On October 30, 2014, ALJ Thomas B. Pender issued the public version of Order No. 27 (dated October 20, 2014) in Certain Opaque Polymers (Inv. No. 337-TA-883). Due to the large size of the order, we have divided it into the following eight parts: part 1,part 2, part 3, part 4, part 5, part 6, part 7, and part 8.
By way of background, the investigation is based on a complaint filed by Rohm and Haas Company, Rohm and Haas Chemicals, and The Dow Chemical Company (collectively, "Dow") alleging violation of Section 337 in the importation into the U.S. and sale of certain opaque polymers that infringe one or more claims of U.S. Patent Nos. 6,020,435; 6,252,004; 7,435,783; and 7,803,878. See our May 22, 2013 and June 20, 2013 posts for more details on the complaint and notice of investigation, respectively.
As summarized in our October 24, 2014 post, ALJ Pender issued Order No. 27 as an Initial Determination ("ID") finding that Respondents Organik Kimya San. Ve Tic. A.S., Organik Kimya Netherlands B.V., Organik Kimya U.S., Inc. ("Organik Kimya") spoliated evidence in this investigation in violation of Commission Rule 210.33(b). Based on Organik Kimya's bad faith, ALJ Pender sanctioned Organik Kimya by finding them in default with regard to Dow's allegations of trade secret misappropriation. Additionally, ALJ Pender imposed monetary sanctions against Organik Kimya and its counsel, jointly and severally. We now provide the details of that ID.
ALJ Pender began by providing a detailed summary on the law, including the criteria for determining whether sanctions are warranted by spoliation: (1) duty to preserve and control evidence and a breach of the duty; (2) a culpable state of mind; and (3) relevancy and prejudice of the evidence.
According to the ID, Organik Kimya spoliated or permitted the spoliation of "massive amounts of evidence prejudicial to Dow's allegation of trade secret misappropriation in this investigation." Specifically, evidence in the possession of three people was accused of spoliation: Dr. Guillermo Perez, Mr. Leondardo Strozzi, and Dr. Dilip Nene.
Although ALJ Pender granted a motion to compel forensic investigation of Dr. Perez's laptop, in "complete disregard" of his Order, the evidence showed that Organik Kimya "essentially wiped the laptop hard drive clean..." and manipulated the computer's clock to alter metadata. Similarly, Mr. Strozzi's personal laptop was ordered to be copied and preserved by Dow's forensic experts after compromising emails from personal accounts were identified. However, despite statements by the ALJ in a hearing on this issue specifically stating that there should be no more evidentiary tampering, and that he would be "mortally annoyed" if any alteration, destruction, or other tampering occurred, the experts uncovered evidence of attempts to delete thousands of files. Furthermore, after the initial investigation by Dow's expert, Mr. Strozzi "accidentally" left his computer and all external storage devices at a highway rest stop, where they were stolen. Last, although Dr. Nene's laptop was ordered to be provided for forensic investigation, the hard drive was replaced prior to the inspection and he testified that he smashed the original hard drive with a hammer and threw it into the garbage. Moreover, external devices associated with the computer were unavailable for inspection or found to be empty.
Based on the evidence reviewed, ALJ Pender determined that this spoliation was undertaken intentionally and in bad faith for at least the Strozzi and Perez laptops. Actions related to the Nene laptop were found to be at least reckless, if not reaching the level of bad faith. Furthermore, the actions were attributed to Organik Kimya as the ALJ found that Organik Kimya had legal and practical control of the evidence.
In response to the spoliation, ALJ Pender ordered sanctions in the form of a default judgment entered against Organik Kimya on Dow's allegation of trade secret misappropriation. The ALJ explained that "[n]o sanction short of default is available to return the parties to the position in which they would have been but for the deliberate destruction by Organik Kimya of evidence potentially favorable to Dow." Furthermore, Organik Kimya and its counsel were ordered jointly and severally to pay Dow's costs and attorneys' fees related to Organik Kimya's failures to comply with its discovery obligations totaling $1,944,379.91.