SDNY Judge Smacks Down ZTE, VRNG Draws Blood
July 27, 2015 (Mimesis Law) — Judge Kaplan pulled no punches in rejecting ZTE’s attempts to shield its general counsel from an immediate deposition in the breach of confidentiality case filed by Vringo in the Southern District of New York. In fact, the Judge categorized ZTE’s opposition brief as “entirely frivolous” and “interposed for purposes of delay and harassment.” Such strong language from a Federal Judge should be enough to give any defendant pause, especially when the Judge also ordered ZTE and its counsel (disclosure – I am co-counsel with different lawyers from ZTE’s outside law firm on a separate patent infringement matter) to show cause “why they should not be sanctioned”. This level of judicial disapproval is unusual and serious business, and an indication that Judge Kaplan will not tolerate further discovery gamesmanship from ZTE. Most Judges want to decide actions on their merits, and have little tolerance for transparent hide-the-ball tactics — especially from sophisticated companies (and their counsel) who are expected to know better.
But while the upcoming sanctions briefing may prove interesting, in reality it is of little formal effect with respect to Vringo’s chances of winning the lawsuit. At the same time, it seems like Vringo’s aggressive approach to this case, for now at least, has thrown ZTE a little “off its game” and into a reactive posture. Going forward, it will be Vringo’s responsibility to press its advantage, and focus on using the discovery process to accumulate the evidence it needs to win on the merits.
The upcoming deposition of ZTE’s general counsel could be an important piece of the puzzle. If the allegations made by Vringo are true and he had an active role in coordinating pressure tactics by Chinese authorities in response to Vringo’s licensing demands, then the deposition may yield damaging testimony for ZTE. And if he relied on underlings to carry out ZTE’s anti-Vringo strategy, additional ZTE employees who may have first-hand knowledge of what ZTE actually did in response to Vringo’s global patent assertion campaign will likely be exposed. You can bet that any such employees will be among the next deposition targets. There is always the possibility, albeit an unlikely one, that ZTE’s general counsel was simply asleep at the wheel and clueless as to his company’s response to Vringo. If his deposition proves that is the case, then perhaps ZTE has even bigger problems that the ones they are running into with respect to Vringo’s all-out assault. At minimum, Vringo investors will continue to monitor these fast-moving legal updates closely, and hope that the discovery process in this case will shed light on ZTE’s perhaps coordinated, and allegedly illegal, efforts to pressure Vringo out of existence.
The Week(s) Ahead — Expected Events
- Parkervision and Marvell CAFC decisions – TBD
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Disclosures and Disclaimers:
Nothing in this material is intended to constitute legal or investment advice of any kind, nor is any of this material based on any non-public information of any kind. In addition to my work at Markman Advisors, I am also a name partner at a NYC-based intellectual property litigation boutique firm, Kroub Silbersher & Kolmykov PLLC (www.kskiplaw.com). Markman Advisors is affiliated with a Houston-based investment management firm, Perdix Capital Management, which may have existing or potential positions relating to situations discussed in this material. Markman Advisors also provides consulting services to buy-side investors, including hedge funds and family offices, that may also have or enter into positions relating to situations discussed in this material.