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Companies ARE Responsible for Contractors’ Conduct – Even if the Contractors are Non-Parties

While this case involves the alleged infringement of multiple different types of intellectual property—both patents and copyrights—along with allegations of the misappropriation of trade secrets, I will resist the temptation to discuss such claims in much further detail.

Plaintiff sought sanctions because the defendant produced altered harddrives (belonging to its contractor) that contained relevant files with incorrect creation dates, and when the court compelled production of that computer, it was wiped with the CCleaner application the day before it was turned over.  No one disputes what happened, but the defendant disputes it did not condone the conduct, had no advanced knowledge of it, and that it is unfair to sanction the defendant for the independent actions of its contractor when his actions disregarded the plain instructions conveyed by counsel. 

Why did this matter?  The plaintiff manufactures boat windshields and the defendant counterclaimed that Plaintiff’s CEO wasn’t the sole inventor of the windshield design, but was instead a co-inventor with one of its employees.  This employee of Defendant worked with a contractor to design the windshield.  If proven, patent co-ownership would be huge in defending against a claim of infringement.  However, the metadata of the CAD drawings illustrating the design had been tampered with—they showed a creation date in 2002 despite deposition testimony indicating creation during 2005.  To complicate evidentiary matters, the contractor also testified that emails during the relevant time period were purportedly destroyed through a “catastrophic computer failure.”  Sure.  That corresponds perfectly with the fact that the defendant produced emails allegedly sent by the contractor during the “relevant time period.”     

Each side had an expert opine on the contractor’s use of the CCleaner application and what, if any, data was still recoverable.  Neither could say what data was deleted.  One expert could not verify the actual CAD file creation date and noted the metadata reflected a file creation date of June 13, 2010, but a modified date of January 14, 2002.  That expert felt the contractor’s explanation of such an anomaly was in no way supported by the evidence.  The other expert said nothing particularly relevant for the purposes of reaching a determination.

Balancing the considerations, the court found that sanctions were warranted.  Even though the contractor was a non-party not within the court’s jurisdiction and acted on his own accord, sanctions were imposed to deter others who disobey court orders and destroy evidence.  Further, the court noted it was the defendant who would benefit from the lack of adverse creation dates or other negative metadata. 

The court ultimately disallowed the contractor’s testimony at trial and disallowed any evidence that originated from him.  The defendant could not rely on the contractor’s deposition testimony for any purpose and could not rely on any documents sent to or from him that the defendant produced.  Attorney’s fees were also awarded for “this whole costly trip down the rabbit hole.” 

To avoid this debacle, the defendant needed to preserve the support for its counterclaim.  If the contractor truly sent emails containing particularly important files to Defendant’s employee in 2005, the defendant should have preserved everything.  But to the defendant’s credit, this oversight might have been because these events occurred about ten years ago when times were drastically different.

Samuel is in the Seton Hall University School of Law Class of 2015 pursuing the Intellectual Property concentration. He received his master’s from the Rutgers Graduate School of Biomedical Sciences and became a registered patent agent prior to entering law school.

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