What companies can learn from Qualcomm v. Broadcom
At first blush, the $8.5 milliom in sanctions levied in Qualcomm Inc. v. Broadcom Corp. seems like the result of a simple case of discovery misconduct. But there may be more to the story, and additional details are likely to emerge following the district court's ruling that further proceedings will occur outside the cloak of the attorney-client privilege. In any case, corporate counsel can take steps to avoid ending up like the counsel in Qualcomm.
EXECUTIVE SUMMARY The Qualcomm discovery debacle has sent ripples of fear through both legal departments and outside counsel—and raised the level of diligence required in managing e-discovery. This article discusses what went wrong in Qualcomm, and the steps companies and their attorneys can take to avoid being the next subject of a highly publicized sanctions order. |
Discovery Disaster
The story of Qualcomm v. Broadcom began when Qualcomm sued Broadcom in 2005, claiming infringement of two video-compression patents. Broadcom's defense was based on claims of inequitable conduct and waiver due to Qualcomm's participation in standard-setting bodies, including the Joint Video Team ( JVT) prior to 2003, when the patents in question were issued.
Broadcom requested from Qualcomm all documents related to its participation in the JVT. Qualcomm performed a search for documents, which may have been limited to the company's email server, and found nothing related to the JVT. Qualcomm's fact and expert witnesses later testified in deposition that the company had not been involved in the JVT prior to 2003. On that basis, in filings before the court, Qualcomm's counsel repeatedly insisted that Qualcomm had not participated in the JVT.
During preparation for trial, a junior associate at Qualcomm's outside counsel discovered some automated emails from a third party server loosely related to the JVT on one of the trial witnesses' laptops. The junior associate informed his supervisors about the documents, which were deemed unresponsive to Broadcom's requests and thus not produced. At trial, when Broadcom's lawyer asked the witness whether she had ever received any JVT-related emails, she admitted she had, and the emails were produced. Qualcomm's lawyers continued to insist during and after trial that no documents existed showing meaningful participation in the JVT. Nevertheless, the jury found for Broadcom.
During posttrial proceedings, Broadcom requested that search terms be run on the document archives of certain employees. When Qualcomm did so, it discovered 230,000-plus pages of emails responsive to Broadcom's pretrial discovery, tens of thousands of which pertained directly to Qualcomm's extensive participation in the JVT prior to issuance of the patents.
The district judge issued a lengthy order accusing Qualcomm's attorneys of intentionally scheming with their client to prevent production of key information at the very heart of their claims against Broadcom. Awarding Broadcom more than $8.5 million dollars in sanctions (the entire amount of Broadcom's fees), the judge then sent the issue to a magistrate for further proceedings. The magistrate referred six of Qualcomm's outside counsel, including the junior associate, to the State Bar for discipline and ordered five named in-house counsel to participate in a court-mandated program designed to prevent future discovery abuses.
Last March, the district judge vacated the sanctions order as to the outside counsel because they had been unable to defend themselves due to the attorney-client privilege. Going forward, Qualcomm's outside counsel will not be prevented from arguing that Qualcomm's in-house counsel—perhaps by limiting the areas searched or the search terms used—were responsible for one of the most-discussed discovery sanctions awards of the decade.
WHAT WENT WRONG?
It is instructive to look at the Qualcomm decision in terms of what the court said Qualcomm and its attorneys failed to do. According to the magistrate judge, Qualcomm and its in-house attorneys failed to do a number of things, including: (a) conduct proper word searches on Qualcomm's computer systems for responsive documents; (b) search the computers or emails of the witnesses that Qualcomm presented at depositions and trial; (c) heed warning signs that their searches were inadequate; (d) produce arguably responsive emails discovered on an employee's computer during trial; and (e) conduct an investigation for other unproduced responsive documents following the discovery of such emails.
The court was similarly critical of Qualcomm's outside counsel. According to the magistrate judge, Qualcomm's outside attorneys failed to: (a) review the locations searched and search terms used by Qualcomm to find responsive documents; (b) question their client's "unsubstantiated assurances" that its search was sufficient; (c) "press" their client's employees for "the truth"; (d) heed warning signs that the searches were inadequate; and (e) conduct a reasonable inquiry into Qualcomm's document production before making factual and legal arguments to the court. According to the court: "Attorneys must take responsibility for ensuring that their clients conduct a comprehensive and appropriate document search."
As noted, the court imposed severe sanctions on Qualcomm and its lawyers for failing to do these things. The court also expressed the following opinion about Qualcomm and its attorneys: "The fault that the Court finds throughout this case was the failure of Qualcomm and many of its attorneys to realize (or take appropriate action based upon the realization) that there was a reason (actually several reasons) to question the accuracy of the representations and the adequacy of the discovery search and production."
The Qualcomm decision has sent ripples through the legal profession. The sanctions the court imposed were severe, and the standards the court imposed on counsel, both in-house and outside, were extremely high. By following the recommendations in "Tips on Avoiding a Qualcomm Scenario," we hope that companies and their lawyers will be able to minimize the risk of becoming embroiled in a similarly painful and public discovery debacle.
EXPERT ADVICE TIPS ON AVOIDING A QUALCOMM SCENARIO Though one could view Qualcomm as a "perfect storm" of discovery missteps, and therefore an aberration, it is also possible to view Qualcomm as a portent of things to come in the era of e-discovery. In view of the latter possibility, this section focuses on lessons that can be learned from Qualcomm and steps that companies and their attorneys can take to avoid becoming the next subject of a highly publicized sanctions order. Put a litigation hold in place. Carefully plan for document gathering. 3. Cross-check and double-check results. 4. If red flags appear, investigate. 5. Do not make representations to the court before
conducting a reasonable investigation. 6. Take a measured approach to written discovery
responses. |
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.