terms of the deal are confidential, meaning that neither Apple nor Nokia want them disclosed lest it be used by competitors to aid their own negotiations. This is fairly typical for licensing agreements, but its de rigueur for Apple, which keeps everything it can secret.

Those terms, however, became involved in Apple's patent battle with Samsung, and the way the courts handled the situation was to give Samsung's outside attorneys at Quinn Emmanuel access to the terms. A protective order accompanied that access prohibiting the firm from sharing those details with Samsung's internal executives and attorneys.

Opposite Day

According to court documents first reported by Florian Mueller, precisely the opposite happened. Outside counsel posted documents to an internal Samsung FTP server that was accessible by a host of executives and attorneys. Those documents included all manner of information that should have been redacted.

In addition, "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," the court documents stated.

All told, "The information was then sent, over several different occasions, to over fifty Samsung employees, including high-ranking licensing executives."

Also—and I know this will shock you—Samsung has not been cooperating with the efforts of Magistrate Judge Paul S. Grewal of the United States District Court for the Northern District of California to uncover what happened. The company has not turned over discovery ordered by the judge or made Dr. Seungho Ahn, the Samsung executive who told Nokia he knew the terms of the Apple licensing deal, available for deposition.

Perhaps, then, it shouldn't be a surprise that Dr. Ahn dismissed any concern about that by blithely saying, "All information leaks."

Yes, because that makes it OK.

Values

As Mr. Mueller opined, "All of this is really, really bad." I'll add that it's indicative of Samsung's corporate values. This is, after all, the company caught red-handed deliberately copying Apple's intellectual property and designs, and more recently faking benchmarking results for some of its Android devices to make them appear faster than they are.

At every turn, Samsung reveals itself to be a company desperate for unearned recognition, a company willing to do anything to "win," including copying the work of even its partners. The company even resorted to proving that Apple invented something to get Apple's patent over that invention invalidated in Germany, something I find repellent.

It's been one thing after another in recent weeks, and it has really turned me off of Samsung. In the court of public opinion, Samsung has a strong base of supporters who bizarrely defend the company as an innovator while calling Apple the copyist. It's perplexing to understand how a rational person could arrive at that opinion.

In the court of U.S. law, things have gone differently. Samsung has been convicted of copying, and the company and/or its outside attorneys could face sanctions for this latest stunt. U.S. judges don't tend to be happy about people or companies violating their orders or resisting the discovery process, especially when that discovery process was ordered by the judge.

It's possible that this will turn out to be some kind of giant misunderstanding, but considering Samsung's track record, I expect further revelations about Samsung mishandling evidence and using that information to its advantage elsewhere.

It remains to be seen what Judge Grewal does about it, but I hope it's significant.

[Update: The article was corrected to refer to Quinn Emmanuel as Samsung's outside lawfirm. A hat tip to @FloridaLegal for catching that for me. - Bryan]

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Comments

furbies

This is just so messed up.

Aren’t Samsung afraid of any legal repercussions ?

Or do they really live in a parallel universe where they’re the sole inventors/patentors of everything ?

CudaBoy

If the crux is that the courts GAVE this licensing info to Samsung’s attorneys; then I think you are over reacting. What did the court expect the Atty to do with info he “can’t” share? A licensing deal is not intellectual or real property; sure you might want to keep it secret but then that makes one wonder what Apple has to hide regarding a mundane licensing deal. It’s business as usual.
Please don’t try to make Apple look any better or worse than any big corporation because they are not. Apple infringed on several VirnetX’ patents and lost $370 mil, they trade court case losses with Samsung all the time. They both sell boatloads of phones (samsung many more) only Samsung has smart TVs and scads of other products compared to Apple’s few;  just whom would this so called important info help most?

furbies

@CudaBoy

<quote>
Samsung’s outside counsel provided Samsung executives, internal attorneys, and even external attorneys working on other cases with details of a highly confidential licensing agreement between Apple and Nokia despite a court order not to do so.
</quote>

and

<quote>
Those terms, however, became involved in Apple’s patent battle with Samsung, and the way the courts handled the situation was to give Samsung’s outside attorney, Quinn Emmanuel, access to the terms. A protective order accompanied that access prohibiting Mr. Emmanuel from sharing those details with Samsung’s internal executives and attorneys.
</quote>

From these statements I infer that the Court didn’t give Samsung access to the papers. And had tried to block Samsung for accessing the licensing papers. It’s Samsung’s outside attorney who breached a specific court order.

Bryan Chaffin

CudaBoy, I would suggest reading the article again. If that doesn’t help, remember that court orders have meaning and are punishable by the courts when they aren’t followed. “Boys will be boys,” or “lawyers will be lawyers,” or “I don’t think these things are really secret, no matter what the courts say” don’t hold weight in a court of law.

Also, I wasn’t making Apple looking good with this article, I was pointing out that Samsung’s actions make it look bad and show the company’s lack of corporate ethics.

Apple and Samsung don’t “trade court case losses” all the time. The only victory of significance I can recall for Samsung is this recent case in Germany, where their successful defense was, “No, really, Apple invented this. Here’s the video.”

Lee Dronick

  A protective order accompanied that access prohibiting Mr. Emmanuel from sharing those details with Samsung’s internal executives and attorneys.

The lawyer is certainly in trouble with the Court, but I am not sure that Samsung is. Unless the court order stipulated that that Samsung may not have   the documents in their possession.

Intruder

“Attorneys eyes only” stipulates that Samsung not receive the documents. Samsung employees should not have accepted the documents knowing (and saying “all information leaks” pretty well indicates that they knew it was information they were not to have) that is was highly confidential data. That is an ethics violation. They knew exactly what they had, knew that they shouldn’t have it, did not disclose that they had it (intentionally or inadvertently) and then proceeded to use it to gain unfair advantage in a negotiation. One could almost call it industrial espionage, where their outside counsel acted as the spy.

Imagestealer

99% of Lawyers give the rest a bad name.

CudaBoy

I am confused. If this privileged info - the licensing agmt. was material to the lawsuit v Samsung; then what was the court allowing outside counsel to do with said info? We know what he was NOT supposed to do but…. I assume it was provided to Samsung’s outside atty. to ascertain any incongruities between Samsung & Apple’s license dealings vs. Apple & Nokia’s licenses.

gnasher729

CudaBoy, that’s exactly why this information was given to outside counsel.

So there’s a document where Samsung says they should be allowed to see some things that are in the document, and the court agrees, and on the other hand Apple says there are things in the document that are highly confidential and that Samsung has no right to see, and the court agrees as well. So what can you do? It’s unfair to Samsung to keep the information relevant to the court case from Samsung. It’s unfair to give Apple’s confidential information to Samsung. So the judge gives it to Samsung’s outside counsel with the strict order not to tell Samsung or anyone about the confidential bits.

That is quite often the only way to handle things in a fair way. You have to trust outside councel of a company to handle things properly. If they don’t, the whole court system falls apart. That makes Samsung’s actions totally unacceptable.

CudaBoy

Put like that the lawyer screwed up, not Samsung.  I wish WE could access that FTP site and see what the fuss is; licensing is not rocket science unless one company makes some very weird nefarious deal that maybe they’d want to hide from the competition but I don’t think there are many secrets vis a vis licensing of bits and pieces, hard and soft. It’s just good press. It’s Samsung’s chips the “brains”  in Apple’s Phones,Pads, & Pods after all…... now THAT’S a licensing portfolio I’d like to peep.

iJack

Hands up all those who actually give a rat’s arse what CudaBoy thinks.

CudaBoy

Hey iWank, I’d be happy if the drones had an original thought at all. Peace.

nolatransplant

I’ve read other places that the document would typically be passed on to the internal lawyers and Samsung executives with redactions. If so, was this the court’s responsibility, the external lawyers’ or is this just incorrect?

Either way, Samsung executives and internal lawyers knew what they had, knew its confidentiality, knew they shouldn’t have had access to the confidential parts and used it anyway to gain leverage in related licensing deals.

This disgraceful attitude appears to infiltrate every bit of Samsung’s smartphone and chip business.

CudaBoy

Goes to the earlier post whether the Court’s original decision to grant outside counsel the confidential matter came with some responsibility or tie to Samsung at all if they get privy to ANY material from any source whether outside counsel, indirectly or directly.  Still begs the question why the counsel was given the material to begin with WHAT ANGLE, I’m getting hate but no answers. Outside counsels can’t make unilateral decisions - they are just another layer of drones on the feed.  First, how hard is it to redact? Who is responsible for the redaction?  I suspect it is lawyers doing the lawyer thing.  A lot of my 30+ year clients are lawyers. Judges are lawyers. Big business ethics is an oxymoron; this is piss. Move on.  I better not ask what the clones think about julian a. huh??
To nola above, don’t talk about disgrace when Apple’s assemblers were systematically committing suicide for years before the press got a hold of it and Apple got shamed - and all you are pissing about is a licensing deal??

nolatransplant

And you don’t think this happens/happened at Samsung factories with the sheer volume of devices and components they produce…? I don’t believe for a second that Samsung hasn’t rushed a product out the door, causing severe stress on its own workers and supply chain. Only reason it made the wide press circulation is because of the role Apple ascended to in the consumer world and trading markets.

Sorry for the digression all. This thread looks to be dead anyway.

Terrin

Cudaboy, you really are a blind Apple hater. The licensing agreement was confidential because the information put Nokia at a disadvantage when licensing Samsung’s patents.

Samsung’s attornies wanted the licensing deal to determine what Apple is paying for Nokia’s patents especially the SEP ones. That goes to determining whether what Samsung was asking for Apple was unreasonable in violation of SEP licensing. Per the Court Order, Samsung itself was never supposed to see the information.  Both Samsung and its attornies knew this, as this is common practice.

Nokia likely gave Apple favourable licensing terms because the fight with Apple and Nokia was one of the first filed, and Nokia was willing to give up some of what it wanted in return for access to some of Apple’s patents. Nokia, however, would not be willing to lower its standard licensing rate for everybody. Samsung, however, wants the same rate Nokia gave Apple, which it should not know.

Further, Apple has not paid VirnetX anything. The case is in the appeal phase. It could end up like the case Apple initially lost concerning Cover Flow. It was overturned on appeal.

Jamie

Actually, revisionist history might very well be what they are after, it’s happened plenty of times parts of the world (including this one. *cough* Al Gore invented the internet *cough*). In China, for example, Mao had his people believing he invented the telephone, modern medicine, etc., etc. Thankfully in the modern age the web more to less renders those sorts of shenanigans impossible to really propagate, it’s too easy to uncover the fraudulence at work.

The thing that troubles me is the precedent that’s set in our legal system when judges don’t enforce our laws in situations like these. Can you imagine how different things would be now if Microsoft were absolved during their antitrust trials, for example?

Statements such as, ‘Information always leaks.’, are the embodiment of chutzpah, and show why in spite of that term having web 3.0 currency as a buzzword, in it’s truest definition it is anything but positive.

I also hope that some someone, somewhere along the line in the legal arena, has the cojones to *draw* the line and say ‘Enough!’. 

Jamie

Sorry for the typos! I wish there were a way to edit. C’est la vie. smile

wab95

Intruder, gnasher729, Terrin:

Great comments. Much appreciated. Enough said.

Bryan:

I stand by my comments on your column dated 02 October regarding Samsung. It seems they have discarded even the thinest of pretences of propriety and are standing before the court of world opinion in all their naked ingloriousness. If one can get passed that, then perhaps they remain a thing of beauty, but only in the most jaundiced of visions.

RonMacGuy

People, don’t encourage the ignorance!!  Don’t feed the troll.  Just ignore him and hopefully he’ll go back to being just an occasional poster.

RonMacGuy

“Aren’t Samsung afraid of any legal repercussions ?”

My opinion…  Samsung is like the misbehaving teenager who gets away with everything.  Until his father takes him over his knee and beats some sense into him, he will continue to do whatever he wants.  Time and time again Samshame has done the wrong things - unethical, unbelievable things, and basically is getting away with it all.  The slow speed of the global court systems has a lot to do with it.  Until Samsung is faced with major sanctions or fines in the greater than a billion dollar range, the most profitable thing for them to do is to break every law they can, anywhere they can, to maximize their current value.  And its working GREAT for them!!

Latest news - iPhone 5S takes top September 2013 sales spots at Big 4 US carriers - AT&T, Verizon, Sprint, and T-Mobile.  iPhone 5C takes 2nd spot at AT&T and Sprint, and 3rd spot at Verizon and T-Mobile.  S4 fills in the rest.  Let’s hope the world is starting to notice how terrible Samsung is as a company and starts to see a mass exodus from them.  It still boggles my mind the loyalty that a lot of Americans have for a Korean company that builds their phones in China over at least an American company that may also build their phones in China but at least is headquartered in America and employees a TON of Americans.  I just don’t get it.  The flack Apple took when first releasing the China-built original iPhone was huge - NOT BUILT IN AMERICA.  WHY NOT BUILD IN AMERICA.  And these same people are buying Samsung phones without any issues.  Truly amazing to me.

And how they are cheating by making their phones faster for benchmark apps - LOL, gotta hand it to them - they have NO shame!!

brettdog

Cudaboy,
It’s not Samsung’s chips that are the “Brains”.
Apple designs the processors and Samsung is just the foundry.
It would be like saying Flextronics (or whoever builds the iphone) is the brains of the iPhone.

Intruder

Quinn Emmanuel will most certainly take a hit in this one, especially in the credibility department. If they cannot protect information provided to them and protected under court order, how can they truly be trusted to protect client confidentiality?

ibuck

Are Quinn Emmanuel’s actions sufficient for disbarment ?

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