The other shoe has dropped in a case that many California attorneys were already talking about, Qualcomm Inc. v. Broadcom Corp.; it hit with such a loud thud that attorneys all over the country will now take notice. Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 599 (S.D. Cal. Aug. 13, 2007). This is an Order to Show Cause directed against all attorneys who represented the plaintiff, Qualcomm, in a patent infringement case it brought against Broadcom. The Order specifically names 14 attorneys from two prominent law firms, one local and one national, but also includes “any and all other attorneys who signed discovery responses, signed pleadings and pre-trial motions, and/or appeared at trial on behalf of Qualcomm.” The Order requires these attorneys to appear in the District Court in San Diego on August 29, 2007, at 9:30 a.m. to show cause why sanctions should not be imposed against them for failure to comply with the Court’s orders. The court granted a subsequent motion for continuance by the 14 attorneys and the hearing date was moved to Friday, October 12, 2007 at 9:30 a.m. The motion states the Order raises “serious issues that potentially impact the legal careers” of the attorneys.
The Order to Show Cause by Magistrate Judge Barbara Lynn Major comes on the heels of the 54-page Order on Remedy for Finding of Waiver, entered August 6, 2007, by District Court Judge Rudi M. Brewster. Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 593 (S.D. Cal. Aug. 6, 2007). There, the District Judge found “by clear and convincing evidence that Qualcomm[‘s] counsel participated in an organized program of litigation misconduct and concealment throughout discovery, trial, and post-trial before new counsel took over lead role in the case on April 27, 2007.” Among other things, this first-shoe-to-drop opinion highlighted Qualcomm’s production of over 200,000 pages of relevant emails and other electronic documents four months after the jury trial (that Qualcomm lost). Judge Brewster impugned Qualcomm’s counsel and their claims that they carried out their discovery obligations in good faith, explaining:
Qualcomm counsel’s discovery responses demonstrate that they were able to locate with alacrity company records from December 2003 forward and find four or more Qualcomm employees participating in proceedings of the [Joint Video Team (“JVT”)]. Yet inexplicably, they were unable to find over 200,000 pages of relevant emails, memoranda, and other company documents, hundreds of pages of which explicitly document massive participation in JVT proceedings since at least January 2002. These examples of Qualcomm counsel’s indefensible discovery conduct belie counsel’s later implied protestation of having been “kept in the dark” by their client.
Judge Brewster’s 54-page opinion detailed the actions of Qualcomm and its counsel, concluding that these facts demonstrate “aggravated litigation abuse.” The court found “constant stonewalling, concealment, and repeated misrepresentations concerning existing corporate documentary evidence.” In spite of such discovery tactics, Qualcomm lost the jury trial, and then the full extent of its abuses was revealed. Qualcomm then fired its lead counsel, and its substitute counsel tried unsuccessfully to explain it all away. In the words of the court, the substitute lead counsel “adamantly denied the obvious and then, when the truth was discovered and exposed by the document production, sequentially contended denial of relevance, justification, mistake, and finally non-awareness.”
The end result of the 54-page opinion was to hold and order that Qualcomm had completely waived its rights to enforce the two video compression patents (5,452,104 and 5,576,767) at issue in the case. The waiver applies not only against Broadcom, but against anyone. The waiver was caused by Qualcomm’s prior inequitable conduct before the Patent Office, conduct that Qualcomm tried to cover up in this litigation.
On August 6, 2007, Judge Brewster also entered an Order Granting Broadcom Corporation’s Motion for Exceptional Case Finding and for an Award of Attorneys’ Fees (35 U.S.C. § 285). Qualcomm Inc. v. Broadcom Corp., No. 05-CV-1958-B(BLM) Doc. 594 (S.D. Cal. Aug. 6, 2007). Judge Brewster there held that: “the enumerated misconduct of Qualcomm establishes the entitlement of Broadcom to all attorneys’ fees, expenses, and costs incurred in the defense of this case.” If the parties are unable to agree on a reasonable number, an evidentiary hearing is to be held before the Magistrate. I would anticipate a very large fee and costs award in this case. It was filed in 2005, and tried before a jury for over two weeks in early 2007.
Back to the Show Cause Order of August 13, 2007, against Qualcomm’s many outside counsel; the Magistrate advised these attorneys that is was considering a host of possible sanctions against them for the egregious conduct the Court had observed:
As such, this Court is inclined to consider the imposition of any and all appropriate sanctions on Qualcomm’s attorneys, including but not limited to, monetary sanctions, continuing legal education, referral to the California State Bar for appropriate investigation and possible sanctions, and counsel’s formal disclosure of this Court’s findings to all current clients and any courts in which counsel is admitted or has litigation currently pending. (emphasis added)
A mandatory disclosure notice like that would be a serious blow to most law firms. Many will be watching to see what sanctions are actually imposed.
Qualcomm’s in-house legal counsel have not been immune from consequences either. For instance, Qualcomm’s General Counsel suddenly resigned the same day the Show Cause Order issued.