Dropped the pen and threw up the sponge

This was said by one of my mates while retelling a story. The story runs that there was a court being held, and there was a recording-clerk as well. But this was a humor story, and the story continued that everybody was telling the recording-clerk to take out what was previously said, to the point that the clerk lost his temper and "dropped the pen and threw up the sponge."

Does this saying mean that he resigned?

Contrary to the other answers, the Oxford English Dictionary lists only "throw (or chuck) up the sponge", and not "throw" or "throw in".

Its first quotation, from a slang dictionary of 1860, says "from the practice of throwing up the sponge used to cleanse the combatants' faces, at a prize~fight, as a signal that the ‘mill’ is concluded."

I think Alain is confusing it with "throw in the towel".

To throw up the sponge is a common expression which originated in the world of boxing and is now an everyday phrase.

Boxers as you know use sponges often dipped in vinegar to wipe the sweat and blood off their face. When one of the fighters is no longer physically able to continue and wishes to give up the fight, the convention is that he or rather his trainer throws his sponge in the middle of the ring. The other fighter is then declared the winner.

So that to throw up the sponge means to give up the fight out of sheer exhaustion or disgust or to acknowledge defeat.

A common variant is "to throw in the towel" where the towel is obviously serving the same purpose as the sponge.

As for dropping the pen this is just circumstantial to the clerk's activity and I don't believe there is an actual idiomatic expression behind this part of the sentence.

(A) I think you mean "threw the sponge", not "through the sponge".

(B) This is not an idiomatic usage, at least that I am aware of. It probably literally means that the clerk got so frustrated that he put down his pen, and threw his sponge at someone.