Federal Court justice Annabelle Bennett today ordered Samsung to find out whether two key witnesses received highly sensitive information through an FTP link to damages expert, Professor David J. Teece’s report. The report included key terms of each of Apple’s four license agreements.
The case centres on Samsung and Apple’s willingness to negotiate on royalties and licensing fees for the technology that allows phones to conduct multiple tasks including taking calls while uploading photos to the internet.
Samsung previously sued Apple claiming the iPhone manufacturer was infringing on its three patents regarding 3G data transmission.
This suit followed Apple's initial claim that Samsung stole its design ideas for computer tablets and phones. Similar cases have also been taking place in the US and Germany.
On March 24, 2012, Samsung’s outside counsel in the US, Quinn Emanuel, sent a draft report by Dr Teece to its client without fully redacting confidential business information. It put it on an FTP file download site that every Samsung employee involved with Apple Samsung litigation had access to.
The US case will see Apple put a motion for sanctions against Samsung in the Californian District Court on October 16.
Justice Bennett has adjourned the Sydney hearing until October 24 to allow Samsung’s lawyers time to find out who had access to the information.
Samsung lead counsel, Neil Young QC, told the court the two executives, who were set to give evidence, were crucial to defending Apple’s allegations that Samsung had refused to negotiate a fair, reasonable and non-discriminatory licensing agreement.
“It’s evidence that lies at the heart of the case,” he said.
“We prepared an affidavit explaining the nature of the evidence and the reasons why it’s clear the evidence must be received by the court to deal with allegations of refusal to negotiate. It’s a matter of importance and urgency that this issue is resolved.”
Apple’s lead counsel Stephen Burley told the court Samsung had taken advantage of substantial market power by offering “non-competitive” terms, while urging the court to direct Samsung to reveal whether their two witnesses’ evidence was tainted by the release of highly sensitive information.
“Dr Teece filed expert reports on behalf of Samsung and his reports deal with whether or not a fair, reasonable and non-discriminatory offer was made,” he said.
“In a significant development, a report has been disseminated to Samsung executives. “We are not permitted to know the details of that beyond what’s publicly available. It was disclosed to 50 Samsung executives… we want to know what the outcome of that deposition is.”
Justice Bennett said it was a continuing saga, in which it would be “extraordinarily” difficult to come to a fair, reasonable and non-discriminatory licensing fee.
“I would have thought it is not at all unreasonable for Samsung to comply with an order to inform Apple whether or not those two people were listed in the attachment. They are entitled to have that information, subject to American law,” she said.
“You know who they are, they are your people. All they want to know is are these two people on the list. They are either there or they are not.”
The case is ongoing, and will resume on October 24.