The Price of Fame
By Daniel J. Ross
Qualcomm, Inc. v. Broadcom Corp., No. 05-CV-1958-B, 2008 WL 66932 (S.D. Cal. Jan. 7, 2008).
Employees Implicated: In-house counsel and retained attorneys, as well as anyone involved in the oversight of legal action or proceedings
eLesson Learned: Make sure that your company has a clear case review and discovery protocol to ensure that attorneys working for you have the proper guidance. If you are involved at any level of the litigation process, from in-house counsel to lead trial attorney to junior associate, you are always responsible to act ethically in the work that you do for your company.
Attorneys long to be described in print as having an “impressive education,” “extensive experience,” and being “talented” and “well-educated.” However, when those words appear in a court opinion enumerating your ethics violations during a cover-up, they don’t ring as sweet.
Qualcomm brought suit against Broadcom in 2005, alleging that Broadcom had infringed two of its patents in the production of an electronic device that utilized the H.264 video standard. The group that created the standard, the Joint Video Team (JVT), required that its members disclose any intellectual property rights (IPR) concerns to ensure that the development of new technologies would not be hindered. Qualcomm, who had been involved with the JVT for more than a year before H.264 was released, failed to raise IPR concerns at any time during the development, choosing to sit and wait for a target to sue after the standard was published. The key to Qualcomm’s suit was its claim that it had no involvement with the JVT until after H.264’s release.
The court determined that there was “clear and convincing evidence that Qualcomm intentionally organized a plan of action to shield the … patents from consideration by the JVT” so that it could (1) sue any infringers and (2) “become an indispensable licensor to anyone in the world seeking to produce H.264-compliant products.” That evidence was the post-trial excavation by Qualcomm attorneys of over 46,000 undisclosed but requested documents, totaling over 300,000 pages, that linked the company to the JVT prior to the publication of H.264.
Then, those gilded words, turned on a pivot for ill-effect: “Given the impressive education and extensive experience of Qualcomm’s [counsel], . . . [i]t is inconceivable that these talented, well-educated, and experienced lawyers failed to discover . . . over 46,000 critical documents that extinguished Qualcomm’s primary argument.”
The Qualcomm team tried to claim its mistakes were inadvertent, but the court didn’t buy it, noting that evidence that either helped or did not harm Qualcomm’s position was found easily, while any damaging documents were left undiscovered. In the end, Qualcomm, its employees, its witnesses, its in-house attorneys, and its retained attorneys were found to be complicit in a massive cover-up.
The particular failures act as guidance both to corporations that oversee the ethical conduct of their attorneys and to attorneys at any level who might consider skirting their ethics obligations.
- Qualcomm’s in-house lawyers, who reviewed and approved false pleadings and were of no use during the search process, were particularly responsible because of their optimal access to and knowledge of the whereabouts of company records.
- Three attorneys involved in the initial discovery failed their Rule 26 duty to “engage in discovery in a responsible manner and to conduct a ‘reasonable inquiry’ to determine whether discovery responses are sufficient and proper.”
- Junior attorneys failed to obtain the assistance of a more senior attorney or to withdraw from the case or “take other action to ensure production of the evidence.”
- Other attorneys failed to determine “whether Qualcomm had complied with its discovery obligations” by not running complete email searches on the computers of employees who were involved with the JVT or who served as witnesses at trial.
- Finally, a number of attorneys were responsible because they made “specific factual and legal arguments to the Court” without verifying the truth of the statements.
In the end, the magistrate awarded over $8.5 million to Broadcom, stripped Qualcomm of its two patents at issue, referred six attorneys to the California Bar for ethics violations, and ordered another five Qualcomm attorneys to attend a Case Review and Enforcement of Discovery Obligations (CREDO) program to identify the specific failures in their discovery methods, develop alternatives, and create a new protocol to prevent similar disasters from occurring in the future.
The lessons from this case are as clear as day, and any corporation or attorney would do well to keep them handy as an instruction guide for “What Not To Do During Discovery.” Be prepared for legal action, have your protocols in place, and make sure that there is proper oversight for anyone you retain to assist you. Although Qualcomm and its attorneys managed to get their name in print, the price they paid for fame was certainly not worth the cost of their actions.
Daniel is a third-year evening student at Rutgers School of Law – Newark and is a member of Rutgers Law Review.
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