Apple v. Samsung Electronics Co, LTD, Case No,: C-11-1846 LHK (PSG), Slip Op. (N.D. Cal July 25, 2012) provides guidance on how to protect potentially relevant electronically stored information from spoliation. In this high profile Northern District of California case, Apple gave Samsung initial notice of its concern regarding potential infringement of Apple’s patents in August 2010. At that time, Samsung was using an email program in which users’ emails were deleted every two weeks unless they were affirmatively saved. After receiving initial notice of Apple’s concerns, Samsung sent out a litigation hold notice to 27 of its employees directing them to preserve all documents that might be relevant. Samsung did not take any other actions relating to the potential lawsuit until the case was actually filed in April 2011, at which time it sent out litigation hold notices to approximately 2,700 employees and sent counsel to Korea to help educate employees about what they needed to preserve.
Samsung argued that its preservation duty did not arise until Apple filed its complaint in April 2011. However, this position was difficult for Samsung to support given that the litigation hold sent by the company to 27 employees in August 2010 stated that there was "a reasonable likelihood of future patent litigation."
Magistrate Judge Paul Grewal held that Samsung’s preservation duty arose in August 2010 when Apple notified it of possible patent infringement. Judge Grewal pointed out that Samsung failed to meet its preservation duty since: 1) It did not stop the practice of deleting emails every two weeks once it received Apple’s August 2010 letter; 2) the number of litigation hold notices sent to Samsung employees after Apple’s August 2010 letter was inadequate; and 3) the company failed to monitor the preservation efforts made by its employees to ensure that they were complying with the litigation hold.
The court had the authority to sanction or dismiss claims made by Samsung, but ultimately Judge Grewal ordered that the jury receive a strongly worded adverse instruction at trial stating that Samsung failed to preserve evidence after its duty to preserve arose, and that the jury should presume that Apple has met its burden of proving that the lost evidence was favorable to Apple. The day after Judge Grewal's ruling, Samsung filed its own motion for an adverse inference jury instruction against Apple on the grounds that Apple failed to issue any litigation hold notices until April 2011. Judge Lucy Koh, the federal judge presiding over trial, ultimately granted Samsung's request for an adverse inference instruction against Apple and decided that the court would provide the jury with the same adverse inference instruction about both companies. Apple and Samsung eventually agreed that neither party would use the adverse inference jury instruction at trial.
Judge Grewal and Judge Koh's rulings that both Samsung and Apple failed to preserve evidence and their decision to order a negative inference instruction to the jury reveals the importance of preserving evidence at the first indication of possible litigation. The decisions made by the judges also suggest that companies need to educate their employees about the litigation hold once it is made, and they must also be vigilant in monitoring their employees to confirm that they are following the directions that are part of the hold.