The court had previously granted Apple's motion to compel Samsung to produce the source code for Samsung's accused products. Apple moved to compel a second time and sought issue preclusion sanctions for Samsung's failure to produce source code. The court decided to focus on Samsung's failure to produce code for its "design-around" products. The court focused on design-arounds because by "their very nature design-arounds impact key questions of liability, damages, and injunctive relief."
The court noted that its previous order had required Samsung to produce all source code for all accused products by December 31, 2011. Samsung did not produce the source code for the design-around products until March, 12, 2012: "Samsung did not produce source code for its '891 and '163 design-around until March 10 and 12, 2012 - after the close of fact discovery - knowing full well that the court would not grant the parties any exceptions. Samsung offers no explanation why it could not produce code in commercial release months before the deadline, or produce other code in commercial release until months after the deadline. Samsung also offers no explanation why it failed to bring any source code production problems to the court's attention as soon as practicable and instead put the onus on Apple to seek relief."
The court then turned to the issue of substantial prejudice. As the court explained, "[t]he Ninth Circuit has set forth five factors to consider whether as given sanction is just: (1) the public's interest in expeditious resolution of litigation (2) the courts' need to manage its dockets (3) the risk of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the availability of less drastic sanctions."
In determining whether to award sanctions under this standard, the court found that Apple had suffered prejudice: "The Ninth circuit has held that a party's failure to produce documents as ordered is considered sufficient prejudice to establish sanctionable conduct. Moreover, in the Ninth Circuit prejudice from unreasonable delay is presumed. Even if prejudice were not presumed, the prejudice here is particularly onerous in light of the significance of design-around code. Fact discovery closed on March 8, 2012, and expert discovery closed on April 27, 2012. Samsung's delay until after the close of fact discovery undoubtedly prevented Apple from conducting any follow-up discovery on code that lies as the center of critical issues in this case. This was not code akin to that otherwise produced save for immaterial differences. This code was specifically written to design around Apple's claims in this case. In other words, it was code specifically written to be materially different from that otherwise produced. And source code is not something that can be reviewed casually. It often takes even highly trained, highly paid experts extraordinary time and effort to understand, let alone fit into the framework of this case. Apple's experts were left with no meaningful opportunity to comprehend this code, even as they face criticism from Samsung in deposition (and assuredly at trial) that their code analysis was deficient. Nothing Samsung offers justifies a conclusion other than that Apple suffered substantial prejudice from Samsung's violations."
The court also found that less dramatic sanctions were not available: "As for factor five, the availability of less dramatic sanctions, there is in the court's view no less drastic alternative than a preclusive sanction-and Samsung does not suggest one - that also remedies the prejudice to Apple. Even if Samsung did eventually produce the missing source code, it would be far too late. Fact and expert discovery have closed. Dispositive motion practice and trial are already upon us. The amount of data at issues is enormous. Apple cannot be expected to perform such a massive undertaking and spend valuable time and resources this late because of its opponent's failure to follow the court's orders. Deadlines have to matter."
Accordingly, the court found that issue sanctions were appropriate and that Samsung would be precluded from relying on any of the late-produced source code.
The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.