July 30, 2018 

VIA ECF (CHAMBER’S COPY VIA HAND-DELIVERY TO CLERK’S OFFICE) 

The Honorable James Donato 

United States District Judge 

San Francisco Courthouse 

450 Golden Gate Ave., Courtroom 11, 19th Floor 

San Francisco, CA 94102 

 Re: Federal Trade Commission v. D-Link Systems, Inc., No. 3:17-cv-00039 JD 

Dear Judge Donato: 

Pursuant to the Court’s Order filed on July 23, 2018 (Dkt. No. 151), defendant D-Link Systems 

(“DLS”) respectfully submits this letter brief in response to the Federal Trade Commission’s 

(“FTC”) purported deficiencies in DLS’s Initial Disclosures arising out of an expert report that 

references documents which were in fact timely produced June 8, 2018. See FTC Letter, Dkt. 

No. 150, at 2.1 

I. FTC Had Notice and Opportunity for Discovery Regarding BSIMM Audits 

The FTC has been on notice of the relevance of present practices to the relief it is seeking since no 

later than March 9, 2017.2

 See Dkt. No. 90 at 8:1-9; Dkt. No. 42 at 4, 8. The FTC itself says it is 

suing on current practices. See id. This is because past practices alone cannot justify the sole

relief FTC is seeking here: a forward-looking permanent injunction. See Compl., Dkt. Nos. 1, 44, 

Prayer for Relief, § A; FTC v. Evans Prods. Co., 775 F.2d 1084, 1087-88 (9th Cir. 1985); FTC v. 

Amazon.com, Inc., No. C14-1038-JCC, 2016 WL 10654030, at *4-6 (W.D. Wash. 2016). Cf.

LabMD, Inc. v. FTC, 891 F.3d 1286 (11th Cir. 2018) (FTC order mandating unspecified 

“reasonable” practices unenforceable). 

The FTC has also had more than ample notice of the use of audits to implement BSIMM, the use 

of third parties in this process, and ample time to pursue fact discovery, had it chosen to do so: 

 August 8, 2017: The FTC has notice of BSIMM implementation starting in 2016. See, e.g., 

Non-Party D-Link Corporation’s (DKC) Response to FTC Interrogatory No. 2.3

 December 5, 2017: Counsel for DLS produced to the FTC a DKC contract with Onward 

Security that identifies and describes the use of external audits to implement BSIMM 

(DKC0004469-DKC0004489) and a prior BSIMM contract (DKC0004436-DKC0004462). 

 December 15, 2017: DKC produces BSIMM policies (e.g., DKC0005921-0005925; 

DKC0005975-0006069) and other BSIMM materials, e.g., Power Point and training sign-in. 

 

1

 The deadline to file a motion to compel fact discovery was June 15, 2018. See Civil L.R. 37-3. 

2 The present practices used for DLS products are unrelated to the allegedly “deceptive” 

statements, as pled by FTC in the Complaint. See Compl., Dkt. Nos. 1, 44, ¶¶ 20, 21, 24, 31-36, 

43-45; Dkt. No. 90. Only Count II is tethered to an alleged representation of “reasonable steps,” 

and its time period is limited to December 2013 to September 2015. See Compl. ¶¶ 20, 31-33. 

3

 Per the Court’s Order, Dkt. No. 73, and the Joint Stipulation, Dkt. No. 75, dismissing it from the 

case, DKC responded to FTC Interrogatories as if it were a party. Both DKC and DLS discussed 

and provided information regarding BSIMM in interrogatory responses. DKC produced BSIMM 

policy documents and contracts in late 2017. 

Case 3:17-cv-00039-JD Document 153 Filed 07/30/18 Page 1 of 4
The Honorable James Donato 

July 30, 2018 

 On or about January 8, 2018: DKC produces to the FTC five additional Power Point 

presentations (e.g., DKC0648113-DKC0648154) relating to measures used to implement 

BSIMM and discussing the Bureau Veritas audit that the FTC now asserts it had no knowledge 

concerning. (e.g., DKC0648138-DKC0648139). 

 January 22, 2018: The FTC is directed to the above-described contract regarding the use and 

timing of external audits, as well as various DKC documents describing the implementation of 

BSIMM, including through use of audits. See DKC’s First Amend. Resp. to FTC Interrogatory 

Nos. 2-3 (e.g., referencing by Bates Onward contract regarding audits (DKC0004469-

DKC0004489), DKC BSIMM policies (DKC0005921-0005925; DKC0005975-0006069)). 

 January 30-31, 2018: The FTC uses this specific contract regarding BSIMM audits as a 

deposition exhibit and is again informed of the external audits implementing BSIMM by the 

DKC 30(b)(6) witness, see Tsai Dep. Tr. at 182-188,4

 and has ample time to ask Mr. Tsai, or 

the two additional DKC employees individually deposed, about the audit. 

II. DLS Met Its Discovery Obligations and FTC Cannot Claim Prejudice 

DLS will not call anyone from Bureau Veritas or anyone else not listed on its Initial Disclosures 

or the FTC’s Initial Disclosures as a witness at trial, unless solely for purposes of impeachment. 

Cf. Isola USA Corp. v. Taiwan Union Tech. Corp., No. 2:12-cv-01361-SLG, 2015 WL 12555874, 

at *2 (D. Ariz. Aug. 13, 2015) (defendant did not have Rule 26(a) duty to disclose employee who 

provided information to expert). Therefore, DLS has met its Rule 26(a)(1)(i) obligations. 

The FTC also mistakenly suggests, see FTC Letter, Dkt. No. 150, at 1, that it was prejudiced by 

DLS’s alleged failure to timely disclose that it would rely on documents produced by DKC 

pursuant to the Court’s Order, Dkt. No. 73, and the Joint Stipulation and Order Dismissing D-Link 

Corporation, Dkt. No. 75. That argument should be rejected. Under FRCP 26(a)(1)(ii), parties 

must disclose categories of documents in their possession, custody, or control that they may use to 

support their claims or defenses. The FTC knew or should have known that a category of 

documents that both parties would use for such purposes would be documents produced by DKC. 

That was the entire point of the Joint Stipulation, pursuant to which DKC would produce 

documents as if a party. See March 9 Hearing Tr., Dkt. No. 42, at 28:12-29:20; Dkt. No. 73; Dkt. 

No. 75. Underscoring this, the FTC’s November 3, 2017, Initial Disclosures list, without 

elaboration, the following category of materials: “Documents ... obtained by Defendant DLS from 

DLC and produced voluntarily to the FTC.” FTC First Amended Initial Disclosures, § II.B.5

 

FTC also mistakenly suggests it was prejudiced by the timely production of the audit reports and 

other documents in compliance with the Court’s Order. See FTC Letter, Dkt. No. 150, at 2; Dkt. 

Nos. 146 & 146-1. Cf. Cryotech Int'l, Inc. v. Technifab Prods., No. C08-02921 HRL, 2010 WL 

1460049, at *1-2 (N.D. Cal. Apr. 9, 2010) (denying motion to exclude expert report relying on 

documents produced 3 weeks after fact discovery cutoff); Cioffi v. Google, Inc., No. 2:13-CV00103-JRG-RSP, 2017 WL 79730, at *1 (E.D. Tex. 2017) (denying motion to exclude expert 

report relying on documents produced late in fact discovery). The FTC’s experts had about one 

month to review the June 8th production and incorporate discussion of such documents into their 

 

4

 The FTC exhibit (PX04068) is not attached to or properly identified in the transcript. However, 

counsel for DLS were provided with hard copies by the FTC, which have been retained. 

5

 DLS’s March 22, 2017, Initial Disclosures state: “D-Link Systems also reserves the right to use 

and rely upon any documents that FTC designates in its initial disclosures[.]” 

Case 3:17-cv-00039-JD Document 153 Filed 07/30/18 Page 2 of 4
The Honorable James Donato 

July 30, 2018 

reports. See Dkt. Nos. 146 & 146-1. The FTC’s expert cited numerous documents from the June 

8th production in his Opening Report6 and the FTC expert directly addressed the audits in rebuttal. 

See Graff Rebuttal, ¶¶ 23-27. Four out of the thirty-five paragraphs in his rebuttal report focus on 

the Bureau Veritas audit reports. See, e.g., ¶ 27 (“I have another issue with the Bureau Veritas 

reports.”). The FTC has suffered no prejudice. 

III. FTC’s Reliance on Factually Inapposite Case Law Fails 

The FTC misinterprets Johnstech Int’l Corp. v. JF Microtechnology SDN BHD, No. 14-CV02864-JD, 2016 WL 4182402 (N.D. Cal. Aug. 8, 2016), where, unlike here: 

 defendant objected that evidence was not relevant and did not produce it to plaintiff before the 

deadline for expert reports and then used this exact information for its expert report; and 

 the deficiency involved a failure to properly disclose a computation of alleged damages, see 

id. at *1-2,7 under Rule 26(a)(1)(A)(iii), which requires parties claiming damages to make such 

documents available. 

Unlike Benjamin v. B & H Education, Inc., No. 13–cv–04993–VC, 2015 WL 6164891 (N.D. Cal. 

2015), aff’d, 877 F.3d 1139 (9th Cir. 2017), DLS did not submit affidavits in support of summary 

judgment from individuals not identified in initial disclosures. Cf. Benjamin v. B & H Education, 

Inc., 877 F.3d 1139, 1150 (9th Cir. 2017). Nor will it do so. 

IV. Documents Timely Produced Can Be Used By Experts. 

There is no question these documents were timely produced and provided to experts. The FTC 

appears cross with how the expert has used the documents. It is hard, if not impossible, for counsel 

to know what materials an expert will use and how he will use them while production is going on. 

To wait until expert reports are produced to complain about timely produced documents upsets the 

carefully ordered, and often agreed upon, schedules that are a key part of complex litigation. The 

FTC cites no authority, nor is undersigned counsel aware of any, where material timely produced 

both in the litigation and to the experts has been excluded by a Court. To do so in this case would 

create bad precedent and bad incentives for litigants in complex litigation. 

For these reasons, DLS respectfully requests that the Court deny the FTC the relief it requests. 

 Respectfully submitted, 

 /s/ John J. Vecchione 

 John J. Vecchione of Cause of Action Institute 

 [pro hac vice pending] 

 Attorneys for Defendant D-Link Systems, Inc. 

 

6 See, e.g., M. Graff Report, Appendix C (listing numerous such documents under sections titled 

“D-Lab Testing Reports, Testing Requests, and Test Plans,” “Checkmarx Scan Reports,” and 

“Third-Party Vendor Test Reports”). 

7 Hoffman v. Constr. Protective Servs., 541 F.3d 1175, 1179-80 (9th Cir. 2008), also involved a 

failure to properly disclose a computation of damages claimed pursuant to Rule 26(a)(1)(A)(iii). 

Case 3:17-cv-00039-JD Document 153 Filed 07/30/18 Page 3 of 4
The Honorable James Donato 

July 30, 2018 

ATTESTATION 

Pursuant to L.R. 5-4.3.4(a)(2)(i), I hereby attest that all other signatories listed and on 

whose behalf the filing is submitted, concur in the filing’s content and have authorized this 

filing. 

Dated: July 30, 2018 /s/ Brock S. Weber 

Brock S. Weber 

CERTIFICATE OF SERVICE 

The undersigned certifies that on July 30, 2018, the foregoing document was 

electronically filed with the Clerk of the Court for the UNITED STATES DISTRICT COURT, 

NORTHERN DISTRICT OF CALIFORNIA, using Court’s Electronic Case Filing (ECF) 

system. The ECF system routinely sends a “Notice of Electronic Filing” to all counsel of record 

who have consented to accept this notice as service of this document by electronic means. Any 

party not receiving the Court’s electronic notification will be sent a copy of the foregoing 

document. 

/s/ Brock S. Weber 

Brock S. Weber 

Case 3:17-cv-00039-JD Document 153 Filed 07/30/18 Page 4 of 4