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Sanctions for Alleged Spoliation Against Samsung Denied in Ongoing Battle with Apple by Administrative Law Judge at the ITC

In the running battle between Apple and Samsung that is playing out in courts and agencies around the world, Apple filed a motion seeking sanctions against Samsung for the alleged spoliation of evidence. Apple alleged that Samsung should be sanctioned for spoliation because Samsung deliberately failed to take institutional steps to retain or back up emails sent or received using its computer email system. Apple also alleged that Samsung had no systematic or company-wide oversight procedures in place to ensure that its employees make appropriate decisions as to which emails are relevant and responsive or to ensure that relevant and responsive emails are in fact saved to employee hard drives.

Samsung denied Apple’s allegations and asserted that it began preserving documents when Apple filed its complaint and that Apple had not shown that Samsung or any of its employees destroyed relevant data after that date. Samsung also stated that even if Apple could establish that evidence was destroyed after the complaint was filed, Apple could not show that Samsung acted in bad faith or with any intent to impair Apple in its case. Samsung also noted that the majority of the accused products were released after the complaint was filed and therefore “[a]ny emails relating to Apple’s claims against these products (design, copying, etc.) would have to predate their release, meaning that any documents not kept would have been deleted pursuant to Samsung’s standard email retention policy. Hence, there is no basis for Apple’s claim that evidence of design and development, copying, or design around has been destroyed.”

The Staff opposed Apple’s motion for sanctions. “The Staff argues that Apple has not sufficiently demonstrated that Samsung did not satisfy its duty to preserve evidence. The Staff notes that Samsung did distribute a timely notice to more than 2,800 potential custodians instructing them to preserve all documents relevant to this Investigation. Moreover, the Staff asserts that Samsung believes that twelve of the thirteen employees Apple alleges did not timely receive the litigation hold notice did, in fact, receive the notice of July 13, 2011 and the thirteenth employee did receive a notice later in the summer of 2011.”

The Administrative Law Judge began the analysis by stating: “It is important to appreciate the possible spoliation of evidence is an important issues, for if parties were permitted to deliberately or even negligently dispose of potentially relevant evidence, such acts would defeat the purpose of discovery and perhaps more importantly, lead to the knowing destruction of evidence and thus impair the ability of a party to present its case. That being said, it is equally important to understand that finding spoliation requires some specific proof of spoliation, not mere speculation or arguments framed in terms of generalities. As such Apple, must be able to prove that Samsung had an obligation to preserve documents at the time it destroyed or permitted documents to be destroyed.”

The Administrative Law Judge then concluded that: “In the present instance, it is undisputed that Samsung’s email system has been employed for over years before this Investigation was instituted. It is also undisputed Samsung’s system routinely deleted emails older than two weeks old before Samsung initiated a litigation hold in response to the investigation. This is permissible. See Chrysler Corp. v. United States, 592 F.3d 1330, 1338 (Fed. Cir 2010) and Fed. R. Civ. P. 37(e). Yet, if Apple could prove Samsung destroyed documents after the inception of the investigation, appropriate sanctions may lie. However, beyond Apple’s rather speculative accusations, I can find no proof Samsung destroyed any potentially relevant emails after the institution of this Investigation. On the contrary, I do find proof that Samsung took reasonable steps to preserve documents by instituting a litigation hold and instructing its relevant employees to err on the side of preservation when retaining documents.”

Accordingly, Apple’s motion for sanctions was denied.

In the Matter of Certain Electronic Digital Media Devices and Components Thereof, Inv. No. 337-TA-796 (May 23, 2012) (Administrative Law Judge Thomas B. Pender)

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