[00:00:00] Speaker 06:
2482, Virage Profiles Limited versus IPC.

[00:00:05] Speaker 01:
Mr. Jaffe.

[00:00:07] Speaker 01:
Thank you, Your Honor.

[00:00:08] Speaker 01:
Robert Jaffe for Virage Profiles.

[00:00:12] Speaker 01:
We list a number of errors on appeal in our briefs, but in this argument I want to focus on two points.

[00:00:17] Speaker 01:
Why organic Kimye is different than this case, and that the length of remedy is unsupported in the record below.

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Organic Kimye involved spoilation on a scale described by the court as wholesale destruction of primary evidence involving a number of issues.

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Clear evidence of deliberate intentional destruction.

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The opinion at 997.

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The court knows from the opinion issued by the other panel, there were three laptop computers, one was overwritten 108 times.

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Further software was used to check it 12 times.

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Forensic software was used to see if anything was left.

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Second computer was hard drive was taken out, hit with a hammer, something that could not possibly be done in the ordinary course of business.

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Their laptop computer was accidentally, supposedly, lost at a rest stop.

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In our case, we have the installation of a single operating system on a single laptop, something done in the ordinary course of business.

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So what difference does that make?

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The intent, the requirement in Micron that you need to have the intent to

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destroy evidence in the intent to prejudice the other party cannot be shown by a single act of maintaining a computer, something that can be done in the ordinary course of business.

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Also, on proportionality, where there is widespread destruction with direct evidence, in fact, admissions in the organic chemie record that it was done, to deprive the other side of evidence.

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And here you have the simple loss of

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one computer's worth of evidence.

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You have a finding of bad faith.

[00:02:00] Speaker 01:
Well, I don't believe you can find bad faith without some plus factor.

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Micron says that you cannot find bad faith from the mere destruction, even the intentional loss of evidence.

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So you're arguing for clear error on that finding.

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I'm arguing that it's clear error that it would be an abuse of discretion because it would be outside the scope of the law of the circuit for them to impose that sanction.

[00:02:23] Speaker 03:
Even though the computer was wiped right around the time that the litigation was filed or discovery requests were coming in or some key dispositive date, and you're leaving out the fact that there were apparently some 30 or more USB devices that had been attached to this computer at one point or another, and you couldn't locate a single one of them.

[00:02:47] Speaker 01:
Couldn't locate them, but there's no showing they were destroyed, let alone intentionally destroyed.

[00:02:52] Speaker 03:
But you can make an inference of bad faith based upon the timing, on the fact that the stolen file was on, a reference to it was on the computer, and that you failed to turn over anything relating to this, particularly the timing of the suspect operating system upload.

[00:03:13] Speaker 01:
Your honor, it's our position that that inference would be a clearer or not meeting the micron standard of clear and convincing evidence of bad faith, spoilation, and of prejudice, and that must show they intended to impair the ability of the opponent to proceed.

[00:03:30] Speaker 03:
And do we look at that in isolation or in the fact that one of your company's employees was convicted in an Italian court of stealing trade secrets?

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Your honor, I think I have to split that in half.

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Obviously, we're not going to ask the court to parse each piece of evidence and find it insufficient.

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So you think we can't look at the course of conduct of this company, which intentionally tried to get an employee of your competitor to steal data, was convicted in Italian court.

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That employee, I think the record shows, met with the person whose computer is at issue here.

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I know you may disagree with that, but it seems like that was at least one of the factual line.

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And we can't look at any of that.

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the, in your view, accidental timing of the operating system upload and the accidental fact that you can't find more than 30 USB devices that were used with this computer?

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Your Honor, I think two points on that.

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I think you can look at the whole concept.

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And if we were arguing there should be no default on any issue, we should go unpunished, I think the course of conduct would be much more important.

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Our argument here is that they should not find a sanction.

[00:04:35] Speaker 03:
It's not that there was not... Well, I thought we were talking about the bad faith inference.

[00:04:41] Speaker 01:
Right.

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I mean, in the bad faith inference, if we get a look at the whole course of conduct and the fact that you were convicted in an Italian court of conspiring to steal trade secrets, that would seem to support an inference of bad faith of wiping the computer's memory right around the time this litigation was filed.

[00:05:00] Speaker 01:
Believe your honor, you're taking bad faith in general, which I think is inappropriate.

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What my crime requires is evidence of bad faith spoliation, intent to impair the ability of the opponent to proceed.

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Every trade secret case involves a misappropriation of trade secrets.

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The person there is acted somewhere contrary to law.

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What do you think the ITC should have done?

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I think the ITC, I think Judge Essex should recommend the ITC should have adopted sanctions relating to the issue.

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where the subordination occurred.

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Receipt and the further inference, which goes beyond the direct evidence shown, use of the trade secrets.

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We should have been foreclosed from that because Micron further tells us, in the other cases we cite in our brief, that even when you find this, you give a remedy that is sufficient.

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But how did they go too far?

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I mean, are you talking about the length of the exclusion order?

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What are you talking about?

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Two different points.

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The length of the exclusion order is a separate point because it's not record-based.

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We say the default is too broad because it goes to the issues not related to the receipt and use of the trade secrets.

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It goes to the scope of the domestic industry, which is something that Verage would never have evidence on.

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And it goes to the questions whether the operating practices that were found and despoiled were even trade secrets.

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Well, in lieu of default, to answer Judge Steink's question, what

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What remedy do you think the ITC should have adopted?

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I'm sorry.

[00:06:31] Speaker 01:
We should be foreclosed on the receipt and use question, and the rest should in conformity with the general rule of resolving cases resolved on the merits.

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The domestic, industrial, or harm, what else?

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And whether the operating practices were in fact trade secrets or, as the expert evidence shows, they were basically publicly available and not very valuable to brought.

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I think it's also important in bad faith and doing proportionality, because bad faith is not the only thing, that the organic Kimye violation was a direct obedience of a court order, and certainly the upgrading of the computer.

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The operating system was installed before there was any order.

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It was only our general duty to preserve.

[00:07:18] Speaker 01:
I'd like to go to the point you mentioned about the length of the remedy, because that's a totally, I believe, separate issue.

[00:07:24] Speaker 01:
In Argetta Kimye, the complete default was upheld based on the pleadings in the case, but the court required and heavily relied on that the 25 year period there was supported by record evidence.

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And the court said that over and over and over again, that the commission decision finds ample support in the record.

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The length of the exclusion order depends on the evidence in the record.

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The record in this case supports the limited exclusion order.

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There is no record evidence in this case supporting 16.7 years.

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There is a single allegation in the complaint, which we believe on the exhibit we showed you is not well-based.

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It's for the entire use period, an average time for the entire use period dating back to 1942.

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the time period clearly in violation of the syntax standards, you must show that period is actually used.

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It would be necessary to be used for development.

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If you take just the time that even Val Bruna's secrets from that same exhibit were done in the 21st century, starting 2001 to 2006, you isolated those trade secrets, you'd find the time for their so-called development period.

[00:08:42] Speaker 01:
which the ITC describes as the period starting with the first manufacture of that grade of stainless steel to the current time, current time being 2006 when the episode was prepared.

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That modern period is 2.7, 2.8 years.

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In the current time, with Barrage being an already established stainless steel manufacturer, with having modern equipment in place, with it not taking in the 21st century more than perhaps weeks or months, but certainly not more than years to develop

[00:09:11] Speaker 01:
any grade or multiple grades of stainless steel, there is no support in the record, which is required under Organic Kimye for the 16.7-year period.

[00:09:21] Speaker 01:
You have an allegation of how long Valbruna took from the time it first developed it to the time it brought the complaint.

[00:09:28] Speaker 01:
Totally fails the syntax standard, which rejected the amount of time claimed by the plaintiff, because it may well not have all been necessary and may well not all represent a true development period.

[00:09:41] Speaker 01:
We think that is a separate error that goes that even after a default, even after the spoilation and sanctions, you cannot get to the length of remedy that the commission imposed.

[00:09:53] Speaker 01:
What they cite in the record, the five questions and answers we show in our brief, just say many years.

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Just say practices had been developed or research and development had been used for many years of trial and error.

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no particular period in time.

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In fact, their witness said they did not keep those sort of records.

[00:10:15] Speaker 01:
They could not tell you from their records what the actual development period was.

[00:10:33] Speaker 00:
If I may start with a default sanction, since that lays the foundation for the Commission's remedy determination.

[00:10:39] Speaker 06:
Let me ask you a couple of questions about that.

[00:10:40] Speaker 06:
First of all, I'm not terribly sympathetic to the notion that the question of whether this was a trade secret shouldn't have been within the default, which is one of the arguments that Mr. Jaffe made.

[00:10:55] Speaker 06:
But he talks about the domestic industry finding, and he says that the default shouldn't have extended to that.

[00:11:01] Speaker 06:
And perhaps there's an issue there as to whether there was a reasonable possibility that the material that was destroyed would relate to the domestic industrial environment.

[00:11:15] Speaker 06:
Could you address that question?

[00:11:17] Speaker 00:
Right.

[00:11:18] Speaker 00:
The problem is that we don't know all the exact volume or contents of the information that was destroyed and missing.

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So it could have very well, though the USB devices that were lost could have contained

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potentially thousands of files and they could have related to the domestic industry and certainly the market that existed in the United States.

[00:11:39] Speaker 06:
How is the domestic industry issue usually determined?

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On what kind of evidence?

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You're looking for injury or threat of injury, of substantial injury to the domestic industry.

[00:11:53] Speaker 06:
So if there's any information... That sounds as though you'd look more to the competitors

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of the accused infringer rather than to the accused infringer's own conduct?

[00:12:06] Speaker 00:
Domestic interference can be established based on the complainant's evidence or evidence that could exist in the respondent's files.

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That information is not irrelevant simply because it's in the respondent's possession.

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But the problem is that we simply do not know

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what information Baraj had.

[00:12:28] Speaker 00:
They certainly considered the information from Barajun special because they exerted a lot of effort to coordinate with Mr. Zalsa to misappropriate the trade secrets and to continue using them throughout the investigation.

[00:12:44] Speaker 02:
The commission here... Am I correct that the scope of the trade secrets in question would have an impact on the scope of the domestic industry inquiry?

[00:12:56] Speaker 00:
The scope of the trade seekers themselves, no.

[00:13:00] Speaker 00:
It more goes to the fact that it is completely unknown what information that Viraj had in its possession and what it destroyed from Ms.

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Mathur's computer and Ms.

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Mathur's files, who was the head of Viraj's research and development in quality insurance.

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And the administrative law judge found here that any information that was in her possession was highly relevant

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for Valbruna improving its trade secrets claim, which includes all the elements here.

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If it were necessary for the stolen trade secrets or the spoliation here to be related to each element of the case, I think that would defeat the purpose of default.

[00:13:53] Speaker 00:
We would have to be looking to the merits of the respondent's case, and I think that would defeat what the purpose of default is here.

[00:14:05] Speaker 06:
Let's turn to the length question.

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But it seems to me very dubious that the ITC can refuse to address the length question on the merits, the remedy, because of the default.

[00:14:19] Speaker 06:
I mean, typically in district court proceedings, once there's a default, the amount of damages or the remedy is still open.

[00:14:27] Speaker 06:
It's not foreclosed by the default.

[00:14:30] Speaker 06:
And why should the ITC be any different?

[00:14:33] Speaker 00:
The ITC is different because the type of remedies are different.

[00:14:38] Speaker 06:
That's true, but why does that make a difference?

[00:14:41] Speaker 06:
It makes a difference because... Why is it a default to have a broader scope before the ITC than in district court?

[00:14:50] Speaker 00:
The Commission rules specifically allows the Commission to consider default and to presume and to consider factual allegations presumed to be true in determining

[00:15:02] Speaker 00:
what relief to issue against a respondent found in default.

[00:15:05] Speaker 00:
And that's found at Commission Rule 210.16C1.

[00:15:08] Speaker 06:
But the rule doesn't say anything about the default extending to the remedy issue, does it?

[00:15:14] Speaker 00:
That provision specifically is a provision that specifically addresses default.

[00:15:19] Speaker 00:
It starts off with relief against a respondent in default and specifically guides the Commission in making its remedy determinations against defaulting parties.

[00:15:28] Speaker 00:
And that's the rule that was applied here.

[00:15:29] Speaker 06:
Where is the language of this rule?

[00:15:31] Speaker 00:
You can find it 210.16C1.

[00:15:34] Speaker 06:
210 what?

[00:15:36] Speaker 06:
What page of the appendix or the briefs?

[00:15:40] Speaker 00:
It's a commission rule.

[00:15:41] Speaker 00:
It's 19 CFR section.

[00:15:44] Speaker 06:
I don't have the entire CFR here.

[00:15:47] Speaker 06:
Did you cite it in your brief?

[00:15:49] Speaker 06:
Did you quote it in your brief?

[00:15:50] Speaker 00:
It is cited in our brief, but we did not quote it in its entirety.

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But I can read it to you, Your Honor.

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Section C starts off with relief against a respondent in default.

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Section 1, type of relief available.

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After a respondent has been found in default by the commission, the complainant may file with the commission a declaration that is seeking immediate entry of relief against the respondent in default.

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The facts alleged in the complaint will be presumed to be true with respect to the defaulting respondent.

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The commission may issue an exclusion order, a cease and desist order, or both.

[00:16:26] Speaker 00:
And so that's the rule that was applied here and cited by approval by the support organic team.

[00:16:30] Speaker 06:
Well, it seems to me not entirely clear.

[00:16:32] Speaker 06:
I'm a little skeptical that the commission has greater authority to extend the default to the remedy than the district court does.

[00:16:40] Speaker 06:
But let's talk about what evidence the commission relied on, because the commission did say even if we didn't extend the default to the remedy, there was still evidence that supported this 16-year period.

[00:16:56] Speaker 06:
But the evidence is just the period in which the

[00:17:01] Speaker 06:
Patentee was the holder of the trade secrets was manufacturing the product.

[00:17:07] Speaker 06:
That doesn't seem to really be very good evidence of the period that it would take someone now to develop the trade secrets.

[00:17:16] Speaker 00:
It's important to keep in mind the nature of the trade secrets here.

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The trade secrets here are not the stainless steel braids themselves or the process for manufacturing.

[00:17:25] Speaker 06:
But answer my question, why is the period of manufacture

[00:17:31] Speaker 06:
really pertinent to the length of time that it was take to independently develop the trade secret.

[00:17:37] Speaker 00:
The evidence is not simply the time that Bob Bruno spent manufacturing the grade.

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It's the 16.7 year period is the average time.

[00:17:46] Speaker 06:
So you agree that the manufacturing period is not very probative?

[00:17:51] Speaker 00:
No, and that's not what the evidence is.

[00:17:53] Speaker 00:
That's not what the commission's decision.

[00:17:54] Speaker 06:
Yes, you agree.

[00:17:55] Speaker 00:
I'm sorry?

[00:17:55] Speaker 06:
Yes, you agree.

[00:17:56] Speaker 00:
I agree that it's not simply the manufacturing.

[00:17:59] Speaker 06:
OK, so what other evidence is that?

[00:18:03] Speaker 00:
The development period here includes all process improvements over time.

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And the evidence shows that Valbruna spent an average of 16.7 years for over 300 operating practices of continuous trial and error, thorough research and development, and incorporating the feedback

[00:18:25] Speaker 00:
from various departments at Brown Bruno and its customers to maximize efficiency and to obtain consistent output for high quality steel.

[00:18:35] Speaker 06:
That's true, but why does that establish how long it would take to independently develop the trade secret?

[00:18:44] Speaker 00:
It is evidence supporting the Commission's finding as to how long garage wood would have been spent developing the same trade secrets.

[00:18:51] Speaker 06:
Is there any other evidence?

[00:18:53] Speaker 00:
That's the evidence that was before the commission.

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So there was no expert testimony that would take such and such a period of time to develop the trade secret.

[00:19:01] Speaker 00:
There is no expert testimony here.

[00:19:03] Speaker 00:
But expert testimony was not required.

[00:19:07] Speaker 00:
Viraj also did not provide expert testimony as to how long it would have taken to develop Val Bruna's operating practices.

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It simply pointed to evidence as to how long it'd take to manufacture its own grades.

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And it made no connection to its proposed period of six months to two years

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to how long Ralph Brunner spent developing its trade secrets.

[00:19:29] Speaker 06:
And we need a better record from both parties.

[00:19:32] Speaker 00:
Well, that's what happens when evidence is destroyed early on in a case.

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And Baraj should not get the benefit of having destroyed evidence in bad faith.

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And I would also like to mention that Baraj did not challenge bad faith in its briefs before this court and raises it for the first time

[00:19:53] Speaker 00:
in oral argument today.

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And the record here contains ample evidence that Verrage had acted in bad faith.

[00:20:05] Speaker 06:
Okay, any further questions?

[00:20:07] Speaker 06:
Thank you, Ms.

[00:20:07] Speaker 05:
Nielsen.

[00:20:08] Speaker 05:
Thank you.

[00:20:14] Speaker 06:
Mr. Menser?

[00:20:19] Speaker 04:
May it please the court, I'm Stephen Menser and I

[00:20:23] Speaker 04:
here for Valbruna, the intervener.

[00:20:27] Speaker 04:
Your Honor, I want to address a question which has to do with the duration of the remedy.

[00:20:32] Speaker 04:
I think it's an important consideration, and it has to do with the evidence that the Commission had before it.

[00:20:39] Speaker 04:
Your Honor discussed the evidence of Valbruna's independent development time.

[00:20:43] Speaker 04:
I think what we all have to realize in the background is that there is missing evidence on the question of independent development.

[00:20:51] Speaker 04:
Viraj exfoliated that evidence.

[00:20:53] Speaker 06:
and to the extent that there are no questions.

[00:21:01] Speaker 04:
So the evidence of that is that Verrage, if you look at the assets, the electronic assets, they were in the possession of Shilpi Mather.

[00:21:10] Speaker 04:
Shilpi Mather is the head of research and development at Verrage.

[00:21:13] Speaker 04:
She's in charge of developing new grades of stainless steel.

[00:21:16] Speaker 06:
There's no question but that they destroyed evidence.

[00:21:18] Speaker 06:
But you made a statement, you said they destroyed evidence of the time that it would take to develop the trade secret independently.

[00:21:25] Speaker 06:
I don't see what the basis for that is.

[00:21:27] Speaker 04:
The basis is that the evidence that was destroyed is research and development material.

[00:21:32] Speaker 04:
It's on her computer, on her USB drive.

[00:21:34] Speaker 04:
We of course don't know what was destroyed, but we can reasonably infer that as the head of research and development, she has access to materials

[00:21:43] Speaker 04:
that involve research and development.

[00:21:44] Speaker 04:
I can cite to a specific example in the record, appendix 2, 2755 through 59.

[00:21:50] Speaker 04:
This is the fragmentary information we get from the forensic inspection, is that she accessed the Valbruna trade secrets from a USB drive, and it was sitting in a folder that was named important R&D file for project.

[00:22:05] Speaker 04:
So she's involved in the research and development process.

[00:22:09] Speaker 04:
Her materials are evidence of how long it would have taken Viraj to develop steel and the trade secrets themselves.

[00:22:16] Speaker 04:
She, in fact, is accessing the trade secrets in the course of research and development is what the record shows.

[00:22:23] Speaker 04:
So we're talking about a exfoliated fact record.

[00:22:26] Speaker 06:
It makes it difficult for the commission... Suppose you put that aside and you say, well, we have to apply the same rule to the ITC that we apply in district court.

[00:22:35] Speaker 06:
and the default doesn't apply to the question of remedy.

[00:22:38] Speaker 06:
Suppose we were to say that's the right world.

[00:22:41] Speaker 06:
What evidence is there to support the Commission's remedy determination?

[00:22:46] Speaker 04:
The evidence to support the Commission's remedy determination is the evidence of Val Bruna's development time of the trade secrets.

[00:22:53] Speaker 04:
It is appropriate to look at the trade secret owner's time to develop trade secrets.

[00:22:58] Speaker 04:
It's what the Commission did in rubber resins.

[00:23:01] Speaker 04:
It's what it did in crawler cranes.

[00:23:04] Speaker 04:
and those were affirmed by this court.

[00:23:07] Speaker 04:
We're talking about the process of development of the stainless steel.

[00:23:10] Speaker 04:
The way it works with stainless steel is that this is a process of incremental development over long periods of time.

[00:23:18] Speaker 06:
But the fact that the trade secret was developed over a long period of time hardly supports the notion

[00:23:27] Speaker 06:
that if someone were trying to independently develop it, that it would take the same period of time, right?

[00:23:33] Speaker 04:
I think, Your Honor, we struggle to find the exact precision, but we're not required to find the exact precision in light of the exfoliated fact record.

[00:23:42] Speaker 04:
We go with what we have.

[00:23:44] Speaker 06:
We keep coming back to the exfoliated fact record.

[00:23:46] Speaker 06:
Put that aside for a moment.

[00:23:48] Speaker 06:
Suppose that the Commission has to make an independent remedy determination without regard to the exfoliation, which may or may not be correct.

[00:23:57] Speaker 06:
Let's assume it for the moment.

[00:23:58] Speaker 06:
It seems to me that all you have is evidence of the period that it took the trade secret holder to develop the trade secret.

[00:24:08] Speaker 06:
And that's a generous reading of the record.

[00:24:11] Speaker 06:
That doesn't really show the period required for independent development, does it?

[00:24:16] Speaker 04:
Well, Your Honor, we have more evidence than just the 16.7 years.

[00:24:20] Speaker 04:
We have Nikola Abghisi who's had the melt shop.

[00:24:24] Speaker 04:
He gave testimony, which was presented to the Commission.

[00:24:27] Speaker 04:
on how Valbruna actually develops these operating practices, that it gets, that it tests the grades of stainless steel as they're made, gets feedback from customers, and throughout the process of the melting and the casting and the refining, these improvements are built back in to the trade secrets.

[00:24:48] Speaker 04:
So that's an appendix 40-52 to 53, appendix 40-63 to 69,

[00:24:55] Speaker 04:
Mr. Algis gives specific examples with respect to an operating practice of chemical composition changes that happen.

[00:25:01] Speaker 06:
Sure, but that's still evidence of the development period for the trade secret owner.

[00:25:09] Speaker 04:
Absolutely, and that is appropriate evidence of independent development.

[00:25:12] Speaker 06:
The question is, it is evidence which bears on the question.

[00:25:16] Speaker 06:
The question is whether that evidence alone is sufficient.

[00:25:20] Speaker 04:
Well, I'd like to point, Your Honor, to actually another piece of evidence that we were able to obtain from the forensic inspection.

[00:25:26] Speaker 04:
Again, I know we're not discussing the exfoliated evidence because we don't have the exfoliated evidence, but the forensic inspection was able to pull out certain information.

[00:25:35] Speaker 04:
We do know that Viraj accessed one of Valbruna's trade secrets.

[00:25:41] Speaker 04:
This is the AIM-1 operating practice.

[00:25:44] Speaker 04:
The AIM operating practice was accessed in 2000

[00:25:49] Speaker 04:
2015, I believe.

[00:25:53] Speaker 04:
Virage first started melting the grade of steel that corresponds to that operating practice 19 years earlier.

[00:26:01] Speaker 04:
So we have the evidence of Virage melting the grade of steel at a certain time and then accessing the operating practice that matches that.

[00:26:09] Speaker 04:
That is actually evidence of Virage's development and reliance on the operating practices, but also the development time it took.

[00:26:17] Speaker 04:
If it had fully developed, the stainless steel wouldn't be accessing it 19 years later.

[00:26:22] Speaker 04:
The record sites for that are 319.

[00:26:23] Speaker 06:
I'm not understanding the point.

[00:26:25] Speaker 06:
I'm sorry.

[00:26:27] Speaker 04:
OK.

[00:26:28] Speaker 04:
Let me try that again.

[00:26:29] Speaker 04:
So Viraj starts melting this grade of stainless steel, grade 201 stainless steel.

[00:26:34] Speaker 04:
And it does that.

[00:26:35] Speaker 06:
They start producing that grade of stainless steel.

[00:26:38] Speaker 04:
Exactly.

[00:26:38] Speaker 04:
They start producing the grade of stainless steel in 1995.

[00:26:44] Speaker 04:
That's an appendix 4896.

[00:26:47] Speaker 04:
We know that it accessed Velbruner's operating practice, the AIM-1 operating practice, in 19 years later.

[00:26:56] Speaker 04:
It accessed it in December of 2014.

[00:26:58] Speaker 04:
That's an appendix 2757.

[00:27:00] Speaker 04:
So you have a 19-year period between when Verage first makes that greatest stainless steel, and it's accessing the operating practice.

[00:27:10] Speaker 03:
Are you saying that they wouldn't have needed to access the operating practice of steel?

[00:27:15] Speaker 03:
they'd already known how to do this grade of steal?

[00:27:19] Speaker 03:
You're asking us to draw an inference from something that doesn't really seem to have any kind of firm evidence one way or another.

[00:27:28] Speaker 03:
I mean, maybe they were just looking at all the various practices.

[00:27:31] Speaker 03:
I mean, when you steal somebody's trade secrets, I assume you just look at everything you stole.

[00:27:36] Speaker 03:
It may not have any bearing because you may have already figured it out.

[00:27:40] Speaker 03:
So I'm not sure how much

[00:27:42] Speaker 03:
I mean, I get your theory, but I'm not sure how much weight it really has.

[00:27:46] Speaker 04:
Well, it really goes to the question of corroborating the 16.7 years.

[00:27:50] Speaker 04:
Again, the backdrop of this is we have exfoliated fact record on independent development that Baraj exfoliated.

[00:27:57] Speaker 04:
What do we have that's left to determine the development period?

[00:28:00] Speaker 04:
We look at Valbruna's development time, and we have testimony saying that it is an incremental process over long periods of time that's unrebutted, and we have evidence

[00:28:10] Speaker 04:
from the forensic inspection that corroborates that.

[00:28:15] Speaker 03:
In these types of cases, what evidence other than the developer of the trade secrets and its competitor who stole them would you use to develop an independent estimate?

[00:28:28] Speaker 04:
Your Honor, you would look at just the nature of the industry, to be honest.

[00:28:34] Speaker 04:
I think you would look at, to get an understanding of how

[00:28:37] Speaker 04:
the product and the technology is developed in the context of the specific industry.

[00:28:43] Speaker 04:
I believe that's what we did.

[00:28:44] Speaker 04:
We looked at the time of manufacture until after the trade secret, but also explained through unrebutted testimony of how that time is used to actually develop the trade secrets.

[00:28:57] Speaker 04:
So it depends on the industry, I think.

[00:29:00] Speaker 04:
You can't say across the board.

[00:29:02] Speaker 04:
What I would like to have done and be able to do is to look at Viraj's documentation and Viraj's explanation of how it developed these grades.

[00:29:12] Speaker 04:
But we are denied that ability.

[00:29:13] Speaker 04:
And in the context of that, the commission's findings as to duration can't be... How critical is that?

[00:29:19] Speaker 06:
I mean, certainly in these remedy situations, typically there's an expert.

[00:29:25] Speaker 06:
If I understand correctly, he says, I'm familiar with the trade seeker, and I'm familiar with the industry, and this is my conclusion as to how long it would take to independently develop the trade seeker, right?

[00:29:37] Speaker 06:
And in order to do that, you don't necessarily have to have access to the information that the misappropriator has, right?

[00:29:51] Speaker 04:
Your Honor, we have had a metallurgical expert who is tasked with looking at the production of Virage.

[00:30:00] Speaker 04:
But again, he can't opine on things on information and evidence that he has denied the access to.

[00:30:06] Speaker 04:
We can't be put in that position.

[00:30:08] Speaker 06:
But did he testify that he couldn't opine on the length of the required development period without access to the information?

[00:30:15] Speaker 04:
Your Honor, I don't believe he testified as to that point.

[00:30:20] Speaker 04:
But I would like to bring this back to the organic chemia decision.

[00:30:23] Speaker 04:
When we look at the overall context in terms of a default decision and the remedy, we have to also consider really the deterrence factor here.

[00:30:34] Speaker 04:
It would be nice to be able to have perfect precision to calculate every single... That case didn't say that the default extended to the remedy, right?

[00:30:43] Speaker 04:
Yes, Your Honor, correct.

[00:30:44] Speaker 04:
But it does say when we evaluate whether to award a default sanction,

[00:30:49] Speaker 04:
you consider the deterrence factor.

[00:30:51] Speaker 04:
And I think it also bears on the question of the calculation of the remedy as well.

[00:30:56] Speaker 04:
It cannot be the case where a party like Farage deceives the court, lies to the parties, consistently does so, destroys crucial evidence in the case that hits multiple areas and hits multiple elements of the violation, and then is permitted to go to a trial on questions like domestic industry and go to a trial on questions of the precise development term.

[00:31:19] Speaker 04:
The commission has discretion, broad discretion, to set the terms of the remedy based on the evidence in the bill.

[00:31:25] Speaker 06:
So why is the rule in district court that defaults don't extend to the remedy?

[00:31:29] Speaker 04:
Your Honor, I don't know if we need to reach the question if default extends to remedy because the commission didn't automatically extend default to remedy.

[00:31:38] Speaker 04:
But the commission rules do say, that's 210.16, say that a defaulting party has waived its ability to contest the allegations in the complaint.

[00:31:49] Speaker 04:
Moreover, the commission rules also say that the allegations in the complaint are presumed to be true.

[00:31:55] Speaker 04:
They're presumed to be true.

[00:31:56] Speaker 04:
These rules have to have meaning and significance.

[00:31:58] Speaker 04:
And Balbrun's allegation as to 16.7 years has to be presumed to be true.

[00:32:03] Speaker 04:
And it is corroborated by the evidence on the 19 years that it took Verage to continually measure.

[00:32:10] Speaker 04:
So I get back to, in light of the- I think we're out of time.

[00:32:14] Speaker 04:
Oh, thank you.

[00:32:17] Speaker 01:
Mr. Jaffe, you've got less than five minutes.

[00:32:20] Speaker 01:
Thank you, Your Honor.

[00:32:21] Speaker 01:
I believe I have about four minutes left.

[00:32:23] Speaker 01:
If I could just make a couple of points quickly.

[00:32:25] Speaker 01:
The domestic industry issue is completely separate from anything that Baraj would know.

[00:32:33] Speaker 01:
I heard ITC counsel say, well, the missing evidence could have been this, could have been this.

[00:32:38] Speaker 01:
That's not enough of the standard of the microphone.

[00:32:40] Speaker 01:
You need a plausible showing that it was evidence that would be prejudicial.

[00:32:47] Speaker 01:
We would agree.

[00:32:48] Speaker 01:
Missing evidence could be anything, but that the Raj would have, and would have the only evidence of the scope of what Val Bruner produces in the United States is not plausible.

[00:32:58] Speaker 06:
But I mean, it's not exactly unusual that in the misappropriators' files you would have, for example, emails saying, well, we better steal this trade secret because it would take us 10 years to develop it all.

[00:33:15] Speaker 01:
There could be.

[00:33:17] Speaker 01:
evidence-like there could be evidence as to what and i was trying to go to the scope of the domestic industry i'm sorry if i confused those two issues on when we agree with with court questions that went must be proven as in the district were on the record in point is that's exactly what happened inorganic can you they accepted a complete default but to impose the length of remedy they went to the record they had expert testimony they found it would actually the actual period would take

[00:33:47] Speaker 01:
Organic Camellia to have recreated Dow's things was 25 years supported in the record, something that I only said that they emphasized.

[00:33:56] Speaker 01:
That is the law.

[00:33:57] Speaker 01:
That is the law that should apply to the ITC.

[00:34:00] Speaker 01:
The circular reasoning that if you have a default, it has to be to all issues and therefore you don't get to challenge it doesn't really get, I think, the government anywhere.

[00:34:11] Speaker 01:
The bad faith, just quickly, was raised in our brief at 12-13, showing without the intent you don't have the bad faith.

[00:34:18] Speaker 01:
But I think the length is the most important thing.

[00:34:21] Speaker 01:
The length, as the ITC described in their brief, is the period from first manufacture to the date of the exhibit.

[00:34:28] Speaker 01:
That doesn't meet the Syntex standard.

[00:34:30] Speaker 01:
Yes, there is some testimony at 40-52.

[00:34:34] Speaker 01:
It says many years of trial and error, research and development.

[00:34:40] Speaker 01:
developing its operating practices for many years.

[00:34:43] Speaker 01:
And that's as far as allegacy was able to go.

[00:34:46] Speaker 01:
The evidence shows that the garage does not have evidence of the actual development period of any particular grade of steel.

[00:34:55] Speaker 01:
That some of this is confidential.

[00:34:57] Speaker 01:
I ask you to look at our reply brief, that there was not evidence as to development of the operating practices over lengthy periods of time.

[00:35:06] Speaker 01:
and they would not have the records necessary to meet the syntax standard.

[00:35:10] Speaker 01:
That period of time, they can't tell you.

[00:35:12] Speaker 01:
They've come in and told the ITC, we can't tell you what portion of that 65 years is actual development.

[00:35:20] Speaker 01:
I think the ITC should not be different on length of remedy and that it is important that it be proven, especially as to a lengthy remedy,

[00:35:34] Speaker 01:
the failure to meet the plausibility standard and the question of showing of whether any of this on the other issues on length and on scope of the domestic industry could have first prejudiced Valbruna and secondly could have been the only source of evidence because of all your spoiling is additional or repetitive evidence that is not enough to pose the most severe sanctions.

[00:36:00] Speaker 01:
I think that's what I'd like the court to leave the court with.

[00:36:03] Speaker 01:
We have the most severe sanction here.

[00:36:07] Speaker 01:
The Supreme Court in National Hockey League said it's easy with hindsight to forgive the despoiler.

[00:36:11] Speaker 01:
I think it's important to think in hindsight, in a despoilation case, always involves two elements.

[00:36:17] Speaker 01:
Some evidence is missing, and it's missing at a time when it should have been preserved.

[00:36:21] Speaker 01:
And we agree to that.

[00:36:22] Speaker 01:
And we agree that there should be a penalty.

[00:36:24] Speaker 01:
We discussed the scope of the penalty in the opening argument.

[00:36:27] Speaker 01:
But with hindsight, especially in the shadow of organic Kimye, the single thing that is known to be missing and the penalty that can be applied for that more than then makes up for any prejudice, the lack of any direct evidence of bad faith or intent to enheed the party.

[00:36:46] Speaker 06:
Even if the default sanction can't

[00:36:50] Speaker 06:
extend to the remedy and I'm not all that familiar what the district court rule is.

[00:36:56] Speaker 06:
Is there some room in making a remedy determination to adopt adverse inferences or to switch the burden of proof as a result of the spoilation because the spoilation might extend to facts that were relevant to the remedy determination?

[00:37:13] Speaker 01:
Your Honor, I see my time's up.

[00:37:14] Speaker 01:
I'll try to answer that quickly.

[00:37:15] Speaker 01:
When I've been involved in default cases in district courts and trial courts, they start clean.

[00:37:21] Speaker 01:
It doesn't matter what happened.

[00:37:22] Speaker 01:
They do what they did endow.

[00:37:24] Speaker 01:
They take evidence and come up with a remedy.

[00:37:27] Speaker 01:
Shepard cautions us it's just as bad to impose a too severe remedy even on a guilty party as it would be to not allow the

[00:37:39] Speaker 01:
remedy.

[00:37:40] Speaker 01:
This is a court of justice.

[00:37:42] Speaker 01:
There's a public purpose to the statute.

[00:37:45] Speaker 01:
The remedy should not extend beyond the scope of the actual trade secrets.

[00:37:48] Speaker 06:
We ask you to reverse.