Qualcomm Inc. v. Broadcom Corp.Qualcomm Inc. v. Broadcom Corp.

2008 WL 66932 (S.D. Cal. Jan 7, 2008)2008 WL 66932 (S.D. Cal. Jan 7, 2008)

United States District Court for the Southern District of California

Sanctioning a PartySanctioning a PartySanctioning CounselSanctioning Counsel

QualcommQualcomm

Alleging patent infringement against Alleging patent infringement against BroadcomBroadcom ““104 patent”104 patent” ““767 patent”767 patent”

BroadcomBroadcom Manufacture, sale, and offers to sell Manufacture, sale, and offers to sell

H.264-compliant productsH.264-compliant products Waiver defense -> Qualcomm’s participation Waiver defense -> Qualcomm’s participation

in the Joint Video Team (“JVT”) in 2002 and in the Joint Video Team (“JVT”) in 2002 and early 2003early 2003

May 29, 2007 – Motion requesting Court May 29, 2007 – Motion requesting Court sanction Qualcomm for failure to sanction Qualcomm for failure to produce tens of thousands of documentsproduce tens of thousands of documents

Joint Video TeamJoint Video Team

Standards-setting body that created H.264 Standards-setting body that created H.264 standardstandard Released in May 2003Released in May 2003 Governs video codingGoverns video coding

H.264 is a standard for video compressionH.264 is a standard for video compression Blu-Ray, Youtube, Itunes store, etc.Blu-Ray, Youtube, Itunes store, etc.

Broadcom needs to prove Broadcom needs to prove Qualcomm participated in and Qualcomm participated in and

communicated with JVTcommunicated with JVT Rule 26(b)(1)Rule 26(b)(1)

Broad discovery, structured to allow “the Broad discovery, structured to allow “the parties to obtain the parties to obtain the fullest possiblefullest possible knowledge of the issues and facts before knowledge of the issues and facts before trial.” trial.” ZubulakeZubulake 217 F.R.D. at 316 217 F.R.D. at 316

Except where protected by privilege, allow Except where protected by privilege, allow discovery regarding any matter relevant to discovery regarding any matter relevant to the litigation. the litigation. Id.Id.

Federal Rules of Civil Federal Rules of Civil ProcedureProcedure

Rule 26(b)(2)Rule 26(b)(2) Tempers the broad discovery mandate of Tempers the broad discovery mandate of

26(b)(1)26(b)(1)

Federal Rules of Civil Federal Rules of Civil ProcedureProcedure

Rule 26(b)(6)Rule 26(b)(6) DepositionsDepositions

Attorney Kevin Leung prepared two separate Attorney Kevin Leung prepared two separate witnesses, both impeachedwitnesses, both impeached

Never searched their computers for any relevant Never searched their computers for any relevant documents or emails or provided them with documents or emails or provided them with information to reviewinformation to review

TRIAL – JANUARY 2007TRIAL – JANUARY 2007

While preparing for trial, attorney Adam While preparing for trial, attorney Adam Bier discovered an August 6, 2002 email Bier discovered an August 6, 2002 email to an employing welcoming her to the to an employing welcoming her to the avc_ce mailing listavc_ce mailing list

Searched her laptop and discovered 21 Searched her laptop and discovered 21 separate emails, none of which Qualcomm separate emails, none of which Qualcomm had produced in discoveryhad produced in discovery

TRIAL – JANUARY 2007TRIAL – JANUARY 2007

Qualcomm trial team decided not to Qualcomm trial team decided not to produce these newly discovered emails to produce these newly discovered emails to Broadcom, claiming they were not Broadcom, claiming they were not responsive to their discovery requestsresponsive to their discovery requests

Ignored the fact that the presence of these Ignored the fact that the presence of these emails undercut their premier argument emails undercut their premier argument that Qualcomm had not participated in JVT that Qualcomm had not participated in JVT in 2002 in 2002

TRIAL – JANUARY 2007TRIAL – JANUARY 2007 Later at trial, attorney Stanley Young Later at trial, attorney Stanley Young

argued against admission of the argued against admission of the December 2002 avc_ce email list:December 2002 avc_ce email list:““Actually, there are no emails – there are no Actually, there are no emails – there are no

emails…there’s no evidence that any email emails…there’s no evidence that any email was actually sent to this list. This is just a was actually sent to this list. This is just a list of email…addresses. There’s no list of email…addresses. There’s no evidence of anything being sent.”evidence of anything being sent.”

No attorney present mentioned the 21 No attorney present mentioned the 21 avc_ce emails found on employees avc_ce emails found on employees computer a few days earliercomputer a few days earlier

TRIAL – JANUARY 2007TRIAL – JANUARY 2007

Over lunch hour, Qualcomm’s counsel Over lunch hour, Qualcomm’s counsel produces the 21 emails:produces the 21 emails: Jury returns unanimous verdicts in favor of Jury returns unanimous verdicts in favor of

Broadcom regarding non-infringementBroadcom regarding non-infringement

Judge Brewster findings - Judge Brewster findings - AUGUSTAUGUST

By clear and convincing evidence that By clear and convincing evidence that Qualcomm, its employees, and its Qualcomm, its employees, and its witnesses actively organized and/or witnesses actively organized and/or participated in a plan to profit heavily by 1) participated in a plan to profit heavily by 1) wrongfully concealing the patents-in-suit wrongfully concealing the patents-in-suit while participating in the JVT and then 2) while participating in the JVT and then 2) actively hiding this concealment from the actively hiding this concealment from the Court, jury, and opposing counselCourt, jury, and opposing counsel

Judge Brewster findings - Judge Brewster findings - AUGUSTAUGUST

““counsel participated in an organized counsel participated in an organized program of litigation misconduct and program of litigation misconduct and concealment throughout discovery, trial, concealment throughout discovery, trial, and post-trial before new counsel took and post-trial before new counsel took over lead role in the case on April 27, over lead role in the case on April 27, 20072007

MONEYMONEY

Judge Brewster adopts District Court’s Judge Brewster adopts District Court’s recommendation:recommendation: $9,259,985.09 in attorney’s fees and related $9,259,985.09 in attorney’s fees and related

costscosts Post-judgment interest on final fee award of Post-judgment interest on final fee award of

$8,568,633.24 at 4.91 percent$8,568,633.24 at 4.91 percent

Post-Trial MisconductPost-Trial Misconduct

Feb 16, 2007: Attorney Bier told Feb 16, 2007: Attorney Bier told Broadcom:Broadcom: ““we continue to believe that Qualcomm we continue to believe that Qualcomm

performed a reasonable search of performed a reasonable search of Qualcomm’s documents in response to Qualcomm’s documents in response to Broadcom’s Requests for Production and that Broadcom’s Requests for Production and that the 21 emails…are not responsive to any the 21 emails…are not responsive to any valid discovery obligation or commitmentvalid discovery obligation or commitment

Post-Trial MisconductPost-Trial Misconduct March 7, 2007 – Bier:March 7, 2007 – Bier:

We “believe your negative characterization We “believe your negative characterization of Qualcomm’s compliance with its discovery of Qualcomm’s compliance with its discovery obligation to be wholly without merit”obligation to be wholly without merit”

But he advised that Qualcomm agreed to But he advised that Qualcomm agreed to search current and archived emails of search current and archived emails of five trial witnesses using the requested five trial witnesses using the requested search terms: JVt, avc_ce, H.264search terms: JVt, avc_ce, H.264

Qualcomm remained difficult to deal with Qualcomm remained difficult to deal with for the rest of March…until..for the rest of March…until..

BustedBusted

April 9 – Qualcomm’s General Counsel, April 9 – Qualcomm’s General Counsel, Batchelder and Lupin, submit Batchelder and Lupin, submit correspondence to Judge Brewster correspondence to Judge Brewster admitting Qualcomm had thousands of admitting Qualcomm had thousands of relevant unproduced documents and relevant unproduced documents and that their review of these documents that their review of these documents “revealed facts that appear inconsistent “revealed facts that appear inconsistent with certain arguments counsel made with certain arguments counsel made on Qualcomm’s behalf at trial and in the on Qualcomm’s behalf at trial and in the equitable hearing following trial”equitable hearing following trial”

Legal Standard - FRCPLegal Standard - FRCP Rule 37(a): authorizes party to file a Rule 37(a): authorizes party to file a

motion to compel an opponent to comply motion to compel an opponent to comply with a discovery request or obligation with a discovery request or obligation when the opponent fails to do so initiallywhen the opponent fails to do so initially

Rule 37(b): court may impose additional Rule 37(b): court may impose additional sanctionssanctions No requirement that failure be willful or No requirement that failure be willful or

reckless; “sanctions may be imposed even reckless; “sanctions may be imposed even for negligent failures to provide discovery”for negligent failures to provide discovery”

Legal Standard - FRCPLegal Standard - FRCP

Rule 26(g)(2): “what is reasonable is a Rule 26(g)(2): “what is reasonable is a matter for the court to decide on the matter for the court to decide on the totality of the circumstances”totality of the circumstances”

Rules 26(g)(3): If an attorney makes an Rules 26(g)(3): If an attorney makes an incorrect certification without substantial incorrect certification without substantial justification, the court must sanction the justification, the court must sanction the attorney, party, or both and the sanction attorney, party, or both and the sanction may include an award of reasonable may include an award of reasonable attorney’s feesattorney’s fees

Legal Standard - FRCPLegal Standard - FRCP

Rule 37(c)(1): If a party, without Rule 37(c)(1): If a party, without substantial justification, fails “to amend substantial justification, fails “to amend a prior response to discovery as a prior response to discovery as required by Rule 26(e)(2),” the court required by Rule 26(e)(2),” the court may prevent that party from using that may prevent that party from using that evidence at trial or at a hearing and evidence at trial or at a hearing and impose other appropriate sanctions, impose other appropriate sanctions, including the payment of attorney’s feesincluding the payment of attorney’s fees

SANCTIONSSANCTIONS QUALCOMMQUALCOMM

Presented no evidence attempting to explain Presented no evidence attempting to explain or justify its failure to produce documentsor justify its failure to produce documents

Not established that it searched the Not established that it searched the computers or email databases of witness computers or email databases of witness testifying on their behalftestifying on their behalf

Did no produce the 21 emailsDid no produce the 21 emails Did not conduct internal investigationDid not conduct internal investigation

Monumental and intentional discovery Monumental and intentional discovery violation = $8,568,633.24 to Broadcomviolation = $8,568,633.24 to Broadcom

SANCTIONSSANCTIONS

ATTORNEYS – Court’s 4 Scenarios:ATTORNEYS – Court’s 4 Scenarios:1) Qualcomm did intentionally hide documents 1) Qualcomm did intentionally hide documents

from retained attorneys – effectively that the from retained attorneys – effectively that the lawyers did not know or suspect that they lawyers did not know or suspect that they existedexisted

2) Retained lawyers failed to discover the 2) Retained lawyers failed to discover the intentionally hidden documents or suspect intentionally hidden documents or suspect their existence due to their complete their existence due to their complete ineptitude and disorganizationineptitude and disorganization

SANCTIONSSANCTIONS

ATTORNEYS – Court’s 4 Scenarios:ATTORNEYS – Court’s 4 Scenarios: Qualcomm shared the damaging documents Qualcomm shared the damaging documents

and counsel worked with them to hide and counsel worked with them to hide documents and all early involvement with JVTdocuments and all early involvement with JVT

While Qualcomm did not tell retained lawyers While Qualcomm did not tell retained lawyers about damaging documents, lawyers about damaging documents, lawyers suspected but chose to ignore evidence and suspected but chose to ignore evidence and warning signs and accept Qualcomm’s warning signs and accept Qualcomm’s incredible assertions regarding adequacy of incredible assertions regarding adequacy of document searchdocument search

Court rejects scenario 1, 2, 3Court rejects scenario 1, 2, 3

Talented, well-education, and experienced Talented, well-education, and experienced lawyers failed to discover any facts or issues lawyers failed to discover any facts or issues that caused them to question sufficiency of that caused them to question sufficiency of Qualcomm’s document search and productionQualcomm’s document search and production 46,000 critical documents that extinguished 46,000 critical documents that extinguished

Qualcomm’s principal argumentQualcomm’s principal argument

No direct evidence establishing option 3 – no No direct evidence establishing option 3 – no one told attorneysone told attorneys

Court decides on ignoranceCourt decides on ignorance

One or more lawyers chose not to look One or more lawyers chose not to look at correct locationsat correct locations

Accepted unsubstantiated assurancesAccepted unsubstantiated assurances Ignored warnings signs that document Ignored warnings signs that document

search and production were inadequatesearch and production were inadequate Did not press employees to tell the truthDid not press employees to tell the truth And/or encourage employees to provide And/or encourage employees to provide

information that Qualcomm needed to information that Qualcomm needed to assert its non-participation argumentassert its non-participation argument

Which Attorneys?Which Attorneys?

3 responsible for initial discovery3 responsible for initial discovery Federal Rules impose an affirmative duty Federal Rules impose an affirmative duty

upon lawyers to engage in discovery in a upon lawyers to engage in discovery in a responsible manner and to conduct a responsible manner and to conduct a “reasonable inquiry” to determine whether “reasonable inquiry” to determine whether discovery responses are sufficient and properdiscovery responses are sufficient and proper

Lawyer’s difficulty with two witnesses was Lawyer’s difficulty with two witnesses was a huge warning signa huge warning sign

Which Attorneys?Which Attorneys?

Did not sanction local attorneys – signed Did not sanction local attorneys – signed pleadings with false information but relied pleadings with false information but relied on work of other attorneys more actively on work of other attorneys more actively involved in litigationinvolved in litigation

Refers the Sanctioned Employees to the Refers the Sanctioned Employees to the State Bar of CaliforniaState Bar of California

CREDOCREDO

Case Review and Enforcement of Case Review and Enforcement of Discovery Obligations programDiscovery Obligations program Identify failures in case management and Identify failures in case management and

discovery protocol utilized by Qualcomm and discovery protocol utilized by Qualcomm and its in-house and retained attorneysits in-house and retained attorneys Craft alternatives to prevent such failuresCraft alternatives to prevent such failures Evaluate and test alternativesEvaluate and test alternatives Create a case management protocol which will Create a case management protocol which will

serve as a model for the futureserve as a model for the future

QUESTIONSQUESTIONS

Should Qualcomm be sanctioned where Should Qualcomm be sanctioned where the fault lies with their Counsel?the fault lies with their Counsel?

Can Sanctions be imposed on Qualcomm Can Sanctions be imposed on Qualcomm and its Counsel Jointly and Severally?and its Counsel Jointly and Severally?