We’ve previously explained the foolishness of trying to destroy or alter electronically stored information that qualifies as evidence in litigation. Why foolish? Because the attempt implies a belief that such misconduct won’t be detected. When scrutinized by the right experts, the attempt will be detected; when properly presented to a court, it likely will be sanctioned.
Take the recent case of Organik Kimya, San. ve Tic., A.S. v. ITC, an appeal from the U.S. International Trade Commission to the U.S. Court of Appeals for the Federal Circuit. The Dow Chemical Company (“Dow”) claimed that former Dow employees assisted Organik Kimya San. ve Tic., A.S. (“Organik”) in misappropriating Dow’s trade secrets to develop competing paint additives. Once Organik received the complaint, the foolishness began.
After the judge permitted Dow to inspect a certain laptop, Organik “began overwriting the laptop’s hard drive by copying the Program Files folder at least 108 times.” This looks like an effort to occupy any available space on the hard drive and thus purge remnants of deleted files. It certainly leads to the question: Why would someone do such a thing? Under these circumstances, there is no good reason. This was an obvious, clumsy attempt to delete files and make them unrecoverable days before a court-ordered forensic examination.The court’s opinion goes on to tell us that Organik “also backdated the computer’s internal clock so that the metadata on the copied files would hide the fact that the overwriting took place only days before the inspection.” We’ve previously discussed how the backdating of a computer’s system clock played a part in how we obtained an $8 million sanctions award on top of a $20 million judgment for a client in a theft-of-trade-secrets case. [cite to “Part III—What Employers Must Know About Metadata and Why: Metadata as a ($20-million-plus) Sword”]
For its final high-tech hijinks, Organik ran a program called CCleaner to delete much of the laptop’s two drives—and then used a program called WinHex twelve times to ensure that the deleted files were unrecoverable. In our $8 million sanctions case, CCleaner played a prominent role in the defendant’s similarly ill-fated effort to scrub its server and computers prior to their court-ordered imaging. [cite to “Part IV—What Employers Must Know About Metadata, and Why: Destroying Metadata, Destroying Evidence and Paving the Road to Sanctions”]
Organik’s sanctionable misconduct also included some old-fashioned, low-tech skullduggery. One of the former Dow employees “removed the hard drive from his personal computer and smashed it with a hammer and threw it in the garbage.” In addition, nearly 2,800 files and folders, many of them responsive, were deleted from the computer of another former Dow employee, who ultimately “lost” his computer and other storage devices when he “accidentally” left them in a rest stop bathroom.
The Federal Circuit upheld substantial sanctions as a result of Organik’s “egregious actions,” including entry of a default against Organik, an award of nearly $2 million in attorney’s fees and costs, and a 25-year limited exclusion order barring the importation of any paint additives that Organik manufactured using Dow’s trade secrets, because evidence demonstrated that it would have taken Organik 25 years to develop the additives absent the misappropriated information.
As with our prior posts about sanctions, we call this case to your attention to help you understand how you can play defense or offense, as circumstances warrant. As for defense, employers need to recognize that employees may be tempted to engage in such foolishness in the heat of trade secret battle, and should take all reasonable steps to prevent this misconduct, through written policies and training. As for offense, if you’ve been the victim of a misappropriation of your trade secrets or other proprietary information, your perpetrator’s misconduct may have included foolishness that may help you prove your case. When it comes to the theft of trade secrets, the cover-up may or may not be worse than the crime, but it frequently is incontrovertible evidence that the crime occurred.