Samsung Used Illegal, Intimate Knowledge of Confidential Apple-Nokia Patent License Terms to Hardball Nokia


Well there is a mighty fine kettle of fish! Just as the old patent issues of Samsung copying Apple designs - and the related patent wars around it - fall off the table of media headlines, suddenly the not-so-pretty side of Samsung rears its head once again and puts Samsung right back in the headlines on patent issues. It turns out that Samsung had managed to get its hands on some extremely sensitive licensing agreement terms forged between Nokia and Apple and then used this knowledge to hardball Nokia during negotiations between Samsung and Nokia.

What does this mean and how did the situation even come to pass?

As it turns out, Magistrate Judge Paul S. Grewal recently and publically outlined the particularly ominous scenario over which Apple and likely Nokia are now requesting sanctions against Samsung for violating time-honored processes of maintaining extraordinarily tight security around highly confidential patent licensing agreements. FOSS Patents, which is manned by Florian Mueller and is our own primary go-to person and website for patent issues, reported this very recently. And Mueller, who is rather impossible to shock about any patent-related issues, actually stated that he was, in fact, shocked by the disclosure and by Samsung's overall behavior.

Image via Shutterstock

Apparently, one of Samsung's outside legal firms had access to the Nokia-Apple licensing agreement, and had the documents for reasons related to one of Apple and Samsung's patent suits. But the documents were supposed to be for the outside legal counsel's "eyes only" and no one at Samsung was ever supposed to see any of the information contained in the agreement.

Judge Grewal's publically available court order underscored the fact, revealing that various Samsung licensing executives - and in total perhaps over 50 Samsung people in total - had managed to get their hands on the totally non-redacted licensing agreement. This was bad enough but apparently Samsung's licensing executives then "allegedly" leveraged the information against Nokia during a licensing negotiation that recently took place on June 4, 2013.

According to Judge Grewel's order, Nokia's Chief Intellectual Property Officer, Paul Melin alleges Samsung executive Dr. Seungho Ahn not only mentioned that he was fully aware of the details of the  of the Apple-Nokia license, but in fact noted them almost word for word. He then allegedly used the information to unfair advantage by claiming that the same Apple-Nokia terms must be used in any subsequent Samsung-Nokia license resulting from the negotiations taking place. Mueller notes this directly from Grewel's order:

"Specifically, according to Mr. Melin, Dr. Ahn stated that Apple had produced the Apple-Nokia license in its litigation with Samsung, and that Samsung’s outside counsel had provided his team with the terms of the Apple-Nokia license. Mr. Melin recounts that to prove to Nokia that he knew the confidential terms of the Apple-Nokia license, Dr. Ahn recited the terms of the license, and even went so far as to tell Nokia that “all information leaks.”

What is shocking here is that Samsung's Dr. Ang was dumb enough - or perhaps the right way to frame it is that Ang thought he was playing a proper hardball game - in revealing this knowledge and then using it as a means to drive hardball negotiations. Alas it was anything but and we lean towards Dr. Ang being ignorant if not stupid about what he was doing.

What he did was to completely ignore what are otherwise widely respected rules governing protective court orders. Dr. Ang's actions have significantly undercut court mandated assurances of confidentiality. Clearly when a court places protective orders on documents and enjoins the party receiving them to maintain strict levels of confidentiality there can be no holes in the intended wall. If holes appear the court loses its integrity, its ability to adjudicate properly and its ability to control the legal processes supposedly under its control.

Judge Grewal underscores that the responsibility to maintain the complete inviolability of the court is entirely the responsibility of the party enjoined to maintain confidentiality when ordered to do so. Judge Grewal specifically says, “Confidential information remains confidential because counsel and clients alike follow court orders. If parties breach this basic rule, the court’s assurances become meaningless."

We can thank Samsung for its untoward here behavior here just as we can thank it for willfully copying Apple's iPhone 3 designs. In addition it is likely Samsung also has in hand the details of licensing agreements Apple has with Ericsson, Sharp and Philips as well.

Bad Intentions or Honest Mistakes?

The confidentiality breach and the use of un-redacted information is directly traceable to Samsung's outside counsel, the law firm Quinn Emanuel. Did Quinn Emanuel truly make a mistake - albeit one of significant consequence - or was its actions intentional? The latter would be an ugly thing to conclude, but even if the scenario proved to be the former, such mistakes cannot be allowed. Whether by mistake or intent the actions need to be punished. That is our two cents on the matter.

It has since been determined that the licensing details have found their way to more than fifty Samsung employees, including the high-ranking licensing executives noted earlier and which includes of course Ang. It has further been determined that there were at least four specific times between March 24, 2012, and Dec. 21, 2012, where Quinn Emanuel emailed the information both to Samsung employees and other law firms that were in the process of representing Samsung in jurisdictions outside of the United States.

At this point, Samsung of course denies any wrong doing whatsoever, but Samsung has also built an entire wall of silence around itself and has chosen to be entirely uncooperative with Judge Grewel, who notes in his order:

"Unfortunately, the court cannot say, because 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, asserting that such a violation can only occur willfully."

What are we to conclude from all of this exactly? Clearly Samsung's behavior here is no different than its willful copying of Apple's iPhone 3 designs and demonstrates Samsung's ongoing lack of respect for established legal processes. It goes to Samsung's behavior with the iPhone 3 - go ahead and copy and just ask for forgiveness later. More accurately, it comes down to not bothering with the legal process at all or caring about it and we'll figure out how to sidestep it later.

Is there another way to read this? Is Nokia's Paul Melin making it all up? Is there really a sugar plum fairy?

We can only hope that Judge Grewel, the ITC and the courts overall do in fact put sanctions in place and make them stick. There is simply no excuse for any of this. For additional details we highly recommend Mueller's own Foss Patents post on the situation.

Edited by Alisen Downey

TechZone360 Senior Editor

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