Organik Kimya, San. Ve Tic. A.S. v. International Trade Commission
848 F.3d 994
| Fed. Cir. | 2017Background
- Dow filed an ITC complaint alleging patent infringement and later trade-secret misappropriation by Organik Kimya after discovering involvement of several former Dow employees (Perez, Nene, Strozzi).
- The ALJ ordered forensic inspections and preservation of relevant computers and files; Organik Kimya/its associates thereafter deleted, overwrote, backdated metadata, ran CCleaner/WinHex, smashed drives, and otherwise spoliated large volumes of potentially relevant data.
- For Perez’s laptop: massive overwriting and use of deletion tools occurred days after a preservation order; metadata was tampered with to conceal timing. ALJ found this conduct in bad faith and highly prejudicial.
- For Nene: he destroyed his hard drive and other media after contact with Organik Kimya; ALJ found reckless disregard but insufficient evidence to impute sanctionable spoliation to Organik Kimya for Nene’s deletions.
- For Strozzi: thousands of user files were deleted just after a preservation order and his laptop was lost after being returned; ALJ found bad-faith spoliation and prejudice to Dow.
Issues
| Issue | Plaintiff's Argument (Dow) | Defendant's Argument (Organik Kimya) | Held |
|---|---|---|---|
| Whether default-judgment sanction for discovery spoliation was permissible | Spoliation after express preservation orders, bad faith, severe prejudice; default appropriate under 19 C.F.R. §210.33(b)/Rule 37 | Default was excessive; lesser sanctions or consent termination should suffice; Micron framework requires showing prejudice and consideration of lesser sanctions | Affirmed: Commission did not abuse discretion; default warranted given deliberate, widespread spoliation and deception |
| Proper legal standard/authority for sanction (Rule 37 vs inherent authority) | Rule 37/19 C.F.R. §210.33(b) authorize default for disobeying discovery orders | Relied on Micron (inherent-authority analysis) and argued that standards differ | Court applies §210.33(b)/Rule 37 standard (coextensive with Rule 37) and affirms sanction; result would be same under Micron |
| Whether lesser sanctions or consent termination were adequate | Default necessary to deter and remedy grave prejudice; lesser sanctions inadequate | Proposed consent order withdrawing products; alternatively adverse inference or narrower sanctions | Commission reasonably rejected consent termination and lesser sanctions given bad faith, deception, and large-scale data loss |
| Appropriateness and duration of limited exclusion order (25 years) | 25 years reflects expert opinion on independent-development period (15–25 years); limited order justified after default | 25 years excessive; typical trade-secret orders shorter; remedy arguments improperly relitigate merits after default | Affirmed: Commission acted within discretion, record supports 25-year period; Organik Kimya may seek advisory opinion or modification by showing independent development |
Key Cases Cited
- Genentech, Inc. v. U.S. Int’l Trade Comm’n, 122 F.3d 1409 (Fed. Cir.) (standard for reviewing ITC sanctions and relation of §210.33 to Rule 37)
- Micron Technology, Inc. v. Rambus Inc., 645 F.3d 1311 (Fed. Cir.) (analysis of default sanctions under a court’s inherent authority: bad faith, prejudice, lesser sanctions)
- Shepherd v. Am. Broad. Cos., 62 F.3d 1469 (D.C. Cir.) (Rule 37 authorizes dismissal/default for discovery noncompliance)
- Nat’l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639 (U.S.) (most severe sanctions must be available to deter extreme discovery abuses)
- Spansion, Inc. v. U.S. Int’l Trade Comm’n, 629 F.3d 1331 (Fed. Cir.) (Commission’s obligation to consider public-interest factors when issuing exclusion orders)
- Hyundai Elecs. Indus. Co. v. U.S. Int’l Trade Comm’n, 899 F.2d 1204 (Fed. Cir.) (Commission has broad discretion in selecting remedy)
- Fuji Photo Film Co. v. U.S. Int’l Trade Comm’n, 386 F.3d 1095 (Fed. Cir.) (review standard for Commission’s remedy choices)
- Everyday Learning Corp. v. Larson, 242 F.3d 815 (8th Cir.) (when willfulness and bad faith exist, dismissal/default may be proper without exhausting lesser sanctions)
- Avionic Co. v. Gen. Dynamics Corp., 957 F.2d 555 (8th Cir.) (selection of proper discovery sanction is within court’s discretion)