Lawyers face sanctions in Qualcomm suit

Chipmaker Qualcomm Inc. dueled Friday in federal court with its hired attorneys over who shoulders the blame for what a judge called "gross misconduct on a massive scale" at a past trial.

U.S. Magistrate Judge Barbara Major is considering sanctions against 19 attorneys who represented Qualcomm in a patent lawsuit the cell phone chipmaker filed against rival Broadcom Corp.

The possibility of sanctions has threatened the careers of attorneys from two Silicon Valley firms and prolonged a damaging episode for Qualcomm. The company's legal activity has helped it become the world's second-largest chipmaker for cell phones.

The judge said she was struggling to understand how Qualcomm and its lawyers committed "the fundamental and monumental error" of failing to share more than 200,000 pages of documents with Broadcom until after trial.

Neither lawyers for Qualcomm nor the 19 attorneys it hired — and is now arguing with — had clear answers.

Joel Zeldin, an attorney for 11 of the lawyers, said Qualcomm hamstrung his defense by deciding to keep its communications with its attorneys confidential.

"The lawyers really can't defend themselves and that's a real due-process concern," he said.

Zeldin said court filings by several Qualcomm employees suggested his clients failed to do their job.

"They give you part of the story," he said. "They can almost say anything they want with impunity because they know we can't answer."

Qualcomm attorney William Boggs defended the San Diego-based company's decision to prevent disclosure of privileged communications with the hired lawyers, and he urged the judge not to fine them.

Boggs called the failure to produce the thousands of documents an unintentional mistake. Qualcomm already has been fined $8.5 million and ordered to pay Broadcom's attorney fees.

The sanctions hearing focuses on the actions of two law firms that worked the case for Qualcomm — Day Casebeer Madrid & Batchelder LLP of Cupertino and Heller Ehrman LLP of Menlo Park.

In statements filed with court this week, the lawyers said they never sought to mislead anyone.

After more than two hours of arguments, the judge gave no indication of whether she would take the unusual step of punishing the lawyers, what penalty she might impose or when she would rule.

She was clearly troubled by Qualcomm's behavior at the trial, which it lost in January.

"If there isn't some kind of sanction for that conduct, what's the deterrence?" she asked.

Qualcomm had sued Irvine-based Broadcom Corp. in October 2005, claiming it violated Qualcomm's patents on H.264 technology, which is used to compress video signals in DVD players, digital televisions and music players.

Near the end of the trial, Qualcomm engineer Viji Raveendran disclosed that her lawyers discovered 21 key e-mails that had not been shared with Broadcom as required during discovery, the phase before trial when parties exchange information.

Broadcom demanded an explanation and learned months later that Qualcomm also failed to share the thousands of pages of documents.

Some of the information Qualcomm didn't share undercut its witnesses' testimony and supported the later finding that Qualcomm deliberately concealed patents it holds from an industry standards group.

U.S. District Judge Rudi Brewster ruled in August that Qualcomm's behavior exposed a "carefully orchestrated plan and deadly determination to hold hostage the entire industry" that would use the technology.

Brewster also found that Qualcomm and its outside lawyers engaged in "constant stonewalling, concealment and repeated misrepresentations" at its trial against Broadcom. He described it as "an organized program of litigation misconduct" and asked Major to consider sanctions against the outside attorneys.