The plaintiff filed a patent infringement action against several companies, including Apple, asserting infringement of its 6,502,135 patent (the "'135 patent"). The '135 patent claims systems and methods that create a VPN based on a DNS request. The plaintiff claimed that Apple attempted to patent identical ideas in its own patent application, application no. 10/940,225 (the "'225 application"). During discovery, the plaintiff noticed the deposition of Mr. Christopher Allie, an engineering manager at Apple who worked on Apple's VPN on Demand and who is listed as a named inventor on the '225 application.
During the deposition, Mr. Allie testified that he had no knowledge of the '135 patent and had never seen it before. The witness was then asked to review claim 1 of the patent and, after doing so, plaintiff's counsel asked him if he still thought Apple was the first to come up with the idea of determining whether to establish a VPN based on a domain name request. To that question, Apple's counsel objected--with a speaking objection--stating that the witness should be given an opportunity to review and analyze the patent before answering. The witness then testified that he could not state whether there was overlap between the two patents.
Plaintiff's counsel continued to ask questions regarding the '135 patent, including walking the witness through every limitation of claim 1 of the patent and continuing to press on whether the '135 patent was different in any way from what Apple tried to patent in the '225 application. Ultimately, Apple's counsel objected and stated that if this line of questioning was going to continue he would have to shut down the deposition and move for a protective order.
Plaintiff's counsel suggested calling the district court's discovery hotline to resolve the issues, but the hotline was unavailable because of a court holiday. When the plaintiff's counsel continued to press for answers on the '135 patent, Apple shut down the deposition and moved for a protective order. As explained by the district court, "[t]he crux of Apple's complaint is that VirnetX's counsel denied Mr. Allié an opportunity to review the entirety of the '135 patent and prosecution history at his deposition prior to asking him any related questions. PO Motion at 4-6. VirnetX's counsel, however, never refused a request from Mr. Allié to read the '135 specification. In fact, Mr. Allié never requested to read the specification or prosecution history."
The district court was not persuaded: "As detailed above, VirnetX's counsel took Mr. Allié through claim 1 of the '135 patent, and Mr. Allié affirmatively confirmed that he understood each limitation. PO Motion, Ex. 1 at 55:22-56:8. At no point after VirnetX's counsel read the text of the claim 1 did Mr. Allié state that he did not understand the claim. Apple's counsel, however, repeatedly lodged speaking objections during the deposition, stating that Mr. Allié was not in a position to understand the '135 patent until he had reviewed the entirety of the specification and prosecution history. Yet when asked, Mr. Allié himself confirmed that he understood the limitations of claim 1 of the '135 patent as recited by VirnetX's counsel and never requested to review the specification nor the prosecution history."
Accordingly, the district court found that "Apple's counsel had no justification under Rule 30 to terminate the deposition. The deposition was not conducted in a manner that annoyed, embarrassed, or oppressed Mr. Allié. Apple's counsel should have simply lodged his objections, allowed Mr. Allié to answer the questions, and then either: (1) taken an opportunity to redirect Mr. Allié on the '135 patent; or (2) contested the admissibility of the testimony by way of any relevant objections at the pretrial hearing or during trial. Instead, Apple's counsel chose to end the deposition in violation of Rule 30(d)(3)(A). Merely disagreeing with a particular line of questioning is not justification to shut down the deposition. As such, Apple's motion for protective order is DENIED."
The district court next turned to the issue of the sanction request made by the plaintiff. The district court found that sanctions were appropriate because of Apple's conduct. "As a result of Apple's counsel's improper termination of the deposition, VirnetX has been deprived of the opportunity of obtaining Mr. Allié's answers regarding the comparison of VirnetX's '135 patent and Apple's '225 application. Apple's counsel terminated the deposition at the precise moment Mr. Allié was going to provide his answers. While Apple may not have 'prepared' Mr. Allié to answer questions regarding the '135 patent, that did not give it the right to stop the deposition."
The district court then analyzed the issue of what would be an appropriate sanction for Apple's conduct. "If the Court simply imposes fees and expenses and orders completion of Mr. Allié's deposition, it would be a nominal sanction at best, as Apple would have accomplished what it conceivably wanted--disruption of the deposition and an opportunity to visit with the witness regarding his testimony. Such a nominal sanction would not provide any deterrent effect and would not put VirnetX in the position it was in prior to the termination of the deposition. In fact, such a nominal sanction would conceivably encourage tactical violation of the Rules in this case and future cases. Absent a true and meaningful sanction, future litigants faced with a witness about to give potentially unfavorable testimony may choose to improperly terminate the deposition knowing that the most likely result is that they will merely be required to offer the witness for additional testimony at their expense at a later date."
Based on these facts, the district court ordered monetary sanctions as well as additional potential sanctions depending on whether Apple's had attempted to coach the witness on how it should answer the plaintiff's questions regarding the '135 patent. The sanctions were ordered as follows:
"Accordingly, given that Apple's counsel improperly terminated the deposition of Mr. Allié in violation of Rule 30(d)(3)(A), to address the relative harm VirnetX has suffered from such improper termination, and to act as a deterrent to such future conduct in this and other cases, the Court GRANTS VirnetX's motion for sanctions and imposes the following sanctions:
"(1) Apple must pay VirnetX's reasonable attorneys' fees and costs associated with responding to Apple's motion for a protective order and the filing of VirnetX's motion for sanctions;
"(2) Apple must produce Mr. Allié for completion of his deposition at a time and location selected by VirnetX, all costs of such deposition to be paid by Apple. Apple shall not, through counsel or otherwise, further communicate in any way with Mr. Allié regarding the patents about which the witness was testifying prior to termination of his deposition. To the extent Apple has communicated with Mr. Allié about the patents since his deposition was terminated, Apple and Mr. Allié are deemed to have waived any privilege they might otherwise assert as to those conversations, and the witness will truthfully answer any and all questions regarding any such communications between Mr. Allié and Apple or any of its counsel, employees or representatives. Apple is precluded from asking any questions of the witness with regard to the comparison of the two patents.
"(3) However, in lieu of Sanction #2 above, Apple may elect the following sanction and no further deposition of Email will be taken:
a. Apple is precluded from calling Mr. Allié at trial, or providing any rebuttal or counter-designation from Mr. Allié's deposition testimony regarding the comparison of '225 application and '135 patent; and
b. The Court will give the following adverse inference instruction to the jury at an appropriate time during the trial:
"During the deposition of Mr. Allié, counsel for VirnetX asked questions related to comparison of VirnetX's '135 patent and Apple's '225 patent application. Counsel for Apple improperly terminated the deposition and did not permit Mr. Allié to answer these questions. You may, although you are not required to, infer that had Apple's counsel not terminated Mr. Allié's deposition, the testimony provided would have been unfavorable to Apple, and that Apple's counsel's reason for terminating the deposition was to prevent such unfavorable testimony from being presented to you in this case."
"The choice of sanctions allows Apple to complete the deposition and avoid the adverse inference instruction, but prohibits it from potentially profiting from having stopped the deposition. At the same time, if Apple chooses not to complete the deposition with any otherwise privileged post-termination communications waived, then such an adverse inference instruction is justified and appropriate. An adverse inference instruction is appropriate upon a showing of bad faith or bad contact, as in this case. Condrey v. SunTrust Bank of Georgia, 431 F.3d 191, 203 (5th Cir. 2005) (citing King v. Ill. Cen. R.R., 337 F.3d 550, 556 (5th Cir. 2003)). If Apple does not want to disclose any post-termination communications, then any lesser sanction would not serve to address the harm caused as a result of Apple's improper termination of the deposition and would not serve to deter other similar violations.
Apple shall file a Notice of Election within three business days of this order."
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The sanctions are quite notable in providing that Apple can elect between a waiver of privilege or an adverse instruction. But plainly the district court wanted to send a message and monetary sanctions would not be sufficient. Accordingly, the district court set forth an approach that sends a message to Apple (and others) that interrupting a deposition with speaking objections and a motion for protective order has serious consequences.