The (Almost) Billion Dollar Ediscovery Blunder

Apple, Inc. v. Samsung Electronics Co., Ltd., et al., Case No. C11-1846 LHK (PSG), 2012 U.S. Dist. LEXIS 103958 (N.D. Cal., July 24, 2012); 2012 U.S. Dist. LEXIS 118426 (N.D. Cal., Aug. 21, 2012).

In addition to a headline-grabbing billion-dollar verdict, Apple’s case against Samsung also offers a cautionary Ediscovery tale. Apple and Samsung are arguably among the most technologically sophisticated companies in the world, yet according to the presiding judge, both mismanaged their data-retention or data-hold policies during their recent high-stakes litigation. 

Despite receiving a letter from Apple in August 2010 containing detailed notice of its infringement claims and issuing litigation holds shortly thereafter, Samsung never confirmed that its employees had adhered to those holds. It also never confirmed that employees adhered to subsequent holds issued after the suit was filed in April 2011. Samsung employees failed to disable a computer function that automatically deleted emails after 14 days. As a result, a significant amount of likely responsive data was not preserved or produced. And Apple fared no better, despite the August 2010 notice it gave Samsung. Apple failed to issue its own litigation holds until after it filed suit, and then waited until September 2011 to issue holds to key designers and the inventors of the involved patents. Apple’s system had automatically deleted likely responsive emails if an individual’s inbox became “too full.” Both sides moved for sanctions claiming spoliation. The presiding magistrate denied Samsung’s motion but granted Apple’s and ordered that the jury be given an adverse-inference instruction. On Samsung’s reconsideration motion, the district court judge found that the order against Samsung was too harsh given the quantity of data it had produced. She further found that Apple’s conduct also constituted spoliation and ordered that identical adverse instructions be given advising the jury that they could decide whether the failure to preserve evidence was important when reaching their verdict. Thereafter, the parties agreed that they preferred that no instruction be given and the judge concurred. We note that the district court also has before it post-trial motions, including one to review the jury’s billion dollar verdict on the basis that the amount of the verdict was not supported by sufficient evidence that the contribution of the patents to the devices at issue added that degree of value.

BuLITS Points

  • Involve your I.T. department!  Make sure to inform I.T. of any litigation holds so they can address any automatic data policies that potentially implicate pending litigation. Better yet, form an Ediscovery team whose members include inside counsel, Ediscovery consultants and I.T. insiders, and together design a procedure to make litigation holds part of an established and reliable process.
  • Make your initial conference with opposing counsel count. Defining the scope of preservation from the get-go makes good sense for many reasons.  Meaningful participation at the 26(f) conference is an established Sedona “best practice” that is sure to generate goodwill from the court should a dispute arise. And defining relevance upfront so at to limit the scope of what’s preserved, collected and reviewed lowers Ediscovery costs, especially in complex, big party v. big party litigation.
  • Document, document, and document again. Whether or not you decide to implement a hold, know the obligations that trigger your preservation duties.  When an event occurs that could arguably create a duty and you conclude that a hold is not yet necessary, document your decision in case your reasoning is later called into question. 

And Remember
Effective litigation holds often need to happen at the granular level.  Does an auto function need to be turned off on individual workstations? Laptops? How about smart phones and tablet devices?  With the proliferation of technologies comes a proliferation of what’s potentially covered by the obligation to maintain. Check in with employees to make sure they fully understand what they need to do with the devices under their control so that both the parameters and execution of your litigation hold are fully defensible. Recirculate litigation holds on a periodic basis, as a reminder to the people on the hold of their obligations to preserve documents. 

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