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Samsung Used Secret Nokia-Apple Agreement for Leverage with Patent Deals

October 3, 2013 - Written By Cory McNutt

The dictionary defines “corporate espionage” as – “Industrial espionage, economic espionage or corporate espionage is a form of espionage conducted for commercial purposes instead of purely national security…industrial or corporate espionage is more often national and occurs between companies or corporations.” The dictionary defines “horse-trading” as – “a shrewdly conducted exchange, as of favors or objects, usu. involving close bargaining.” Most successful companies do one or the other, sometimes both, and now this time, Samsung was caught with its hands in the cookie jar, so to speak.

According to the Foss Patents, that cover software patent news and issues, Samsung executives knew all about the terms of a secret Nokia-Apple patent license. Apparently, they saw a filing from Nokia that related to a Nokia-Samsung discussion that was so secretive even the title of the document was to be sealed. This discussion was about the 2011 Nokia-Apple settlement of which nobody knew the terms.

Magistrate Judge Paul S. Grewal of the United States District Court for the Northern District of California entered an order handed down at Apple’s request, for sanctions against Samsung for violation of illegal disclosures of confidential business information. Samsung and Nokia held a meeting to discuss patent agreements between the two companies and in that meeting, Samsung Executive, Dr. Seungho Ahn:

informed Nokia that the terms of the Apple-Nokia license were known to him” and according to a declaration from Nokia’s Chief Intellectual Property Officer, Paul Melin, 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. The Melin declaration furthermore says 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.

Why would intelligent people say something that could get them thrown in jail! So the big question is how did Samsung know about the contents of licensing agreement when it was marked, “Highly Confidential—Attorneys’ Eyes Only?” Having privy to this information would give Samsung an unfair advantage or leverage in their negotiations with either Apple or Nokia, but to disclose something that seriously violates court rulings is surprising, and could prove to be costly for Samsung if convicted.

Judge Grewal writes:

[t]here is reason to believe the rule [that confidential information made available only to outside counsel won’t be disclosed to the party itself] has been breached in the present case. But due to the current lack of information, the judge can’t say yet [w]hether the actions of Samsung and its counsel are worthy of sanctions, and what those sanctions might be.

Time will tell what happens to Samsung in this case, and what sanctions will be handed down from the courts. We are certainly not condoning this conduct, but it happens every day in the business world. What do you think about this type of behavior going on in the corporate world?