A judge has sanctioned Apple Inc. for the conduct of one of its lawyers in a high-stakes patent case in Tyler.
In an 11-page order in VirnetX Inc. v. Cisco Systems Inc., et al., handed down Aug. 8, Chief U.S. District Judge Leonard Davis of the Eastern District of Texas granted a motion for sanctions requested by VirnetX Inc. and its lawyers at McKool Smith. Davis found that an unnamed Apple lawyer improperly terminated a crucial deposition of an Apple engineer during a pivotal moment of questioning. The judge ordered Apple to pay VirnetX’s attorney fees and costs associated with filing the sanctions motion. The judge also wrote that if Apple doesn’t make the engineer available for a follow-up deposition, he will instruct jurors that they can infer that Apple tried to block them from hearing damaging evidence. Davis’ order doesn’t identify the Apple lawyer who handled the deposition, and the related briefs are under seal.
On Aug. 13, Apple filed its notice of election to produce Christophe Allié for completion of his deposition.
According to court documents, Apple is represented in this case by Houston-based Williams Morgan & Amerson and Longview’s Albritton Law Firm. Kenyon & Kenyon also advises Apple in an of counsel role, and represents Apple in a separate International Trade Commission case brought by VirnetX.
VirnetX, which licenses patents relating to Virtual Private Network (VPN) technology, has been giving tech companies headaches for years. Its lawyers at McKool Smith won a $105 million jury verdict against Microsoft Corp. in 2010, which Microsoft settled, along with another case, for $200 million. Emboldened, VirnetX and McKool Smith soon after sued Apple, Cisco Systems Inc., Aastra Technologies Ltd. and NEC Corp. (Aastra and NEC settled for undisclosed amounts.)
The sanctions motion stemmed from the April 6 deposition of Allié, an engineering manager at Apple who helped develop “VPN on Demand” for iPhone — the service that allegedly infringes VirnetX’s patents. VirnetX’s lawyer asked Allié about his attempt to patent the idea of using a domain name to determine whether to establish a VPN, an idea which VirnetX claims is covered by one of its patents. When VirnetX’s lawyer asked Allié if he knew about VirnetX’s patent, he said he didn’t. VirnetX’s lawyer read part of VirnetX’s patent to Allié and asked if he could explain how the patent differed from the claimed invention in his patent application. Allié seemed prepared to answer, but Apple’s lawyer objected. The Apple lawyer argued that, instead of reading the patent aloud to Allié, VirnetX’s lawyer should have let the engineer read both the patent and its related documentation in detail. The Eastern District of Texas discovery hotline wasn’t open, so Apple’s lawyer pulled the plug on the deposition.
McKool Smith alleged that the Apple lawyer disrupted the deposition because he wanted time to coach Allié’s response. The appropriate sanction, they argued, was an “adverse inference” finding — a jury instruction that they can infer that Allié would have given deposition testimony favorable to VirnetX.
The judge agreed, writing that “an adverse inference finding is appropriate upon a showing of bad faith or bad contact, as in this case.” But he gave Apple an out. Apple can avoid the adverse inference finding, he ruled, if it makes Allié available for a follow-up interrogation and refrains from communicating with him beforehand. If Apple communicates with Allié in any way, attorney-client privilege for those communications will be deemed waived.
“Judge Davis came up with a measured remedy that will act to deter this behavior in the future,” says VirnetX’s lead counsel in the case, Doug Cawley.
Apple’s lead counsel, Danny Williams of Williams Morgan, could not be reached for comment.