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In a ruling that has some patent lawyers chattering, an East Texas federal judge has dealt crippling sanctions to Toshiba America Inc. and its attorneys at California’s Knobbe Martens Olson & Bear. Judge T. John Ward slammed Toshiba for “willfully and intentionally” violating the court’s order to produce evidence during discovery in a patent infringement case involving Juniper Networks Inc., according to a June 14 order made public this month. Ward also scolded Knobbe’s Orange County-based partners Vito Canuso III and Perry Oldham for allegedly telling the court the evidence — critical computer code known as BIOS — was “unavailable.” “Contrary to Toshiba’s repeated representations to the court . . . such BIOS code was available and in possession of Toshiba,” Ward wrote. “The court rejects Mr. Canuso’s representation . . . that his use of the term �unavailable’ in reference to Toshiba’s BIOS Code was merely a poor choice of words and that his intended representation was that such code was �irrelevant.’ “ The judge’s sanctions include cutting by half Toshiba’s voir dire time, number of juror strikes, and opening statement time — as well as limiting by two-thirds the company’s closing statement time at trial, now scheduled for Aug. 6. Further, Ward is prohibiting Toshiba from using any expert witnesses who could speak about noninfringement at trial, and he plans to instruct the jury that the company intentionally withheld evidence. Canuso and Oldham did not respond to calls seeking comment. Their colleague, partner Douglas Muehlhauser, who has also worked on the case for Knobbe, says he can’t comment because the litigation is ongoing. A spokesman for Toshiba America Information Systems says he can’t comment for the same reason. Sunnyvale, Calif.-based Juniper Networks is suing Toshiba America for infringing on one of its patents on controlling access to computer memory in laptops. Juniper is represented by Irell & Manella partners Morgan Chu and David McPhie. Chu was out of the country, and McPhie would not comment on the case. Most of the case’s filings have been sealed, but Ward’s eight-page sanction order says the court first asked Toshiba for relevant documents and data in June 2006. On Feb. 21, Toshiba had not turned over the BIOS code and had claimed, Ward said, that it was not available because it was in a third party’s possession. But on April 27, a Toshiba witness stated in a deposition that the BIOS code was indeed available and in the company’s possession, according to Ward’s order. Toshiba tried to argue that the code was irrelevant, but on May 24 Magistrate Judge Charles “Chad” Everingham of the U.S. District Court for the Eastern District of Texas ordered Toshiba to turn it over, Ward wrote. Ward issued his sanctions at a June 14 hearing. It remains unclear how much responsibility Toshiba’s attorneys in the case bear for the discovery mess. Experts say the case highlights the general issue of how difficult the relationship between attorneys and their clients can be when it comes to gathering relevant evidence, especially in the age of e-discovery. “It’s not enough to send a set of discovery requests to the client and ask for their best efforts in responding,” wrote Robert Andris II in an e-mail. Andris, an IP litigator and partner in Ropers, Majeski, Kohn & Bentley’s Redwood City, Calif., continued: “The lawyer needs to work with the client to make sure they can represent [that] a diligent and thorough search was made. Otherwise, disasters like this can turn a lawsuit about patents into a case that is anything but.” News of Ward’s order and its severe sanctions have been tearing up the e-mail wires among patent litigators in recent days, says Weil, Gotshal & Manges intellectual property partner Edward Reines. Reines was particularly surprised by the allegation that Knobbe attorneys, particularly Canuso, had done anything worth sanctioning. “Based on my experience with Vito Canuso, I can only imagine that any shortcoming in discovery was due to a mix-up or confusion,” he says. “I tried several cases against Vito and Knobbe in the last seven years, and they impressed me by maintaining the highest ethical standards. . . . I wouldn’t be surprised if Toshiba sought relief from an appellate court.” Reines and other IP attorneys say scoldings and sanctions like Ward’s are unusual. “I think it’s very likely that this will force a settlement,” says Anthony Falzone, director of Stanford Law School’s Fair Use Project. “It’s hard to try a case like this with — I was about to say �one hand tied behind your back’ — but I think it’s even more than that.” Computer program source code is often the focus of discovery suits, Reines says, adding that he does not know the specifics of the Toshiba/Juniper dispute. [ E-discovery of electronically generated information is also a topic in this week's In-House Counsel. See "A Primer on Assessing E-Discovery."] The code represents so much of a company’s work product and intellectual property that it’s reasonable to not want to hand it over to competitors, he says. Adds Reines, “Companies often consider it to be their crown jewels.”
Jessie Seyfer is a reporter with The Recorder , an ALM publication.

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