ITC Becomes House of Horrors For Respondent and Counsel

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ITC Becomes House of Horrors For Respondent and Counsel


Here’s a post–Halloween tale to chill the blood of any business accused of patent infringement and their outside litigation counsel, courtesy of Docket Navigator.

On October 29, 2014, Administrative Law Judge Pender of the International Trade Commission issued a decision in which he found that the respondent, Organik Kimya of Turkey, had engaged in the deliberate destruction of relevant evidence on company–controlled laptop computers and then lied about it to the ALJ. Based on that finding—detailed at length in a 119–page initial determination—ALJ Pender imposed the harshest possible sanctions: (1) a default judgment against Organik Kimya, meaning the company could not offer any defense to the charges of the misuse of trade secrets in the ITC proceeding; and (2) an award of $1,944,379.91 in attorneys’ fees and costs to the complainant, Dow Chemical. The fee award was imposed jointly and severally on the Turkish company and its U.S. attorneys. The ALJ found that Dow would likely find it difficult to recover from a Turkish company with no significant U.S. presence, and that its attorneys had overseen the inspection of a company laptop when the spoliation occurred, failed to diligently verify the truth of explanations offered by the company to explain the loss of information to the ITC, and had not introduced any evidence that a litigation hold memo had been put in place at the outset of the litigation.

While the details of this case are extreme—involving a concerted effort to secretly wipe stored computer data—the severe sanctions imposed by ALJ Pender serve as a potent reminder to counsel to draft and distribute a litigation hold memo promptly and clients to identify and preserve relevant documents in their possession, custody, or control.

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