InsideCounsel » May 2008
Qualcomm’s Quandary
Disastrous discovery missteps shed light on a familiar problem.
Online Exclusive: To learn more about Qualcomm's court-ordered CREDO, click here.
By now the numbers are well known. 46,000: The number of relevant, occasionally case-shattering e-mails and documents Qualcomm failed to turn over during discovery in the patent infringement suit it brought against Broadcom. 200,000: The number of pages contained in those documents, of which Qualcomm claimed to be unaware. $8.6 million: The estimated cost of Broadcom’s legal fees in Qualcomm Inc. v. Broadcom Corp., for which Qualcomm will be forced to foot the bill after Federal District Judge Rudi Brewster’s none-too-pleased August 2007 order decrying the company’s “deliberate plan to conceal evidence.”
After presiding over a sanctions hearing, Federal Magistrate Judge Barbara Major was similarly indignant over what she deemed Qualcomm’s “monumental and intentional discovery violation.” With fiery orders from both judges, it was clear someone would have to pay.
Qualcomm, which declined to comment for this story, maintained it was not to blame for the unearthed e-mails. After fighting to preserve attorney-client privilege, Qualcomm filed four unsealed declarations in October 2007 in which employees exonerated the company while criticizing its outside attorneys. These declarations invoked a self-defense exception to the attorney-client privilege, and in a March order, Brewster lifted privilege. Now six of Qualcomm’s outside attorneys—five from Day Casebeer Madrid & Batchelder and one from Heller Ehrman—will have the chance to tell outside counsel’s side of the story. There’s no telling what those hearings could reveal, but some experts expect an inside look at a case of discovery gone wrong.
“This has put a shiver down the spine of both inside and outside counsel,” says Ken Withers, director of judicial education and content for The Sedona Conference. “The sanction orders may expose a tense and sometimes hostile relationship between inside and outside counsel when it comes to the conduct
of discovery in complex cases. The Qualcomm situation is unusual, but it provides a window on a common problem.”
Standards and Sanctions
When Qualcomm sued Broadcom for patent infringement in October 2005, there was no inkling the case would be anything more than another patent action. Broadcom’s defense hinged on Qualcomm’s participation in the Joint Video Team (JVT), a standard-setting body.
JVT participants holding patents associated with the content of the standards—such as the patents Qualcomm sued over—must agree to certain terms, such as granting royalty-free licenses. Essentially, if Qualcomm had participated with the JVT in creating a video standard published in 2003, its lawsuit against Broadcom would be invalidated.
“Throughout the trial, [Qualcomm] kept up a drumbeat that it hadn’t participated and that there was no evidence it participated,” says David Rosmann, vice president of intellectual property litigation for Broadcom. “So the central defense of Broadcom failed because there was no evidence.”
Then during trial in January 2007, a Qualcomm employee admitted under cross-examination to receiving e-mails from the JVT’s mailing list before the standard was published. “This was the tip of the iceberg that led to everything else,” says Jack Regan, a partner with Wilmer Hale, which represented Broadcom in the Qualcomm action.
Namely, it led to production of the 46,000 JVT-related e-mails Qualcomm hadn’t turned over during discovery, which proved involvement in the JVT in 2002. The jury returned a verdict for Broadcom and criticized Qualcomm’s “inequitable conduct.” In turn, Brewster referred Qualcomm and its lawyers to Major for sanctions.
Major ordered the outside attorneys to the California state bar for sanctions. (That could change after they’re allowed to break privilege, for which a Day Casebeer partner says it is “gratified.”) She also ordered Qualcomm and its lawyers to participate in a court-run program to identify Qualcomm’s failures. Filings in the so-called case review and enforcement of discovery obligations (CREDO) program, over which Major will preside, were expected April 10.
If nothing else, Major hopes the program “will provide a road map to assist counsel and corporate clients.” According to Withers, one thing it could reveal is that the pitfall of discovery often lies in the relationship between inside and outside counsel. “As discovery itself has become more cumbersome and expensive, more sophisticated in-house counsel have been doing more to bring operations in house and reduce costs,” Withers says. “That has created a conflict with outside counsel still under an obligation under the rules to certify [proper discovery conduct].”
