Apple Inc. v. Samsung Electronics Co. Ltd. et al

Filing 502

Administrative Motion to File Under Seal filed by Apple Inc.. (Attachments: #1 Declaration, #2 Proposed Order, #3 Exhibit Apple's Opposition to Samsung's Motion to Compel, #4 Mazza Decl ISO Apple's Opposition to Samsung's Motion to Compel, #5 Ex. 1 to Mazza Decl ISO Apple's Opposition to Samsung's Motion to Compel, #6 Ex. 2 to Mazza Decl ISO Apple's Opposition to Samsung's Motion to Compel, #7 Proposed Order Denying Samsung's Motion to Compel, #8 Apple's Opposition to Samsung's Motion to Permit Samsung's Expert Itay Sherman to Review Design Materials Designated Under the Protective Order, #9 Kim Declaration ISO Apple's Opposition to Samsung's Motion to Permit Samsung's Expert Itay Sherman to Review Design Materials Designated Under the Protective Order, #10 Ex. 1 to the Kim Declaration, #11 Ex. 2 to the Kim Declaration, #12 Ex. 3 to the Kim Declaration, #13 Ex. 4 to the Kim Declaration, #14 Ex. 5 to the Kim Declaration, #15 Ex. 6 to the Kim Declaration, #16 Ex. 7 to the Kim Declaration, #17 Ex. 8 to the Kim Declaration, #18 Ex. 9 to the Kim Declaration, #19 Proposed Order Denying Samsung's Motion to Permit Samsung's Expert Itay Sherman to Review Design Materials Designated Under the Protective Order)(Hung, Richard) (Filed on 12/15/2011)

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HAROLD J. MCELHINNY (CA SBN 66781)
[e-mail]
MICHAEL A. JACOBS (CA SBN 111664)
[e-mail]
JENNIFER LEE TAYLOR (CA SBN 161368)
[e-mail]
ALISON M. TUCHER (CA SBN 171363)
[e-mail]
RICHARD S.J. HUNG (CA SBN 197425)
[e-mail]
JASON R. BARTLETT (CA SBN 214530)
[e-mail]
MORRISON & FOERSTER LLP
425 Market Street
San Francisco, California 94105-2482
Telephone: [phone]
Facsimile: [phone]

WILLIAM F. LEE
[e-mail]
WILMER CUTLER PICKERING
HALE AND DORR LLP
60 State Street
Boston, MA 02109
Telephone: [phone]
Facsimile: [phone]
MARK D. SELWYN (SBN 244180)
[e-mail]
WILMER CUTLER PICKERING
HALE AND DORR LLP
950 Page Mill Road
Palo Alto, California 94304
Telephone: [phone]
Facsimile: [phone]

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Attorneys for Plaintiff and
Counterclaim-Defendant APPLE INC.

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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APPLE INC., a California corporation,

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Plaintiff,
v.
SAMSUNG ELECTRONICS CO., LTD., a
Korean corporation; SAMSUNG
ELECTRONICS AMERICA, INC., a New
York corporation; and SAMSUNG
TELECOMMUNICATIONS AMERICA,
LLC, a Delaware limited liability company,

Case No. 11-cv-01846-LHK (PSG)
APPLE’S OPPOSITION TO
SAMSUNG’S MOTION TO PERMIT
SAMSUNG’S EXPERT ITAY
SHERMAN TO REVIEW DESIGN
MATERIALS DESIGNATED UNDER
THE PROTECTIVE ORDER
Judge:

Hon. Lucy H. Koh

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Defendants.
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PUBLIC REDACTED VERSION

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APPLE’S OPPOSITION TO SAMSUNG’S MOTION TO PERMIT ITAY SHERMAN TO REVIEW DESIGN MATERIALS
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Samsung’s motion to allow its expert Itay Sherman to view Apple confidential

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information should be denied. The damage to Apple from disclosing Apple’s confidential

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information to Mr. Sherman, whose business and commercial activities compete with Apple,

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would greatly outweigh any possible prejudice to Samsung from denying this motion.

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Mr. Sherman is the founder and Chief Executive Officer (“CEO”) of a company whose website

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announces that it “is aiming to bring innovative multi-touch technology to mass market.” (See

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Declaration of Esther Kim in Support of Apple’s Opposition to Samsung’s Motion to Permit

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Samsung’s Expert Itay Sherman to Review Design Materials Designated Under the Protective

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Order (“Kim Decl.”) at ¶ 2.) He is the named inventor and is currently pursuing patents directed

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to systems “capable of detecting double point or finger taps or gestures, and districting [sic] them

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from single point or finger taps or gestures.” (Id. at ¶ 3; see also Ex. 3 at 70-7 ) He also has

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ongoing consulting arrangements with several of Apple’s competitors in the smart phone market.

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The competitive intelligence Mr. Sherman would gain from reviewing Apple’s design

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information would be invaluable to Mr. Sherman and the companies with which he consults.

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Thus, Apple faces substantial potential harm in allowing Mr. Sherman to have access to its

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confidential information.

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In contrast, Samsung has not offered any reason why its defense to this action would be

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impeded if Mr. Sherman were denied access to Apple’s confidential information. Samsung has

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sufficient time to retain another expert in this action, as opening expert reports are not due until

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March 22, 2012. (Dkt. 187.) Accordingly, the balance of harms weighs in favor of denying

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disclosure of Apple confidential information to Mr. Sherman.

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I.

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FACTS
On September 6, 2011, Samsung disclosed that it had retained Itay Sherman as a design

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expert and demanded to know, by September 9, 2011, whether Apple objected to the disclosure to

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Mr. Sherman of Apple information designated as “Confidential” or “Highly Confidential –

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Attorneys’ Eyes Only” under the Interim Model Protective Order. (Kim Decl. at ¶ 5.) The next

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day, Apple responded that it needed more time to “evaluate Apple’s potential objections to this

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expert.” (Id. at ¶ 6.) Apple’s initial review of Mr. Sherman’s curriculum vitae gave Apple much
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reason for concern, as it appeared that Mr. Sherman was “actively engaged in commercial

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activities and obtaining patents in areas that overlap with the subject matter of this case.” (Id.)

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Apple promptly requested additional details regarding Mr. Sherman’s commercial activities and

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his pending patent applications. (Id.) In particular, Apple sought reassurances that these

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activities and applications did not overlap with the subject matter of Apple highly confidential

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information, which Samsung was seeking to reveal to Mr. Sherman. (Id.) Samsung refused to

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make such representations (id.) because it could not. Mr. Sherman is the founder, CEO, and sole

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board member for DoubleTouch, Ltd., a company that develops and markets technology to be

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used in consumer electronics devices that compete directly with Apple’s products.

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Realizing the potential competitive harm to Apple that would result from disclosure of

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said sensitive information, Samsung proposed that Mr. Sherman “review only those confidential

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documents that relate to the design aspects of this case, and only those documents that relate to

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previously released Apple products.” (Kim Decl. at ¶ 6.)

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Samsung’s assurances that it would show Mr. Sherman only documents relating to “the

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design aspects of this case” are not – and cannot – be sufficient to address Apple’s concerns.

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Given Mr. Sherman’s opinion that design and functionality are intertwined (Dkt. 172), virtually

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all documents would be deemed to relate to “the design aspects of this case.” In correspondence

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and during the parties’ meet-and-confer call on November 16, 2011, Apple – despite its

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uneasiness with his involvement – offered to consider allowing Mr. Sherman to view confidential

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Apple documents on a case-by-case basis, if Samsung would identify in advance the specific

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documents Samsung wished to show him. (Kim Decl. at ¶ 7.) Samsung again refused. (Id.)

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Instead, Samsung asked that Mr. Sherman be given access to broad categories of confidential

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documents: (1) all computer-aided design (“CAD”) files; (2) all design inventor notebooks; (3)

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the deposition transcript of Apple design patent inventor Christopher Stringer; and (4) all Apple

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presentations purporting to show that certain features of designs are functional. (Dkt. 482-2 at

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¶ 2.) These categories cover a wide array of information – beyond those that relate strictly to

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design. For example, Samsung believes that pricing and manufacturing information is relevant to

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design issues, because such information indicates whether changes were made for commercial

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rather than aesthetic reasons. (Kim Decl. at ¶ 8.)

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Given Samsung’s inadequate assurances and refusal to compromise, Apple has continued

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to maintain its objection to Mr. Sherman’s access to Apple confidential information, based on his

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business activities and pending patent applications.

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II.

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ARGUMENT
The purpose of a protective order is to “prevent harm by limiting disclosure of relevant

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and necessary information.” Micro Motion, Inc. v. Kane Steel Co., Inc., 894 F.2d 1318, 1325

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(Fed. Cir. 1990) (emphasis in original). In resolving disputes where the party receiving

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confidential information under a protective order seeks to utilize the information in a manner that

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is opposed by the producing party, the court will balance the interests of the parties. Telular Corp.

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v. VOX2, Inc., No. 00 C 6144, 2001 WL 641188, at *1 (N.D. Ill. June 4, 2001); also 8 Charles

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Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2043 (3d ed. 2010). Where, as

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here, the disclosure of confidential information to a third-party expert is opposed by the

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producing party, the court must balance the disclosing party’s interest in protecting its trade

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secrets and confidential information from disclosure to its competitors against the interest of the

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party seeking disclosure in selecting the expert most beneficial to its case. BASF Corp. v. United

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States, 321 F. Supp. 2d 1373, 1379 (C.I.T. 2004); Telular, 2001 WL 641188, at *1. In balancing

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these interests, the Court should take into account the specific expertise of this expert and whether

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other experts possess similar expertise. Id. The balance of interests here weights heavily in

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Apple’s favor.

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Mr. Sherman should not be allowed to review Apple confidential information because he:

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(1) is the owner and CEO of DoubleTouch, Ltd., a company that is developing touch screen

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technology designed to compete with Apple’s touch screen technology; (2) is a named inventor

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on numerous pending patent applications claiming multi-touch technology; and (3) has ongoing

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consulting relationships with companies that design technologies and products that have been, or

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may be, offered to handset manufacturers that are Apple’s competitors.

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A.

Apple Would Suffer Harm If Its Confidential Information Were Disclosed to
Mr. Sherman, the Founder and CEO of a Company Developing Multi-Touch
Technology Aimed at Apple’s Market.

The disclosure of sensitive Apple information to Mr. Sherman represents a significant

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competitive threat to Apple. Mr. Sherman is the founder, CEO, and sole board member of

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DoubleTouch, Ltd., a company that develops multi-touch technology competing directly with

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Apple’s technology. Indeed, DoubleTouch markets its products as “providing the full experience

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of multi-touch with a fraction of the cost.” (Kim Decl. at ¶ 9.) Samsung’s own motion

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acknowledges that DoubleTouch “is in the business of licensing low-cost multi-touch

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technology” to “vendors that provide touch controllers to the consumer electronics market as well

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as consumer electronics companies themselves.” (Samsung Mot. at 3.) Thus, it is undisputed that

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Mr. Sherman and his company DoubleTouch develop and market technology to be used in

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consumer electronics devices that compete directly with Apple’s own products.

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Samsung contends that Apple’s concerns about providing its sensitive business

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information to Mr. Sherman are baseless because he would “only testify in this case about design

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patents, not utility patents.” (Id. at 4.) Regardless of the nature of his testimony, however,

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Mr. Sherman’s access to Apple’s business information poses the risk of substantial competitive

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harm to Apple. Nor are Apple’s concerns alleviated by Samsung’s proposal that Mr. Sherman be

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provided only with “design documents.” The list of documents Samsung proposes to provide to

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Mr. Sherman include some of the most sensitive documents Apple possesses, including CAD

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files, design sketchbooks, and “internal documents [purportedly] showing that design features are

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functional.” (Id. at 4-5.) These documents go to the heart of the design of Apple’s products,

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including information about designs that Apple has not yet pursued, as well as designs that Apple

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considered and chose not to pursue.

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Apple views its designs, including its alternate designs to products already released, as

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crucial to its success. Maintaining the secrecy of Apple’s designs and its design process itself is a

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top priority for Apple. For this reason, Apple guards its designs with security measures that are

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as high as (or even higher than) those used to guard its source code. Apple should not be required

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to share this highly sensitive competitive information with someone who designs the same types

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of products for competitors.

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B.

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Apple Will Suffer Harm Because Mr. Sherman Is Pursuing Patent Protection
for Inventions Aimed at Apple’s Market.

Disclosing Apple confidential information to Mr. Sherman would also prejudice Apple

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because Mr. Sherman is currently seeking patent protection for inventions that are aimed directly

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at Apple’s market. For example, Mr. Sherman is the named inventor of a patent application –

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apparently assigned to his company DoubleTouch – entitled, “Implementation of Multi-Touch

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Gestures Using a Resistive Touch Display.” (Kim Decl. at ¶ 3.) This patent application generally

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describes “a system based on a standard resistive touch screen that is capable of detecting double

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point or finger taps or gestures, and districting [sic] them from single point or finger taps or

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gestures.” (Id.; see also Ex. 3 at 70-73.) Mr. Sherman and his company are continuing to

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prosecute this patent application and related applications. Access to Apple’s design documents

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showing non-public information about Apple’s designs could allow Mr. Sherman and his

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company to develop and modify their patent strategy, armed with inside knowledge about

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Apple’s past and current designs.

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C.

Apple Will Suffer Harm Because Mr. Sherman Provides Consulting Services
to Apple’s Competitors.

In addition to his current employment, Mr. Sherman has a history of working for or

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heading companies developing technology for use in products in direct competition with Apple.

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From 2007 and 2010, before founding DoubleTouch, Mr. Sherman was the Chief Technology

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Officer (“CTO”) of Modu, Ltd., a company focused on developing mobile phones to compete

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with Apple’s iPhone.

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Modu’s desire to compete
with the iPhone was even documented in the press. (Kim Decl. at ¶ 10.)

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Before joining Modu, Mr. Sherman was the CTO for Texas Instruments Mobile

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Connectivity Group, where he worked closely with Nokia, Motorola, and Sony Ericsson – all

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competitors to Apple’s products. Mr. Sherman is an individual who is likely to continue to

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specialize in technologies in which Apple competes. (Dkt. 482-1.)

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In addition to Mr. Sherman’s intimate involvement with companies that are in competition
with Apple, he has ongoing consulting relationships with Apple’s competitors.

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If Mr. Sherman were granted access to Apple’s sensitive confidential materials, this

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information would unavoidably become a part of his general knowledge and could be used to the

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advantage of Apple’s chief rivals. “It is very difficult for the human mind to compartmentalize

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and selectively suppress information once learned, no matter how well-intentioned the effort may
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be to do so.” BASF, 321 F. Supp. 2d at 1380. Thus, Apple would be commercially harmed by

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the disclosure of its confidential documents and information to Mr. Sherman, who provides recent

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and ongoing consulting services to Apple’s competitors regarding the same technology that is at

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issue in this case.

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D.

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Samsung Will Not Be Prejudiced Because Samsung Has Ample Time to
Retain a Qualified Expert to Opine on Issues Related to Industrial Design.

Samsung will experience little prejudice if Mr. Sherman is denied access to Apple’s

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confidential information. As opening expert reports are not due until March 22, 2012, Samsung

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has enough time to retain another design expert. Samsung could also choose to proceed with

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Mr. Sherman as an expert witness without showing him Apple confidential information. Because

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there is enough time to retain another design expert and Mr. Sherman is still free to opine as to

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design, albeit without the benefit of Apple confidential documents, Samsung would suffer little

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prejudice in not being able to disclose Apple’s confidential information to him.

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Samsung suggests that any credible expert would “need to be someone with extensive

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experience in the mobile phone and mobile device markets.” (Samsung Mot. at 4.) Samsung is

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free, however, to locate such an expert who is not currently the CEO of a company that designs

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and sells technology for such products, and who is not currently providing consulting services for

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a number of Apple’s competitors.

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III.

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CONCLUSION
For the foregoing reasons, the injury to Apple from disclosure of its confidential

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information to Mr. Sherman, who engages in commercial activity and obtaining patent protection

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in areas that are competitive with and adverse to Apple’s interests, far outweighs the slight

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inconvenience to Samsung of obtaining a different expert. Accordingly, Apple respectfully

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requests that Samsung’s motion be DENIED.

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Dated: December 15, 2011

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MORRISON & FOERSTER LLP
By:

/s/ Richard S.J. Hung
Richard S.J. Hung

Attorneys for Plaintiff
APPLE INC.
APPLE’S OPPOSITION TO SAMSUNG’S MOTION TO PERMIT ITAY SHERMAN TO REVIEW DESIGN MATERIALS
CASE NO. 11-CV-01846-LHK (PSG)
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