Articles Posted in Sanctions

Published on:

To resolve Apple and Nokia’s request for sanctions against Samsung from Samsung’s violation of a protective order, the court ordered written discovery and depositions to determine the extent of the violation. After discovery and several hearing, the court began its analysis by noting that “[a] junior associate missing one redaction among many in an expert report is not exactly a historical event in the annals of big-ticket patent litigation. Even if regrettable, these things can happen, and almost certainly do happen each and every day. But when such an inadvertent mistake is permitted to go unchecked, unaddressed, and propagated hundreds and hundreds of times by conscious – and indeed strategic – choices by that associate’s firm and client alike, more significant and blameworthy flaws are revealed.”

The court then addressed three separate questions. “First, has its protective order been violated? Second, if the protective order has been violated, does the court have the authority to issue sanctions for those violations? Finally, if the court has the authority to issue sanctions, what factors should it consider in determining whether sanctions are warranted?”
Continue reading

Published on:

In this patent infringement action that was originally filed against a number of defendants, plaintiff Alexsam, Inc. (“Alexsam”) moved for a continuance of the impending trial date set for October 2013. To support the motion, plaintiff notified the district court that it had terminated its relationship with its counsel of record and suggested that it anticipates litigation between itself and its counsel of record. Alexsam requested a delay in the trial setting so that it could secure new counsel.

The district court had previously conducted a consolidated trial on Defendants’ invalidity claims in May 2013. The jury found each of the asserted claims valid. As explained by the district court, “Shortly after the invalidity trial, Plaintiff and Best Buy, Inc. settled the remaining issues between them (Doc. No. 270 in 2:13-cv-2). The Court then tried the infringement issues in Alexsam, Inc. v. Barnes & Noble, Inc. (2:13-cv-3) and Alexsam, Inc. v. The Gap, Inc. (2:13-cv-4) in June 2013. The Barnes & Noble trial was conducted June 3-7, 2013, and the Gap trial was conducted June 24-28, 2013. Both juries found no infringement (Doc. No. 219 in 6:13-cv-3 and Doc. No. 243 in 6:13-cv-4).”
Continue reading

Published on:

As Apple and Samsung head toward yet another trial, Apple filed a motion for sanctions, accusing Samsung of violating the protective order in the case. Apple’s motion asserted that Samsung’s counsel had improperly shared information under the protective order with executives at Samsung.

The court began its analysis with a discussion of the importance of protective orders: “Time and again in competitor patent cases, parties resist producing confidential information to their adversaries’ lawyers. They fear, among other things, that the lawyers will insufficiently shield the information from the competitors that they represent. Yet time and again, the court assuages these fears with assurances that a protective order will keep the information out of the competitors’ hands. 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. There is reason to believe the rule has been breached in the present case.”
Continue reading

Published on:

Plaintiff Vasudevan Software, Inc. (“VSi”) filed a motion for sanctions against defendant MicroStrategy (“MS”). The sanctions motion was based on statements that VSi characterized as threats against both VSi and its counsel by an outside counsel and a principal of MS, in conjunction with MS’s filing of a request for reexamination of four of VSi’s patents and another patent held by Zillow, a client of VSi’s outside counsel. Rather than deny that the statements were made, MS asserted that even if the statements were made they could not be sanctioned for making them because of the First Amendment.

The district court explained the background facts as follows: “Sean Pak, a partner at Quinn, Emanuel, Urquhart & Sullivan, LLP, counsel for MS, contacted Brooke Taylor, a partner at Susman Godfrey, counsel for VSi. He requested a meeting include the principals of VSi and MS. Pak said MS was planning to be “aggressive” in defending against VSi’s claims in this case and would take “initiatives” toward that end, including filing reexamination petitions with the USPTO to reexamine VSi’s patents. Pak proposed flying to Seattle (where the Susman Godfrey office in which Taylor works is located) to discuss these “initiatives” with VSi and its counsel. Taylor agreed and Pak, Taylor and Jordan Conners (a Susman Godfrey associate also representing VSi) met in person at Susman Godfrey’s Seattle offices on September 10, 2012. Additional VSi counsel Les Payne and Eric Enger of Heim, Payne, & Chorush, LLP, VSi principals Mark and Helen Vasudevan, and MS Executive Vice President and General Counsel Jonathan Klein participated in the meeting over the phone. Klein stated that he would not pay VSi anything to settle VSi’s patent infringement claims against MS and, if VSi did not immediately dismiss the case, threatened to make the litigation as painful as possible for VSi, file reexamination petitions with the USPTO for all of VSi’s patents in suit, and take action against Susman Godfrey. When Payne specifically asked Klein what he meant by taking action against Susman Godfrey, he refused to answer and suggested that Susman Godfrey would have to wait and see. ”
Continue reading

Published on:

In Smart Options, LLC v. Jump Rope, Inc., Case No. 12-C-2498 (N.D. Ill. March 25, 2013), plaintiff Smart Options brought suit for infringement of U.S. Patent No. 7,313,539 against Jump Rope. The ‘539 Patent relates to a method for purchasing an “option” to buy a good or service (e.g., concert ticket) at a “reservation price” within a designated time period. If the option to buy is not exercised then it expires and there is no refund of the “option fee.” Smart Options utilizes the patent in the operation of its website www.optionit.com. Jump Rope operated a smart phone application that allows users to bypass entrance lines at events by purchasing a “Jump” which allows immediate access to the event without any additional purchase required.

After the suit was filed, Jump Rope served Smart Options with a Rule 11 motion and cover letter stating that Jump Rope would seek its attorneys’ fees and costs if Smart Options proceeded with the suit and the Court entered a finding of non-infringement. Jump Rope explained why it considered the suit to be meritless:

Plaintiff alleges violation of a patent that covers providing options on the right to purchase goods or services at a future time. Defendant’s software application, however, does not provide options or charge option fees. Rather, it allows someone to buy the service provided – a right to “jump the line” at an event or facility. Plaintiff and its counsel could have and easily should have discovered this, as the iPhone/Android application they accuse is free to download.

Continue reading

Published on:

In Arrival Star S.A.., et al. -v- Meitek Inc., et al., Defendant Meitek Inc. (“Meitek”) moved for Rule 11 sanctions against the Plaintiff Arrival Star S.A. (“Arrival Star”) based on Meitek’s contentions that “ArrivalStar’s counsel (1) failed to prepare any claim construction before filing suit, (2) made a “tactical decision” to sue Meitek instead of its Chinese parent company due to the difficulties of retaining service and recovering judgment against the latter, and (3) improperly relied on the views of a patent practitioner to opine on the issue of infringement.” Meitek sought at least three times its attorneys’ fees of $110,000 and preferably 5 to 10 times this amount, or $550,000 to $1,100,000 in sanctions.

The Court recited the standard under Rule 11 that sanctions may be imposed “when a filing is frivolous, legally unreasonable, or without factual foundation, or is brought for an improper purpose. The standard governing both the ‘improper purpose’ and ‘frivolous’ inquiries is objective.” (internal citations omitted). The Court further stated that Local Rule 11-9 further provides that the presentation to the Court of frivolous motions subjects the offender at the discretion of the Court to sanctions.
Continue reading

Published on:

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.”
Continue reading

Published on:

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.”
Continue reading

Published on:

Apple sought sanctions against Samsung pursuant to Fed.R.Civ.P. 37(b)(2) in two separate motions pertaining to alleged violations of discovery orders, including an order regarding discovery on damages. The court had initially ordered Samsung to produce two categories of documents: (1) documents from the custodial files of Samsung designers of the Samsung products at issue during the preliminary injunction motion referencing the Apple products alleged by Apple to embody one or more of the ornamental or utility features claimed in the patents; and (2) all survey documents from central or custodial files that reference the Apple products-in-issue. After this order, Apple contended that the Samsung production was still woefully inadequate and the court issued a further order directing Samsung to comply by December 31, 2011 and stating that failure to comply would subject Samsung to sanctions.

The court ultimately agreed that Samsung had failed to comply with the court’s orders, even though there was significant burden on Samsung due to the compressed case schedule. “The scale of Samsung’s production and the burden placed on it by the compressed case schedule and the numerous claims at issues . . . That burden, however, does not negate Samsung’s obligation to comply with no fewer than two court orders specifying the production of documents that reference Apple’s products claimed to embody the features and designs at issue. As this court has stated under similar circumstances, ‘[o]nce the order compelling production issues, the focus of this court’s appropriate inquiry necessarily shifts to compliance.’ Notwithstanding Samsung’s efforts, the court agrees with Apple that Samsung’s production as of October 7 and December 31, 2011 failed to comply with the Court’s orders.”
Continue reading

Published on:

Plaintiff Schering Corp. (“Schering”) filed a patent infringement action against Apotex Inc. (“Apotex”). Schering brought a motion contending that Apotex spoliated relevant evidence. The motion was based on the omission of allegedly relevant evidence from Apotex’ expert report. The expert report was served in October 2011 and Schering notified Apotex of the alleged spoliation a few days after the report was served. Apotex responded to the letter and stated that it had no other additional information to provide because the expert did not save the slides that he analyzed.

Schering did not bring the alleged spoliation to the court’s attention for several months. The court found that this delay was significant and that Schering had not adequately explained the delay. “Schering fails to adequately explain why it waited for months, and until the eve of trial, to bring this alleged spoliation to the attention of the Court.”
Continue reading