US Magistrate Judge Paul Grewal imposed a severe and rarely used penalty yesterday on Samsung in its case against Apple by eliminating one of Samsung's infringement defenses from the lawsuit. The defense was an important one: Samsung had argued that its recent implementation of the "blue glow" feature in TouchWiz is a non-infringing workaround to Apple's patent — US 7,469,381 — on the iOS "scrollback" behavior that displays a background texture when you scroll beyond the edge of a document or webpage. The court's reasoning for yanking this defense is hard to argue with.

Apple requested specific code from Samsung during the discovery stage of the litigation, including code that might support Samsung's assertions that it had designed around Apple's patented iOS features. When that code wasn't produced in a timely manner, Apple filed a motion requesting that the court order Samsung to comply. Judge Grewal agreed that the code must be produced to Apple by December 31. When Samsung failed to do so, Apple brought this motion for sanctions. That's the procedural background, now let's take a look at the substantive ramifications of the ruling.

A court-ordered sanction precluding a defendant's defense against infringement is unquestionably harsh. Specifically, Judge Grewal's order states that Samsung "shall not argue that design-arounds are in any way distinct from those versions of code produced" in the case already. That means if the original TouchWiz scrollback feature is found to infringe Apple's patent, the newer "blue glow" feature can also be found to infringe — even if Samsung's workaround is in fact a non-infringing alternative. Any way you look at it, that's rough.

But it's difficult to feel too sorry for Samsung here. Code is an essential piece of evidence in any software-centric case like this and it simply has to be made available, well before trial. More importantly, the court mandated that it be handed over more than four months ago and any concerns from Samsung that the code would fall into the wrong hands at Apple is rather flimsy, and obviously wasn't persuasive at the time. As with any complex patent case, the court has issued a "protective order" to ensure that proprietary information, such as code, is only revealed to designated technical experts and attorneys, and not to executives and engineers at Apple. Given this protection and the magistrate's direct mandate, it's difficult to understand why Samsung chose to gamble on holding back the information.

While this all sounds final for Samsung, we're unlikely to have closure on the issue just yet. The magistrate is typically the first to decide these types of procedural issues, but he isn't the last. We're almost certain Samsung will appeal the order to presiding judge Lucy Koh — the impact of the sanctions are just too huge. There's no indication she will view Samsung's gamble any differently than the magistrate, but we'll keep a close eye on it just in case. And, who knows, maybe this will provide additional incentive for the parties to settle at the upcoming mediation.