Thursday, August 30, 2012

Pulling Back The Curtain, Part I

Has a federal district court judge found inspiration in Toto, Dorothy's dog in The Wizard of Oz?  While a great deal of attention has been paid to the patent infringement trial pitting Apple against Samsung, which resulted in a $1 billion jury verdict in Apple's favor at the end of last week, recent events in a case involving another patent infringement trial, this one featuring Oracle against Google, have caught the attention of the legal and public relations communities.

Oracle had sued Apple, alleging that elements of Apple's Android operating system contained misappropriated items from Oracle's Java code.  Early in May, 2012, the jury found that Apple had infringed Oracle's copyrighted program, but the jury deadlocked on whether Apple's infringement fell within the "fair use" doctrine.  The jury later found that Google had not infringed two Oracle patents.

On August 7, 2012, U.S. District Court Judge William Alsup, who had presided over the trial, issued an order requiring the attorneys on both sides to file a statement by August 17th "identifying all authors, journalists, commenters or bloggers who have reported or commented on any issues in this case and who have received money (other than normal subscription fees) from the party or its counsel during the pendency of this action."

Judge Alsup's order was procedurally and substantively unusual.  As to procedure, the order came two months after the trial had ended, and neither side had requested the issuance of such an order.  Judge Alsup issued the order on his own volition, saying that he was "concerned that the parties and/or counsel herein may have retained or paid print or internet authors, journalists, commentators or bloggers who have and/or may publish comments on the issues in this case."  Judge Alsup justified the order by stating that it would be useful for the appellate court to know "whether any treatise, article, commentary or analysis on the issues posed by this case are possibly influenced by financial relationships to the parties or counsel."

The substance of the order, that a judge wanted to know whether bloggers and others were being paid by the parties to comment on the case, caused both the legal and public relations communities to speculate on what led to its issuance.  One thought was that the disclosure in April by Florian Muller, a prominent blogger who had been critical of Google, of his financial ties to Oracle may have led Judge Alsup to wonder whether there were other undisclosed relationships between bloggers and the parties.  Another thought was that a July 27th San Jose Mercury News article had brought attention to the "vast shadow army of law firms, public relations specialists, trade organizations, pundits, think tanks and academics [that] has emerged to dominate the debate over Google," and the fact that "many of them are paid for their opinions."  The article began with a specific example:
"Scott Cleland hates Google for a living.  For the past five years, the McLean, Va.-based analyst has churned out an endless stream of anti-Google papers, memos, research, testimony -- even a book: 'Search & Destroy: Why You Can't Trust Google Inc.' While his views that Google is a dangerous monopolist once seemed like a fringe theory, it has now drawn the attention of antitrust and privacy regulators throughout the world.  'I feel less lonely,' Cleland said. 'I have a strong belief that the wheels of justice turn slowly, but they turn truly.'  But as Cleland's crusade has gained popularity it has also gained funding -- to a degree that he won't disclose -- from Google's competitors, including Microsoft. While he insists that his influential views remain his own, the financial connection begs the very real question of whether he is a hero or a paid corporate hit man -- and whether the debate he pushes is a legitimate intellectual discussion or a commercial enterprise."
Members of the legal community also questioned the scope of the order, whether Judge Alsup had the power to issue it, and whether it was constitutional.  See, for example, "Alsup Goes Fishing With Wide Net."  However, since neither Oracle or Google challenged the order, the issues of power and constitutionality were unlikely to be addressed.  Similarly, questions as to the scope of the order would have to wait until Judge Alsup reviewed the parties' submissions to see whether they had complied.

Getting favorable media for clients, or neutralizing unfavorable media, is a large part of the public relations raison d'etre. Within the public relations community however, Judge Alsup's order revealed differing attitudes as to the propriety of paying bloggers.  PRWeek interviewed representatives of several agencies, and the consensus seemed to be that it is an acceptable practice to pay bloggers as long as the compensation is disclosed.  However, as I blogged about in "Social Media and Astroturfing," this is no more than the law requires.  Payments to bloggers for favorable reviews are required to be disclosed by the Federal Trade Commission, and the FTC has brought enforcement actions against companies that failed to make the required disclosure.  Hill + Knowlton Strategies expressly forbids compensation to bloggers.   Steve Barrett, a PRWeek editor,  wondered whether, even with disclosure, paying bloggers is appropriate:
"Am I the only one who feels extremely uneasy and uncomfortable about this whole paying bloggers debate?  . . .  [i]f a brand or an agency is paying these bloggers to write about brands, that has gone way beyond PR's traditional territory of earned media into the paid media environment - or, as it is also known, advertising.  That's an area that is fraught with danger in my opinion."
When the August 17th deadline for compliance arrived, Oracle confirmed in its submission that it had a paid consulting relationship with Florian Mueller.  As for Google, it notified Judge Alsup that the scope of his order created a group too large to list, but it assured Judge Alsup that it had not compensated anyone "to report or comment on any issues in this case" or otherwise struck a "quid pro quo" arrangement for favorable coverage.  In response, Judge Alsup issued a new order expressing his dissatisfaction with Google's submission:
"in the court's view, Google has failed to comply with the August 7 order.  . . .  Google suggests that it has paid so many commenters that it will be impossible to list them all. Please simply do your best but the impossible is not required. Oracle managed to do it. Google can do it too by listing all commenters known by Google to have received payments as consultants, contractors, vendors, or employees."
Judge Alsup required Google to supplement its filing by August 24, directing it to "disclose those commenters that can be identified after a reasonably diligent search,"  with the following clarification of  his original order:
"Payments do not include advertising revenue received by commenters. Nor does it include experts disclosed under Rule 26.  . . .  As for organizations receiving money, they need not be listed unless one of its employees was a commenter. Gifts to universities can be ignored."

Google filed its supplemental disclosure on August 24th.  I'll discuss what was in it, and the reaction to it, on Tuesday, September 4th.  Have a good Labor Day Holiday.

Monday, August 6, 2012

Proceed With Caution

“Litigation Support” is the term we use at Hill + Knowlton Strategies to describe how those of us who work in the legal communications space help lawyers, and their clients, meet the communications challenges posed by highly visible and newsworthy lawsuits.  Many lawyers, for good reason, are reluctant to “argue the case in the press,” but in today’s environment not having a communications strategy or not responding to media inquiries may not be an option.  Having someone experienced in public relations contend with the media is important to assure accurate reporting, as many stakeholders, such as vendors, customers, shareholders, analysts, and employees, may be following the lawsuit in news reports as it unfolds.    Because of the interests of stakeholders, the lawyer or the client may need to have a particular position communicated, and the pr professional can help craft the message.  In all instances, the pr professional must work closely with the lawyer to make sure that communications with the media are consistent with the lawyer’s legal strategy.  Finally, in communicating with the media, the lawyer and the pr professional must be cognizant of the ethical rules concerning trial publicity, especially if the case involves a jury trial.  For example, most jurisdictions have adopted a variation of ABA Rule of Professional Conduct 3.6, which provides in part that: 
"a) A lawyer who is participating or has participated in the investigation or litigation of a matter shall not make an extrajudicial statement that the lawyer knows or reasonably should know will be disseminated by means of public communication and will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the matter."
When the patent infringement trial pitting Apple against Samsung resumed Friday, August 3, 2012, the judge presiding over the case, U.S. District Judge Lucy Koh, had to address the issue of whether a press release issued on behalf of Samsung shortly after the jury trial began, purportedly in response to media inquiries, crossed the line drawn by the California version of ABA Rule 3.6.  As has been widely reported, Apple has sued Samsung alleging Samsung has infringed on Apple’s patents by manufacturing smartphones and tablet computers that copy the look and feel of the iPhone and iPad. For those interested in a quick primer on the lawsuit, here is a segment of CNBC's Squawkbox that featured one of my former partners at Jenner & Block, Brad Lyerla, an experienced intellectual property lawyer. 

After discovery had been closed and evidentiary hearings had been held on the exhibits to be used at the trial, Samsung requested permission to add as exhibits a series of slides that it contended shows that Apple's iPhone design was derived from the Sony Walkman. According to news reports, Samsung’s request had been denied three times before the trial began with jury selection on Monday, July 30, 2012.

Before opening statements began on Tuesday, July 31, 2012, John Quinn, managing partner in the firm representing Samsung, Quinn Emanuel Urquhart & Sullivan, LLP, asked Judge Koh to reconsider the decisions excluding the slides. Judge Koh denied the request, and after Mr. Quinn continued to argue the issue, threatened to sanction him if he persisted.  Although Mr. Quinn stopped arguing the matter in court, “Samsung has decided to make [its argument] in the court of public opinion.”  The sequence of events was chronicled by one reporter covering the trial: 
At 2:48 p.m., after openings were done and a suave Apple industrial designer was testifying, a Samsung press statement hit our inbox (along with those of other reporters) with a link to the excluded slides. (The linked material has since been removed, but All Things D snagged it.)” 
 The link to the disputed slides, which some reported came from a public relations firm, was accompanied by the following statement:
 “The Judge’s exclusion of evidence on independent creation meant that even though Apple was allowed to inaccurately argue to the jury that the F700 was an iPhone copy, Samsung was not allowed to tell the jury the full story and show the pre-iPhone design for that and other phones that were in development at Samsung in 2006, before the iPhone. The excluded evidence would have established beyond doubt that Samsung did not copy the iPhone design. Fundamental fairness requires that the jury decide the case based on all the evidence.
One reporter characterized it as “[a] brazen statement, particularly the last line which seems to express hope that members of the jury will see the excluded evidence.”  Another reporter asked “[w]hat was John Quinn thinking when he authorized a press statement . . . discussing exhibits the judge had specifically barred that very morning?

Later, after the jury had been dismissed for the day, Apple’s lawyers brought the matter to Judge Koh’s attention, arguing that the press release “was an intentional attempt to pollute the jury.”  Judge Koh was reported to have been angry, which was expressed to Samsung's lawyers:
" 'Call Mr. Quinn,' she told the Samsung legal team. 'I'd like to see him today.' When they told her he had already gone back to Los Angeles for an event, Koh ordered Quinn to file a declaration by Wednesday. 'I want to know who drafted the press release, who authorized it from your legal team,' Koh said, 'and I want Mr. Quinn's declaration as to what his role was.' "
Mr. Quinn filed his declaration Wednesday, August 1, 2012, and essentially doubled-down.  He asserted that he authorized issuing the slides to respond to media inquiries, that the information in the slides where already in the public record, and that he authorized the statement that accompanied the slides because “Samsung has every right to defend itself in the public domain from unfair and malicious attacks.”

Apple’s lawyers responded to Mr. Quinn’s declaration with a letter to Judge Koh asserting that “Mr. Quinn’s declaration does not address two of the Court’s questions: who drafted the statement and who released it.”  Apple’s lawyers followed up the letter with a motion seeking sanctions, arguing that the press release was “the latest in a string of litigation misconduct,” and suggesting that the proper sanction would be for Judge Koh to issue judgment in Apple’s favor by ruling that the patents at issue in the case are valid and infringed by Samsung.

It was highly unlikely that Judge Koh would summarily rule in Apple’s favor, so it was no surprise when she denied Apple's motion at the beginning of Friday's proceedings.  After saying that she would "not let any theatrics or any sideshows distract us from what we are here to do," Judge Koh separately brought each member of the jury into the courtroom to ask whether they had read anything about the case since it had recessed on Tuesday.  One juror said that he had seen headlines about the case on the internet, but had not read any of the stories.  After each juror assured Judge Koh that they could be impartial, witness testimony resumed.

That may not, however, be the end off the matter.  Judge Koh said the press release seemed like "a willful attempt to propagate excluded evidence," which she may investigate further at the end of the trial.  Mr. Quinn correctly stated in his declaration that the information was already part of the record.  In fact, it was contained in the trial brief Samsung filed the Saturday before the trial began.   That being the case, Judge Koh may be persuaded that the reporters seeking to understand the issue simply could have been provided a link to the brief.  I suspect that she may still want to know who drafted the press release, and who decided that it should be sent to reporters other than those requesting the information.