Samsung’s New Tactic: Piss Off Courts Around the World

| Analysis

Samsung has found a new way to make U.S. Judges angry by improperly acquiring confidential Apple and Nokia licensing agreements, and now the company is taking its act on the road by getting on the bad side of Australian Judges for doing exactly the same thing. The electronics maker is compounding the problem by failing to cooperate with court investigations into its actions, and it looks like the company is fine with that.

Samsung's new track record: Piss off the courts around the worldSamsung's new track record: Piss off the courts around the world

Samsung came under fire in U.S. Federal Court when information surfaced showing its outside legal team handed over confidential licensing documents from a deal between Apple and Nokia. The company then allegedly used the information in those documents to an unfair advantage in its own negotiations with Nokia.

The documents were supposed to be available only to special witnesses in Samsung's ongoing courtroom patent infringement fight with Apple, but its outside law firm, Quinn Emmanuel, posted unredacted versions of the files to Samsung's servers on at least four occasions. Nokia executives said that Samsung executive Doctor Seungho Ahn bragged about the confidentiality breach saying, "All information leaks."

Samsung has been dragging its heals in the U.S., and has worn Judge Lucy Koh's patience thin. She berated the company during a recent hearing saying, "Samsung's lack of information after three months is inexcusable, and necessitates Court-supervised discovery."

Now it looks like Samsung isn't done angering courts because they're doing the same in Australia. As part of Apple and Samsung's mobile device patent infringement fight in that country, Justice Annabelle Bennett has been asking pointed questions about the document leak, and so far hasn't been getting the clear answers she was hoping for.

The Judge in Australia is concerned that Samsung may have used the same leaked documents to its advantage in the country, and Samsung hasn't seemed concerned about letting Apple the U.S. courts know what's happening. Instead, the information has been coming from Apple's legal team -- most recently in a transcript from an Australian hearing from October 24.

Justice Bennett seemed to have little tolerance for Samsung's actions and less than forthcoming attitude. She said in court,

I really cannot believe that Samsung has not put itself in a position of being able to answer virtually any question – these are obvious questions – whether Samsung has not put itself in a position to be able to answer those questions immediately in Australia. I find that incomprehensible. I would have thought Samsung would have been – Ashurst [Samsung's Australian law firm in this case] would have been bending over backwards to ensure that everything about these confidentiality breaches was known and available and the information be made available to this court, and it would have been offered to the American court.

The transcript also has her asking very pointed questions such as, "Has the American court been told about the breaches in Australia?" And later, "I want to know whether the American court is aware that the similar – similar confidential information was breached in Australia in relation to the same person's report."

Samsung's track record with Apple in court hasn't been very good so far, and it doesn't look to be improving. The electronics maker has been fighting with Apple in courts around the world over mutual allegations of mobile device patent infringement, although so far it's Apple that's been scoring the significant wins.

The iPhone maker's highest profile win so far came in August 2013 when a U.S. jury ruled it wasn't infringing on any of Samsung's patents, but that Samsung was infringing on a long list of iPhone and iPad-related patents. That win led to over US$1 billion in damages awarded to Apple, although a portion of that was improperly calculated and a new trial to determine what should be done about that part is scheduled for November.

Samsung is also dealing with the European Commission's proposed antitrust settlement, and that may involve improperly acquired confidential licensing documents, too, according to FOSS Patents' Florian Mueller.

"Various stakeholders are working on submissions to the European Commission concerning Samsung's proposed antitrust settlement," he said. "Samsung's proposal is insufficient in its own right, and it's even more problematic when considering that Samsung has been improperly provided with confidential licensing information involving multiple companies (three of them European companies) that it could abuse in secret arbitration proceedings."

Samsung is at least consistent. It introduces new devices quick enough so that in the event Apple files an infringement lawsuit, they'll already be on to the next product before the court proceedings are underway. The company also drags its feet to slow down the process, and now it's doing the same in the licensing document investigations.

Whether or not Samsung's actions are arrogant is somewhat immaterial; the company has clearly able to get away with its tactics so far. That may, however, be changing at least so far as how it deals with confidential documents. The courts aren't pleased with Samsung's cavalier disregard for that confidentiality, and this time it could have more serious repercussions.

Justice Bennett in Australia looks ready to move forward aggressively and in the U.S. there's a possibility Samsung executives could find themselves held personally responsible. If so, they could face steep fines and even jail time.

For now, Samsung's defense has been that the document leaks were accidents, and that no one used them. It's no surprise that Samsung and its legal team are taking that approach to the situation, although it doesn't look like the Judges are buying it.

Instead, Samsung's actions are showing it to be a company that sees itself as above the law, and that's not going over well with the courts. Maybe it's time for Samsung to rethink its legal tactics.

Comments

MuppetGate

Maybe Samsung has done the maths. The money it makes by breaking the law is far more than any fines that will be imposed for breaking the law.

RonMacGuy

Maybe it’s time for Samsung to rethink its legal tactics.

Why?  Like you said, they have had nothing but upside with their decisions.  Like I’ve said before, until they get slapped with multi-BILLION-dollar fines, they feel no pain for their pathetic actions.  The courts are allowing this garbage to happen, with nothing more than a slap on the wrist.  Even if a judge does fine them, say, $4 Billion, they will squawk and whine and drag their feet until it is reversed or until years have passed and the amount is reduced from appeal to appeal.  In the meantime, the world ignorantly continues to buy their stuff.  Pretty sad.  Now here comes the Florian bashing…

 

Deancourt Design

They act with the confidence of someone who knows something the rest of us do not.
Maybe someone, somewhere in a position of power has been bought off.

gnasher729

Deancourt: We know who is in their pocket - the South Korean government. Samsung is 20% of the South Korean economy. Even the CEO being convicted for tax evasion doesn’t make a difference; he got a pardon from the president.

If you think someone in the USA in a position of power has been bought, there is no sign of that. And it would be very, very hard. The biggest problem is that the same persons don’t stay in power.

Intruder

Dragging its HEELS, not HEALS.

Pet peeve.

Aftermac

Samsung would make a great Mayor of Detroit…

Lee Dronick

Dragging its HEELS, not HEALS.

Well they could be dragging their heals as in in healing, making amends, for their wrong doings. smile

It could have been a typo that autocorrected. I have that feature turned off.

vpndev

Class act, all the way.

ibuck

So far, it seems Samsung is immune from everything but legal fees (Although lawyers representing them would be wise to collect big fees up front). Will they ever pay big judgments? Maybe not.

Perhaps the only way to correct their transgressions is to ban ALL their products from your country, for a period of time. How about 2 years?

Bosco (Brad Hutchings)

Look Ron, my problem with Florian is that his “analysis” and “recommendations” cost more than a handful of developers significant licensing fees and intrusion into their private business in the Lodsys debacle. That he has not apologized for his role in that tells everything about what his intentions were, i.e. get paid for pushing their narrative. See his analysis of Oracle/Google prior to getting on Oracle’s payroll. Also see Judge Alsup’s “bashing” of Florian once he figured out that Google didn’t engage in that kind of astroturfing directed at affecting outcome of a pending case.

Whatever side of Apple/Samsung you want to be on, if any, you don’t need to rely on Florian to organize your facts for you. If what Samsung is purportedly doing sickens you, how Florian has operated ought to do the same. While actions of both these parties may seem to benefit their respective sides, they also seem to work against truth and justice.

RonMacGuy

I completely understand your problems with Florian.  But regardless of the past, TMO continues to quote Florian as an expert source, and to me I appreciate his assessments of the current Apple/Samsung legal situation.  They seem objective to me today.  How he may have acted in the past has no bearing on his work today, in my opinion.  I just hope your campaign to discredit him nearly every single time TMO posts a quote from him comes to an end.  But, I probably shouldn’t have joked about the Florian bashing.

Bosco (Brad Hutchings)

Back in the day, Bryan used to get all over Rob Enderle for a very similar ethics issue as Florian has, that is pushing a customer’s party line as “independent analysis”.

At any rate, just as I said back before Oracle/Google went to trial and Florian was telling you guys that the case would put a bullet through Android, his business model is to tell certain groups of people what they want to hear. His paying clients are companies that want to deliver red meat to their most rabid customers and bully their opposition into unwarranted settlements. It works for him because in an especially uncertain sphere (legal system) of an uncertain world, we innately crave expertise and certainty. So he calls himself an expert and that’s that. Our appetites are sated with whatever BS he’s pushing on whomever’s behalf.

RonMacGuy

LOL, wow, I didn’t realize what a monster he was!!

I hardly think he is as terrible as you make him out to be.  Just a guy trying to make a living.  No offense, but you tend to border on the extreme sensationalism side in your assessments.  But hey, everyone’s entitled to their own opinions.

He sounds like a pretty knowledgable guy to me.  From Blogger.com:  Florian Mueller is an award-winning intellectual property activist-turned-analyst with 25 years of software industry expertise spanning across different market segments (games, education, productivity and infrastructure software), diverse business models and a variety of technical and commercial areas of responsibility, enabling a holistic perspective. Florian advises clients on the patent wars surrounding mobile devices, and on their economic and technical implications. His consulting services are available directly (contact form, LinkedIn profile) as well as through two primary research firms (Gerson Lehrman Group, Coleman Research Group) serving the financial community. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof.)

Bosco (Brad Hutchings)

I hardly think he is as terrible as you make him out to be.  Just a guy trying to make a living.

Ron, ask any of the developers who were served by Lodsys in the timeframe when your “impartial analyst” suggested that developers just settle with Lodsys whether they would be upset if something awful and untimely just happened to the guy.

FYI, these were independent developers who sold apps on Apple’s App Store, both for iOS and the Mac. Some received copies of Florian’s original blog posting during their “discussions” with Lodsys about the letters. I look at Florian’s body of work and have no doubt that he was right in the center of that whole charade.

RonMacGuy

I don’t know any of the developers who were involved.  But for the most part there is nothing but decent stuff said on the web about this guy.  Just saying.

wab95

Jeff:

I’m no lawyer (although married to one - who BTW does grants, contracts, IP, etc - so I do get some home-schooling), but Samsung’s pattern with the courts suggests a strategic exploit that, as some have averred above, appears to comprise part of their business model.

They are making a net profit by blatantly copying (or some using more inflammatory language often say, ‘stealing’) their rivals’ designs, gaining market share in that sector, then altering that design so as to avoid the infringement and rolling out, as quickly as possible, their next-gen products which escape any or as many legal obstacles as possible, on the one hand; while on the other they obfuscate, obstruct, sabotage and delay any legal proceedings associated with their initial infringement. These costs, including keeping on board a sufficiently skilled albeit reprobate legal defence team both at home and abroad, appear to be factored into the costs of the product rollout and its lifespan.

I’m not sure, however, that the way to understand this is to put it in terms of being either arrogant (which they are, in spades) or considering themselves ‘above the law’ (which they are, de facto, in S. Korea), as much as it is that, as a megacorporation, they feel a certain entitlement, as part of that corporate culture, to be as ruthless as necessary in order to garner profits, marketshare, dominance, and eventually, to outcompete their rivals. Law and the courts are a mere inconvenience to be managed by legal teams, whom you purchase as needed - like any other asset - as a function of storming the castle and achieving victory. The courts simply don’t understand how business is done, is all. Dominance and victory in this part of the world has always been a ruthless, merciless and bloody-minded business; and business is simply war by other means. What’s not to understand? (As a side-note: there is a decidedly sexist component to this. Both the US and Australian courts are judged by women - who clearly don’t understand war or business - which should merit a certain level of disdain and contempt to illustrate to them that they are out their league. Disdain for women - especially women of Asian descent - and their judgement is part of corporate culture.) And, when all else fails, and your warriors are defeated on the legal flank, you simply pay the ransom to protect your house’s leadership, accept your losses on that front and move on. Ultimate victory awaits. Glorious stuff.

The only way this changes, and Western courts are at a disadvantage that east Asian courts (read ‘ruling parties’) are not, is play on their terms and hand out penalties that alter the playing and the cost of achieving victory. Just review the sentences for corruption and being caught cheating, particularly at the cost of international embarrassment to the government and the nation, that the Chinese courts mete out to convicted cheats. Imprisonment is a given, and execution is not off of the table. Not Western-style execution of senior leadership - i.e. removal from office, but hanging or being put down by a firing squad. Oh, and in case you thought they through with you, no; your business is stiffly fined, your assets and perhaps those of your relatives are seized. In fact, your relatives might also be sent for ‘re-education’ at one of the country’s finer facilities specialising in hard labour-induced attitude adjustment.

Fines mean nothing, at least not on the level that Samsung have had to face to date, perhaps apart from the one cited above, but don’t hold your breath on the payout. That could be delayed for years. For this to stop, leadership will need to be imprisoned - without the option to ‘buy out’, assets seized and imports banned. The penalties will need to be draconian to be understood and to alter practice.

In other words, the courts must first alter how they do business if they want Samsung (and there are others out here equally egregious - sorry - aggressive in their business approach) to alter how they do theirs. Anything short of that will, in all likelihood, continue to be seen as the cost of doing business by the likes of Samsung.

I also believe that judges, and anyone else interacting with this part of the world, need to spend some time in the region to better appreciate the cultural context of their engagements - what intelligence analysts refer to as ground truth.

wab95

Addendum:

I don’t believe, for one moment, that any court in the Western world will want to go down that path, nor do I advocate that they do; ergo, I don’t see Samsung changing their tactics anytime soon.

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