Long article from New York Law Journal with lots of Kaplan quotes--all good!
Cutting & pasting here so you don't need to sign up for a subscription:
Chinese GC Ordered to US for Deposition in Patent Case
Mark Hamblett
08/17/2015
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A federal judge has ordered the general counsel of a Chinese corporation to come to the United States for a deposition in a patent case, despite the attorney's fear he will be arrested upon entering the country.
Southern District Judge Lewis Kaplan instructed attorney Guo Xiaoming of the China-based ZTE Corporation to be deposed in Kaplan's courtroom in Vringo v. ZTE Corporation, 14-cv-4988.
Guo's attorneys at Clifford Chance US had asked Kaplan for "mercy" and to at least allow his deposition to take place outside of the United States because he feared a possible arrest by U.S. authorities in a criminal investigation into a violation of the embargo against the Iranian regime.
In the litigation before Kaplan, Vringo claims ZTE has for years been selling telecommunications covered by Vringo's patents, that ZTE wrongly sued Vringo both in China and before the European Commission, and that ZTE prompted a Chinese government entity to pursue charges of anticompetitive behavior.
At issue in the litigation is the alleged violation of a nondisclosure agreement that the parties had signed during unsuccessful settlement talks.
The judge said the parties disputed Guo's precise role, but "there is no real doubt that he was involved in a supervisory capacity and considerable reason to suspect that he was at least one of the architects of ZTE's tactics and strategy."
"At the very least, it is clear from emails sent or received by Mr. Guo that he knew and approved of ZTE's plan to 'forc[e]' Vringo to settle by 'making war' over what ZTE characterized as Vringo's refusal to resolve the dispute between the companies at a 'reasonable price'," he said.
And the judge noted Guo is a member of the Shenzen Municipality People's Congress, which has supervisory authority over the court where ZTE sued Vringo, so "Vringo quite reasonably sought to take his deposition."
Kaplan had ordered on July 24 that Guo be deposed in the United States, but it was not until Aug. 5, when ZTE moved for reconsideration, that it first revealed to the court the existence of an FBI and Department of Commerce investigation into unauthorized exports of U.S.-origin equipment to embargoed countries, including Iran.
In a letter signed by Jeff Butler, partner at Clifford Chance, the firm handling the criminal investigation for ZTE, the company no longer claimed Guo's deposition in the U.S. would be disruptive. Instead, Butler said, "I believe that Guo Xiaoming would almost certainly be questioned, subjected to a border search, served with a grand jury subpoena to appear, or worse, be detained in connection with the investigation."
If Kaplan would not entertain this plea for "mercy" in its motion to reconsider, Butler and the legal team said the motion should serve as notice that ZTE is unable to comply and "regrettably" was expecting to be sanctioned. But Kaplan said the company had failed to present new facts, issues or arguments that would warrant reconsideration.
"The facts concerning the federal criminal investigation and the concern that Mr. Guo would be detained and questioned, if not more, were well known to ZTE," the judge said. "Indeed, the lengths to which it went to avoid the deposition entirely, or failing that, to have it take place in Hong Kong, reinforce that conclusion."
The judge said Clifford Chance had reason to believe there might be sealed indictments or outstanding arrest warrants, including for Guo, and that "ZTE obviously instructed its lead counsel in this [patent] litigation [King & Spalding] to seek to avoid Mr. Guo being deposed at all," or at least be deposed outside of the United States.
"Yet it litigated two motions to compel in this court on those very issues without ever once informing the court of the criminal investigation or of its concerns with respect to Mr. Guo coming to this country," he said. "It thus put both the court and its adversary to considerable burden for reasons that were never disclosed."
Kaplan continued: "In light of ZTE's lack of candor and its stalling and game playing with respect to the Guo deposition in the months prior to the present, ZTE has no claim on the favorable exercise of the court's discretion."
The judge said he tended to agree with the view that "even the pendency of criminal charges against a deposition witness in a criminal case should not excuse the witness from appearing in the United States for a deposition in a civil case where that otherwise would be appropriate."
Regardless, Kaplan said there was a strong case for having Guo deposed here, particularly when there have already been "substantial problems in the conduct of discovery against ZTE."
He declined to consider sanctions at this time, saying that "ZTE and Mr. Guo may reconsider their position in light of this ruling."
The attorneys for Vringo are Alston & Bird partners Karl Geercken, Amber Wessels-Yen and Mark McCarty.
In addition to Butler, the attorneys for ZTE are John Alexander, associate at Clifford Chance US; Robert Perry and Paul Straus, partners, and David Joffe, senior associate, of King & Spalding; Jeffrey Catalano, associate at Brinks Gilson & Lione in Chicago; and Charles McMahon and Jay Reiziss, partners, and Brian Jones, associate, at McDermott Will & Emery.
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