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

Filing 971

NOTICE of Authority Regarding #895 Administrative Motion to File Under Seal by Samsung Electronics America, Inc.(a New York corporation), Samsung Electronics Co. Ltd., Samsung Telecommunications America, LLC(a Delaware limited liability company) (Attachments: #1 Exhibit A)(Maroulis, Victoria) (Filed on 5/24/2012) Modified text on 5/25/2012 (dhm, COURT STAFF).

EXHIBIT A

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UNITED STATES INTERNATIONAL TRADE COMMISSION
Washington, D.C.
In the Matter of
CERTAIN ELECTRONIC DIGITAL
MEDIA DEVICES AND COMPONENTS
THEREOF

Inv. No. 337-TA-796

ORDER NO. 19: ORDER DENYING COMPLAINANT APPLE INC.'S MOTION
FOR SPOLIATION SANCTIONS AGAINST SAMSUNG
(May 11, 2012)
On April 16, 2012, complainant Apple Inc. (Apple) submitted a motion seeking sanctions
for alleged spoliation of discoverable material against respondents Samsung Electronics Co,,
Ltd., Samsung Electronics America, Inc., and Samsung Telecommunications America, LLC
(collectively, "Samsung"). (Motion Docket No. 796-031) On May 4, 2012, Samsung filed a
response opposing the motion. Also on May 4, 2012, Commission Investigative Staff ("Staff')

filed a response opposing the motion.
I. Position of the Parties
Apple's Position
Apple alleges I should order sanctions for spoliation because Samsung has deliberately
failed to take "institutional steps to retain or back up emails sent or received using its (computer
e-mail] system." Apple alleges a relevant e-mail is preserved only if; (1) an employee who sent
or received the email has been informed of the litigation hold; (2) the employee decides, as a
matter of his or her judgment, that the email should be preserved; and (3) the employee saves the
email on his or her computer, What is more, Apple alleges Samsung has no systemic or
company-wide oversight procedures in place to ensure that its employees make appromiate

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decisions as to which emails are relevant and responsive or to ensure that relevant and responsive
mails are in fact saved to employee hard drives.
Apple also alleges Samsung's conduct is "completely insufficient" to satisfy its duty to
preserve evidence, Apple contends that Samsung should know better than not to preserve
evidence, for it "has been twice sanctioned by courts precisely because of its failure to produce
emails that were desfroyed as a result of Samsung's systemic policy of automatically deleting
emails from its system." Apple alleges Samsung was fined for such conduct by Korea's Fair
Trade Commission and that its "failures" were exacerbated by the fact that many key witnesses
did not even receive notice of the Investigation until months after Apple filed its complaint in
early July of 2011, which means automatic destruction of their emails continued. Apple also
alleges Samsung Employees followed document destruction policies and destroyed notebooks,
diaries, and other hard copy documents — some of which were allegedly destroyed in the last few
months.
Apple alleges Samsung's spoliation obstructed orderly discovery and prejudiced its

preparation of its case. Apple states Samsung's "failures" deprived it of "unknown volumes of
relevant documents from key employees, and further deprived" it of the ability to depose key
witnesses. Hence, Apple claims prejudice because it cannot allegedly discover documents
pertaining to: (1) Samsung's alleged analysis and copying of its technology; (2) design of the
Samsung products by key Samsung engineers; and (3) design around of Apple's products.
Samsung's Position
Samsung denies Apple's allegations. Samsung asserts its obligation to preserve
documents began when Apple filed its Complaint on July 5, 2011, and that Apple has not shown
Samsung or any of its employees destroyed relevant data after that date. Samsung also states

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that the evidence Apple speculates about in its motion "never existed in the first instance; if it
did, it would not have been subject to a duty to preserve because it related to steps in the process
that took place long before Apple filed its complaint"
Samsung next posits that even if Apple could establish it destroyed evidence after July 5,
2011, which it denies, there is no proof Samsung acted in bad faith or any intent to impair Apple.
Samsung also asserts the evidence Apple alleges it destroyed has not been shown to be and is
unlikely to be critically relevant to Apple's case. Specifically, the majority of the accused
products were released before July 5, 2011 and any emails relating to Apple's claims against
these products (design, copying, etc.) would have to predate their release, meaning that any
documents not kept would have been deleted pursuant to Samsung's standard email retention
policy. Hence, there is no basis for Apple's claim that evidence of design and development,
copying, or design around has been destroyed,
Samsung asserts that in any event, there is no evidence of intentional destruction and no
evidence of missing documents by topic. In addition, Samsung has produced nearly 12 million
pages of documents, including 80,000 emails, and 58 million pages of source code, and 163
Samsung witnesses have been deposed. Samsung argues all of this refutes Apples allegations.
Samsung states from a technical standpoint, it operates a data system, including an email
system [

] for (

] worldwide employees and must comply with Korean privacy laws,

which are designed to protect the right of individuals over the rights of past military dictatorships
to gather information. In addition, Samsung asserts, the [
been using for more than [

j which Samsung has

1 years, is designed to avoid the danger that confidential business

information will be misappropriated in the event a computer is lost or stolen by preventing the
download of every message unless a decision is made to download. Samsung also notes that

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even extending records retention to by an additional 16 to 30 days woUld cost Samsung an
additional { } per year. Samsung states, nevertheless, employees can preserve
email from destruction after a set two week time period by saving it to a hard drive on their
computer or by using Microsoft Outlook if they have a need to do so.
Samsung asserts it issued a timely and carefully drafted litigation hold in July of 2011
and recipients were told to retain documents rather than destroy them if they had any doubts as to
their relevance. Samsung states its attorneys held meetings with document custodians and other
key personnel stressing the importance of preservation. Samsung also explains how the
witnesses identified by Apple as having destroyed ernails or not having many emails, (1) did not
work on relevant subject matter; (2) would only have had entails predating the Complaint; (3)
did not destroy emails; (4) saved emails on their hard drives as instucted; or (5) identified emails
dated well before the date of the Complaint. Samsung also disputes that it destroyed any
notebooks or other physical documents as alleged by Apple.

Staff's Position
The Staff opposes Apple's Motion for Sanctions. The Staff argues that Apple has not
sufficiently demonstrated that Samsung did not satisfy its duty to preserve evidence, The Staff
notes that Samsung did distribute a timely notice to more than 2,800 potential custodians
instructing them to preserve all documents relevant to this Investigation. Moreover, the Staff
asserts that Samsung believes that twelve of the thirteen employees Apple alleges did not timely
receive the litigation hold notice did, in fact, receive the notice on July 13, 2011 and the
thirteenth employee did receive a notice later in the summer of 2011.
The Staff also notes that Samsung's employees did have the capability of preserving
email by saving it to their hard drives. In addition, the Staff asserts even Apple acknowledges

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that Samsung instructed the employees to save all relevant email to their individual computer
hard drives. Hence, the Staff argues Apple has not established Samsung failed to take adequate
steps to ensure preservation of documents. The Staff also argues that considering the size and
complexity of Samsung and its obligation to abide by the laws of the Republic of Korea, Apple
did not prove Samsung acted unreasonably in taking the steps it did to ensure the preservation of
the emails. The Staff also argues that because of the repercussions of Apple's Motion, Samsung
should not be sanctioned without more specific support than it has provided.
The Staff also disputes Apple's allegations that Samsung destroyed notebooks and other
physical documents. Instead, the Staff submits that Apple "has again made only conclusory
allegations of wrong-doing." In particular, the Staff notes Apple has not identified a specific
notebook maintained by Kim Soo Jung or any other Samsung employee involved in this
investigation that may have contained relevant information and that is missing.
IL An alysis
It is important to appreciate the possible spoliation of evidence is an important issue, for
if parties were permitted to deliberately or even negligently dispose of potentially relevant
evidence, such acts would defeat the purpose of discovery and perhaps more importantly, lead to
the knowing destruction of evidence and thus impair the ability of a party to present its case.
That being said, it is equally important to understand that finding spoliation requires some
specific proof of spoliation, not mere speculation or arguments framed in terms of generalities.
As such, Apple must be able to prove that Samsung had an obligation to preserve documents at
the time it destroyed or permitted documents to be destroyed.
In the present instance, it is undisputed that Samsung's [

] email system has been

employed for over [ ] years before this Investigation was instituted. It is also undisputed

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Samsung's [

] system routinely deleted emails older than two weeks old before

Samsung initiated a litigation hold in response to the investigation. This is permissible. See
Chrysler Corp. v. United States, 592 F.3d 1330, 1338 (Fed.Cir 2010) and Fed. R. Civ. P. 37(e).
Yet, if Apple could prove Samsung destroyed documents after the inception of the investigation,
appropriate sanctions may lie. However, beyond Apple's rather speculative accusations, I can
find no proof Samsung destroyed any potentially relevant emails after the institution of this
Investigation, On the contrary, I do find proof that Samsung took reasonable steps to preserve
documents by instituting a ligation hold and instructing its relevant employees to err on the side
of preservation when retaining documents.
Samsung supported its Opposition to Apple's Motion for Sanctions with evidence. Based
upon my analysis of the evidence presented to me, I find that Samsung has specifically disproven
the great majority if not all of the factual allegations relating to spoliation that Apple made in its
Motion for Sanctions. Accordingly, I find Apple has not adequately established that Samsung
did not satisfy its duty to preserve evidence. Rather, as mentioned, I find Samsung took
reasonable and appropriate steps to preserve evidence and did not, either negligently or
purposefully destroy evidence based upon the record before me. Therefore, I do not find
Samsung intended to impair Apple's ability to prosecute its infringement claims in this
Investigation, which is a necessary prerequisite to a finding of bad faith and thus the granting of
an adverse inference for spoliation. See Micron Tech. Inc. v. Rainbus, Inc., 645 F,3d 1311, at
1326-28 (Fed.Cir. 2011).
ITL Order
Apple's Motion is hereby DENIED,

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Within seven days of the date of this document, each party shall submit to the Office of
the Administrative Law Judges a statement as to whether or not it seeks to have any portion of

this document deleted from the public version. The parties' submission may be made by
facsimile and/or hard copy by the aforementioned date.
Any party seeking to have any portion of this document deleted from the public version
thereof must submit to this office a copy of this document with red brackets indicating any
portion asserted to contain confidential business information. The parties' submissions
concerning the public version of this document need not be filed with the Commission Secretary.
SO ORDERED.

Thomas B. Pender
Administrative Law fudge

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