Apple v. Samsung, C 11-1846 LHK (PSG) (5/4/12)
Judge: Paul S. Grewal
Holding: Motion for 37(b)(2) Sanctions GRANTED
As readers know, I occasionally post on cases from other jurisdictions that might be of interest, and the Northern District of California is a good source since it uses patent rules similar to those in the Eastern District - in fact it was the source for the Eastern District's rules back in 2001. It also addresses similar issues (although seeing Apple as a plaintiff is a little weird).
Eastern District practitioners are also likely to be familiar with the judge in this case, U.S. Magistrate Judge Paul S. Grewal, who worked on several cases in the Eastern District before taking the bench, and who spoke on a panel on e-discovery at the Eastern District's bench/bar last fall. This opinion by Judge Grewal I thought might be of interest because it deals with a common issue - source code production - and the consequences of belated production.
In this case, the plaintiff moved for sanctions against the defendant for late production of source code. Judge Grewal's opinion described the world of source code production in patent cases in a memorable way.
In a typical patent infringement case involving computer software, few tasks excite a defendant less than a requirement that it produce source code. Engineers and management howl at the notion of providing strangers, and especially a fierce competitor, access to the crown jewels. Counsel struggle to understand even exactly what code exists and exactly how it can be made available for reasonable inspection. All sorts of questions are immediately posed. Exactly who representing the plaintiff gets access—and does this list include patent prosecution counsel, undisclosed experts, and so-called “competitive decision makers”? Must requirements and specification documents that explain the functionality implemented by the code be included? What compilation, debugging and analysis tools are required? What about the test database and user manuals? Make files? Build files? Does the code have to produce in a native repository such as CVS or Perforce? Must daily builds in development be produced (and if so, in real-time or batch?) or is production limited only to copies in commercial release? Put simply, source code production is disruptive, expensive, and fraught with monumental opportunities to screw up.
Truer words were never spoken.
In this case, Judge Grewal granted the plaintiff Apple's motion to compel the defendant Samsung to produce source code, and Apple later filed a motion for sanctions claiming that Samsung did not comply with that order. Interestingly, the issue was whether Samsung had complied with the order not with respect to the code plaintiff Apple wanted to use, but with respect to the code that Samsung intended to rely on - specifically the code for Samsung's "design-around" products. "Like many accused infringers," Judge Grewal wrote, "Samsung developed these products with the specific intent of avoiding the plaintiff's asserted patents, in this case the ‘381, ‘891, and ‘163 utility patents. This is of course Samsung’s right, and in many ways exactly what the disclosure requirements of the patent system are designed to achieve. The court focuses on design-arounds because by their very nature design-arounds impact key questions of liability, damages, and injunctive relief. They are inevitably designed with substantial input from counsel for the specific purpose of distinguishing other products at issue. In short, they matter. A lot. Because Samsung had these products in hand in some cases months before the court's December 31 deadline, and in other cases did not produce them until months after, the court finds that Samsung clearly violated the court's order and that sanctions are warranted, as set out below." (Emphasis mine).
Judge Grewal looked at (i) what he ordered Samsung to produce in the December 22 Order and by when; (ii) whether Samsung complied; and (iii) if Samsung did not comply, whether Apple’s requested sanctions were appropriate. (Apple was seeking an order precluding Samsung or any of its experts from presenting, using, or relying on any source code that was not timely produced under the December 22 Order; and an order deeming that, for purposes of assessing infringement by any version of a Samsung accused product, the product version for which Samsung timely produced source code is representative of all versions of that product).
Judge Grewal determined that Samsung was not permitted to exclude from the ordered production the design-around code Apple had requested, and that it had "plainly violated" the court’s December 31 deadline. "More troubling still is Samsung’s design-around code production for the ‘891 and ‘163 patents. Fact discovery closed on March 8, 2012. Samsung did not produce source code for its ‘891 and ‘163 design-arounds 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." So Samsung violated the order, and its conduct was "well within its own control" so sanctions were warranted, the Court concluded. But which ones?
The Ninth Circuit had set forth five factors to consider whether a given sanction is just, the Court explained:
- the public's interest in expeditious resolution of litigation;
- the court's need to manage its dockets;
- the risk of prejudice to the party seeking sanctions;
- the public policy favoring disposition of cases on their merits; and
- the availability of less drastic sanctions.
"Where a court order is violated," the Court wrote, "the crux of the analysis is the risk of prejudice to the party seeking sanctions, and the availability of less dramatic sanctions." Even if prejudice were not presumed, the Court noted, the prejudice here was 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 at 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.
In light of the specific facts of the case, Judge Grewal concluded that preclusive sanctions were appropriate, and ordered that "Samsung shall be precluded from offering any evidence of its design-around efforts for the ‘381, ‘891, and ‘163 patents, and shall not argue that the design-arounds are in any way distinct from those versions of code produced in accordance with the court’s order. Samsung must instead rely solely on the versions of code that were produced on or before December 31, 2011."
From Docket Navigator.
