On August 6, 2012, Chief ALJ Charles E. Bullock issued the public version of Order No. 46 (dated June 5, 2012) granting-in-part complainant MyKey Technology Inc.’s (“MyKey”) motion for sanctions against respondent CRU Acquisitions Group LLC d/b/a CRU Data-Port LLC (“CRU”) in Certain Computer Forensic Devices and Products Containing Same (Inv. No. 337-TA-799).

By way of background, ALJ Bullock previously issued Order Nos. 43 and 44 granting MyKey’s motions to compel written discovery, product samples, and source code.  See our May 4, 2012 and June 29, 2012 posts for further details regarding Order Nos. 43 and 44, respectively.

According to the Order, MyKey sought sanctions against CRU for its failure to comply with Order Nos. 43 and 44, arguing that CRU’s supplemental discovery responses with respect to non-infringement are “grossly insufficient” and that CRU has still not produced certain products and source code.  Asserting that it was harmed by CRU’s failure to comply with discovery obligations and that it cannot reasonably establish the matters addressed by the information wrongly withheld by CRU, MyKey requested (1) a finding of infringement against CRU; (2) a finding that CRU has offered for sale, sold, used, imported, sold for importation, or sold after importation in the U.S. the accused products; (3) the preclusion of CRU from introducing or relying on documents not identified in response to MyKey’s discovery requests; and (4) the preclusion of CRU from objecting to MyKey’s use of secondary evidence to show what would have been shown by the discovery withheld by CRU.  In response, CRU argued that there is no basis for imposing sanctions given that (1) with respect to Order No. 43, its non-infringement contentions are sufficient in light of MyKey’s conclusory infringement allegations, and that CRU would supplement its responses after reviewing MyKey’s expert reports; (2) it was in the process of negotiating an agreement with MyKey regarding the accused products subject to Order No. 44 and therefore believed that it did not have to produce all products, and further, that it had produced additional samples by May 25; and (3) the parties reached an agreement on May 28 for production of source code.

Respondents Guidance Tableau, LLC and Guidance Software, Inv. (collectively, “Guidance”) also submitted an opposition to MyKey’s motion, contending that an order finding that the UltraDock or Fastbloc products infringe could unfairly prejudice Guidance because it has previously sold similar products.  The Commission Investigative Staf (“OUII”) partially supported the motion, asserting that while CRU violated Order Nos. 43 and 44, it has since supplemented its responses to MyKey’s interrogatories, offered to make source code available, and produced some sample products.  OUII therefore believed that the non-monetary sanctions sought by MyKey were too severe, and that MyKey should be awarded the costs for preparing and filing its motion.

ALJ Bullock agreed with MyKey and OUII that CRU failed to abide by Order Nos. 43 and 44 regardless of any potential agreements it had with MyKey.  Citing Commission Rule 210.33, the ALJ agreed with OUII that monetary sanctions were appropriate and ordered CRU to pay MyKey “a sum equal to the attorneys’ fees that MyKey spent on filing the present motion and reply,” and further noted that MyKey may seek its fees relating to any supplemental expert reports that are necessitated by CRU’s delayed productions.  Additionally, ALJ Bullock found that CRU’s non-infringement contentions were insufficient, and ordered CRU to supplement its responses after reviewing MyKey’s expert reports which were served on May 29.

ALJ Bullock ordered MyKey to file an accounting of attorneys’ fees for consideration no later than June 12, and CRU to file a response by June 19.  On July 20, 2012, the ALJ issued the public version of Order No. 49 ordering CRU to pay $9,784.33 in attorney’s fees to MyKey.  See our August 2, 2012 post for more details.