Judge says Samsung’s lawyers illegally shared private Apple-Nokia licensing agreements with Samsung execs

Samsung’s been a bad, bad boy. And I’m not just talking about creative ways to make its Samsung Galaxy S4 look faster than it is. In a court filing made public this morning, U.S. Magistrate Judge Paul S. Grewal says that Samsung’s lawyers inappropriately shared Apple-Nokia licensing agreements with Samsung executives.

And while he does it in a witty, engaging way, he also makes it clear that Samsung needs to step up and face the music.

Apple-Samsung case court order

In Apple and Samsung’s ongoing battle, Apple has been forced to disclose information it would rather not — such as the full details of the Apple-HTC licensing agreement and data on Apple and Nokia’s agreements. These are typically released to outside counsel — hired lawyers — so that they can help the company prepare its case, but are not generally released to the company itself due to a “protective order” that the judge overseeing the case issues.

Then they’re marked “Highly Confidential — Attorney’s Eyes Only.” But as Judge Grewal entertainingly explains in the filing, that’s not always enough:

A casual observer might reasonably wonder what magic a protective order works that allows outside counsel access to confidential information to advance the case without countenancing untoward uses by the client. The answer is not a magical one at all: confidential information remains confidential because counsel and clients alike follow court orders. If parties breach this basic rule, the court’s assurances become meaningless.

Grewal adds that “there is reason to believe” that the rule has been breached in this case.

Samsung’s lawyers sent an expert report drafted by David J. Teece — with secret details from those contracts — to Samsung executives. They also posted the report on an FTP site that over 50 Samsung employees had access to, Judge Grewal says, and sent an email with instructions on how to access the server. In addition, the lawyers emailed “some version” of the report to Samsung executives not just once, but on several occasions … “at least four.”

Then, in a meeting between Samsung and Nokia on June 4, Samsung’s Dr. Seungho Ahn, the company’s senior vice president and head of the IP Center, revealed that he had information about the Apple-Nokia license, which he had received as a result of the Apple-Samsung trial, according to Nokia’s chief intellectual property officer, Paul Mellin.

It seems clear that Samsung has been caught with its hand in the cookie jar, but the company’s not saying anything:

Samsung has elected not to provide the court with any sworn testimony from Dr. Ahn or anyone else at the meeting. 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. 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 …

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?

Ouch.

As a result, Judge Grewal has ordered Samsung to provide Apple with all emails in which confidential information may have been sent, and to have Dr. Ahn, the company’s SVP of intellectual property, deposed, as well as up to five additional Samsung employees, to be chosen by Apple, no later than October 22.

“Letting Samsung and its counsel investigate this situation without any court supervision is unlikely to produce satisfactory results,” Grewal wrote. “Rarely is the fox permitted to investigate without supervision the disappearance of chickens at the henhouse.”

Exactly what impact this will have on the trial is uncertain. What is certain is that it won’t be good for Samsung.

When I asked Samsung for their position on this filing, the answer from a PR representative was short: “We do not have a comment on this.” On October 22, that will have to change.