The Downfall of Exosystems, Day 1

UNITED STATES vs. EXOSYSTEMS, CORP.

No. PCA-1-23-108

In the United States Court of Appeals for the Ninth Circuit

Pasadena, California

Finalized

April 13^th, 2023

Before: The Honorable James R. Kozinski,

United States Senior Circuit Judge

~ ~ ~

Justitia Cæcus Est

STENOGRAPHIZED BY: JOHN EVERETT

1	IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
2	– – – – – – – – – – – – – – – – X
3	UNITED STATES, :
4	Plaintiff, :
5	vs. : No. PCA-1-23-108
6	EXOSYSTEMS, CORPORATION :
7	– – – – – – – – – – – – – – – – X
8	Pasadena, California
9	Monday, March 20^th, 2023
10
11	The above-entitled matter came on for hearing
12	before the United States Court of Appeals for the Ninth Circuit
13	on March 20^th, 2023 at 10:05.
14
15	APPEARANCES:
16	MICHAEL L. CRAMEN, ESQ., Deputy Solicitor General,
17	Department of Justice, Sacramento, California; on behalf
18	of the Plaintiff.
19	TREVOR C. SHERIPAN, ESQ., Monrovia, California; on behalf of
20	the Defendant.
21	Before his Honor:
22	JAMES R. KOZINSKI, Senior Circuit Judge,
23	9^th Circuit Court of Appeals, Pasadena, California
24	Heard before:
25	TRIAL JURY
1	E X H I B I T S
2	PLAINTIFF EXHIBITS:
3	1 Exosystems, Corp. internal report, re. UAV non-
4	responsiveness incident; 03 JUN, 2021 (04 JUN, 2021)
5	2 RCAF log of airspace infringement (08 OCT, 2021)
6	3 USAF radio transmission (08 OCT, 2021)
7	4 Dept. of Defense investigation report (29 OCT, 2021)
8
9
10
11
12
13
14
15	DEFENDANT EXHIBITS:
16	1 Company constitution of Exosystems, Corporation
17	(revision 1.04a, revised 12 APR, 2019)
18	2 Exosystems, Corp. UAV non-responsiveness policy
19	(revision 1.01, revised 08 JUL, 2020)
20	3 Court record of New York vs. Steiner,
21	4 Court record of Arkansas vs. Decker,
22
23
24
25
1	P R O C E E D I N G S
2	(10:05)
3	BAILIFF: All rise! Court is now in session. The
4	Honorable Justice Kozinski presiding.
5
6	THE COURT: Thank you. You may be seated. Call the docket.
7
8	THE CLERK: Civil action 1-23-108, The People of the United
9	States of America versus Exosystems, Corporation.
10
11	THE COURT: Now then, Mr. Cramen. If everyone is prepared,
12	we will hear your opening statement.
13
14	MR. CRAMEN: Thank you, your honor. Good morning, ladies
15	and gentlemen of the jury. May it please the court. What need
16	I say? We all know why we’re here. We are here to dispense
17	justice to the murderers at Exosystems, whose negligence and
18	incompetence have resulted in thousands of deaths.
19
20	MR. SHERIPAN: Objection!
21
22	JUSTICE KOZINSKI: Sustained. Mr. Cramen, may I remind you
23	that you must convict the defendant with evidence, and not
24	with pitiful rhetoric?
25
1	MR. CRAMEN: Of course, your honor. What I aim to prove,
2	and I’m sure it’ll be a real challenge (giggles), is that the
3	defendant, through their fault, are responsible–
4
5	THE COURT: The evidence, Mr. Cramen! The evidence!
6
7	MR. CRAMEN: Coming right up.
8	(Mr. Cramen shuffles to his briefcase, returns after a moment.)
9	On Oct. 8^th, 2021, AI drones belonging to Exosystems went rogue
10	and began indiscriminately firing at the ground, killing 335
11	civilians. Only after a full day did they call for help from the
12	United States Air Force which then destroyed the drones with
13	missiles, presumably to a mix tape of Kenny Loggins.
14	(Mr. Cramen smiles for a moment.)
15	Anyway, the next week many of the remaining drones took off of
16	their own accord and flew around the Capitol building in
17	Sacramento. After these were destroyed by the Air Force the rest
18	of the drones were dismantled. The following Monday the
19	Department of Defense launched an investigation and Exosystems
20	launched their own internal investigation, most likely to assure
21	the public that they had everything under control.
22
23	THE COURT: The facts, Mr. Cramen, and nothing more.
24
25	MR. CRAMEN: Of course, your honor. So after that, the FBI
1	MR. CRAMEN (cont.): took over the investigation and found
2	that the drones were controlled by the internet activist group,
3	“Anonymous.” Eight members of Anonymous were arrested in America
4	and three others were later found in Russia, and a fourth in
5	Spain. At the Congressional hearings in February and March of
6	2022 Exosystems blamed everything on Anonymous. Senator Patel
7	pointed out that Exosystems have lost control of their drones
8	before; although they never went rogue. The Senate later voted
9	to terminate the contract with and cut funding for Exosystems.
10	Four months later, on Friday, August 19^th, 2022, Exosystems shut
11	Down its US operations and has since then only operated inter-
12	nationally. We now stand here today in March, ready to finally
13	dispense justice to these vile criminals. Thank you, ladies and
14	gentlemen.
15
16	THE COURT: That was very lovely, Mr. Cramen.
17
18	MR. CRAMEN: Thank you, your honor.
19
20	THE COURT: There’s just one thing you forgot to do.
21
22	MR. CRAMEN: And what’s that, sir?
23
24	THE COURT: You forgot to say anything about, let alone
25	offer proof of, the defendant’s guilt.
1	(The audience laughs.)
2
3	MR. CRAMEN: You’re right, your honor. I guess I got a
4	little ahead of myself. After all, I don’t need to remind
5	anyone here of what happened. We’ve all seen the hearings and
6	the news reports- hell, I’m sure many of the people in this
7	room were either victims of Exosystems or know one or two.
8
9	(The audience puts forth noises of support.)
10
11	THE COURT: Order! Order! That is just the sort of thing
12	we’re supposed to rise above. Many a defendant has been found
13	guilty because of the court’s partiality. This is not Salem,
14	Virginia and this year is not 1692. It will be difficult for us
15	to pretend we know nothing of the case from media exposure but
16	we must put forth a concerted effort to do just that. With that
17	having been said, let us now hear from the defense.
18
19	MR. SHERIPAN: Thank you. Good morning, ladies and gentlemen
20	of the jury. Your honor, before I begin I wish to bring up a
21	concern I have about the exposure of this case. As my colleague
22	Mr. Cramen made clear, we have all seen the news. Although it is
23	no longer fresh in our minds, I feel that it will nevertheless
24	pose a threat to our impartiality.
25
1	THE COURT: Your concern is a valid one, Mr. Sheripan, and
2	I’ll do everything within my power to limit exposure. The jurors
3	are being sequestered very close by and will have quite little
4	chance to be utterly corrupted on their trip over. That reminds
5	me, I see several members of the audience wearing buttons with
6	Exosystems’ logo crossed out. That is unacceptable. This is not
7	a sports arena and you are not here to intimidate the other
8	team. Remove them or remove yourselves. Thank you. Go on.
9
10	MR. SHERIPAN: Thank you, your honor. People of the court,
11	much has been said about Exosystems’ actions, and much of it has
12	been misleading. I will attempt to ameliorate the situation. To
13	start off with, let me say that no security system is foolproof.
14	In a one-year period Anonymous hacked the PlayStation Network,
15	Bank of America, Koch Industries, and multiple governments
16	including the US; that was more than a decade ago. There’s no
17	difference between then and now. No giant is too big to fall to
18	these virtual guerrillas. Exosystems was just another victim and
19	the crime being discussed was not their own.
20
21	MR. CRAMEN: (scoffs)
22
23	MR. SHERIPAN: Is there a problem?
24
25	MR. CRAMEN: No, of course not.
1	MR. SHERIPAN: As I was saying, the trials against the
2	members of Anonymous found that they were responsible for
3	the incident in question. It was because of them that the
4	weapons systems came online, it was because of them that the
5	UAVs went rogue, and it was because of them that those
6	individuals died. When Exosystems went before Congress that’s
7	exactly what they said. True, Exosystems has lost control of
8	UAVs before, but that happens. And not just with contractors,
9	either. The military has lost control of UAVs on multiple
10	occasions, but they have the authority to shoot them down before
11	anybody can get hurt. How many private companies have F-35s
12	loaded with missiles to shoot down their own defective products?
13	Of course, in true, red-blooded American fashion, the Senate
14	voted to terminate their contract anyway. Exosystems is no
15	Lockheed Martin, but they should still have due process, right?
16	Thanks to this- I would argue- unlawful termination of their
17	contract, Exosystems was forced to close their domestic
18	operations just to avoid bankruptcy. And now the plaintiff
19	would have them pay for a crime they were an unwilling accessory
20	to? I pray that the jurors will have the clearness of mind and
21	reason to exonerate my client. Thank you.
22
23	THE COURT: Thank you, Mr. Sheripan. Mr. Cramen, would you
24	like to call your first witness?
25
1	MR. CRAMEN: I would, your honor. I call Ms. Julie Procter
2	to the stand.
3
4	(Plaintiff’s witness, having been sworn, testifies as follows.)
5
6	THE COURT: Have a seat, ma’am.
7
8	(Direct examination)
9
10	Q: Ms. Procter, where do you live?
11	A: Rosamond, California.
12	Q: How long have you lived there?
13	A: For five years.
14	Q: What is your vocation?
15	A: I’m a security systems analyst for the Dept. of Defense.
16	Q: Uh-huh. Now tell me, Ms. Procter, does a company have
17	the responsibility of making sure their products are safe?
18	A: Yes.
19	Q: And do they also hold responsibility for making sure
20	the lock doesn’t get picked by any old basement-dweller with
21	an internet connection?
22	A: (after a pause) Yes.
23	Q: Then tell me, in your professional opinion, can
24	Exosystems be in any way held liable for the deaths their drones
25	caused?
1	(Ms. Procter remains silent.)
2	THE COURT: Ms. Procter, please answer the man’s question.
3
4	MS. PROCTER: Will you rephrase it, please?
5
6	MR. CRAMEN: Should Exosystems’ security have been tighter?
7	A: Based on the investigation carried out by the Dept. of
8	Defense, the system they had in place was outdated, at that
9	point, by almost a year. The 512-bit encryption key their
10	software had at the time used an algorithm that was cracked by
11	hackers sometime around January of 2021.
12	Q: For the record, once again, could Exosystems’ security
13	measures have been stronger, as per Exhibit 4, Dept. of Defense
14	investigation report?
15	A: Yes, they could have.
16	MR. CRAMEN: No further questions, your honor.
17
18	MR. SHERIPAN: I would like to question her, your honor.
19
20	THE COURT: Very well, go ahead.
21
22	(Cross-examination)
23	MR. SHERIPAN: Good morning, Ms. Procter.
24
25	MS. PROCTER: Good morning.
1	MR. SHERIPAN: Do you work at Edwards Air Force Base?
2	A: Yes, I do.
3	Q: That must be a heck of a commute.
4	A: Tell me about it.
5
6	MR. CRAMEN: Objection. Relevance?
7
8	MR. SHERIPAN: I’m trying to make her more comfortable.
9
10	THE COURT: Sustained. Proceed with your examination.
11
12	MR. SHERIPAN: Is there an unbreakable code, Ms. Procter?
13	MS. PROCTER: Well, there is the Voynich Manuscript.
14	Q: Yes, yes of course. But no one knows that answer. Is
15	there a lock that can only be unlocked by its rightful owner?
16	A: No. Any code that works can eventually be broken.
17	Q: So is it true that Exosystems’ algorithm would have been
18	cracked even if it were the new one?
19	A: Well, yes, but that is why newer and better software is
20	continuously being developed. It’s an effort to stay one step
21	ahead of the hackers.
22	Q: And how effective is that? Can you estimate how long the
23	new code was in use before being replaced?
24	A: I believe it was six months.
25	Q: And how much more difficult was that to crack?
1	A: I don’t know.
2	Q: How would one go about learning what version of software
3	Exosystems was using? Would a lot of people even have access to
4	that information?
5
6	MR. CRAMEN: Objection. Assumes facts not in evidence.
7
8	MR. SHERIPAN: I was just about to ask for a concrete
9	number. Is that OK with you, boss?
10
11	MR. CRAMEN: Yeah, no problem, chief.
12
13	MR. SHERIPAN: Thanks, pal.
14
15	MR. CRAMEN: Your welcome, buddy.
16
17	THE COURT: Gentlemen!
18
19	MR. CRAMEN: Excuse us, your honor.
20
21	MR. SHERIPAN: Would you care to give an estimate as to how
22	many hackers in the US could conceivably learn what security
23	software version Exosystems had, look up and apply the cracked
24	algorithm, then hack away?
25	Q: To hazard a guess, I would say maybe a couple thousand.
1	Q: And if the hackers were determined enough to hack into
2	Exosystems as they did, would it be plausible to suggest that
3	the thousand hackers who knew how to hack the old software could
4	have cracked the new one and went on their merry way?
5
6	MR. CRAMEN: Objection!
7
8	MR. SHERIPAN: On what grounds?
9
10	MR. CRAMEN: Calls for speculation.
11
12	MR. SHERIPAN: I’m asking the lady her professional opinion,
13	Ramen!
14
15	MR. CRAMEN: It’s still speculative, Sharpie Pen!
16
17	MR. SHERIPAN: How’d you like to speculate what my foot’s
18	going to do once I shove it–
19
20	THE COURT: Order! Order!
21	(Justice Kozinski vigorously strikes his gavel.)
22	THE COURT: Mr. Sheripan, are you quite through?
23
24	MR. SHERIPAN: Momentarily, your honor. With no further
25	objections, I can reach the point of my questioning.
1	THE COURT: Very well. Get on with it, preferably without
2	you and your colleague staging a catfight.
3
4	MR. SHERIPAN: Very well. Ms. Procter, when Nintendo was
5	planning to release their 3DS system, they touted it as
6	un-hackable; it was hacked less than 24 hours after its release.
7	With that having been said, (turns around, gazes at Mr. Cramen)
8	in your professional opinion, (returns attention to Ms. Procter)
9	do you feel that if Anonymous- which always has a motive behind
10	its actions- wanted to break Exosystems’ security, they would
11	have done so no matter the strength of the algorithm?
12
13	MR. CRAMEN: Objection, calls for conclusion.
14
15	MR. SHERIPAN: Michael, I swear, I–
16
17	THE COURT: Overruled! Just answer the question! I mean,
18	please answer Mr. Sheripan’s question, Ms. Procter.
19
20	MS. PROCTER: It is difficult to say. I won’t want to
21	mislead this court.
22
23	Q: Just one more question. Do the UAVs owned by the US Air
24	Force use the same security software as Exosystems?
25	A: (after a moment pause) I can’t say.
1	Q: Thank you. That is all.
2
3	THE COURT: At this point we will break for lunch. Please
4	return here by 13:00. Everyone wait in your seats as the jurors
5	leave. As for Messrs. Sheripan and Cramen, We’re going to have a
6	chat. You two are in serious trouble.
7
8	(RECESS, 11:45 o’clock to 13:15 o’clock)
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1	(13:21)
2	(The hearing, having been resumed, proceeds as follows.)
3
4	THE COURT: Welcome back, ladies and gentlemen. I hope you
5	all enjoyed your lunch break. If everyone is ready to proceed,
6	we’ll do just that. I trust that the attorneys will kindly
7	refrain from addressing each other, and ignore whatever law
8	school rivalry compels them to bicker like an old married
9	couple. Mr. Cramen, you may begin when ready.
10
11	MR. CRAMEN: Thank you, your honor. I will now call Bradley
12	Jacobs to the stand.
13
14	(Defendant party, having been sworn, testifies as follows.)
15	(Direct examination)
16
17	Q: Mr. Jacobs, what is your position in Exosystems?
18	A: I’m the co-founder and Chief Executive Officer.
19	Q: How long have you held that position?
20	A: Eleven years, now. And I’d like to point out, no
21	accidents occurred during that time which put anyone’s life in
22	danger.
23	Q: Well it only takes one, doesn’t it, Brad? What I would
24	like to know is why didn’t Exosystems respond to the drones’
25	actions sooner? After almost a full day had gone by, you still
1	(MR. CRAMEN, cont.) refused to seek the military’s help.
2	After a drone crossed Canada’s border, then the Air Force took
3	matters into their own hands and destroyed them. But why didn’t
4	you ask them to do so sooner? Say, before the drones killed 600
5	people or before they nearly caused an international incident?
6	A: Well… SOP (Standard Operating Procedure) requires that
7	we do everything we can before involving the military. Those
8	procedures were put in place to protect us and the Air Force,
9	not to mention preventing an embarrassing situation for us and
10	the Pentagon.
11	Q: So is that better than preventing the deaths of hundreds
12	and causing tens of millions of dollars of property damage?
13	A: No! We… we had follow the rules, you understand? That
14	clause has been amended since then, but we couldn’t break our
15	own law! That would be a violation of our contract. We’d be
16	telling the government we don’t care about honoring our
17	agreement, you understand? We had to try everything we could–
18	Q: Then why didn’t you try everything you could sooner?
19
20	MR. SHERIPAN: Objection– argumentative.
21
22	THE COURT: Sustained.
23
24	MR. CRAMEN: No further questions for now, your honor.
25
1	(Cross-examination)
2	MR. SHERIPAN: Mr. Jacobs, when did you first become aware
3	of the drones’ malfunction?
4	A: Only a few minutes after it started on Friday afternoon.
5	Q: And that was Friday, October 8^th, 2021. Correct?
6	A: That’s right.
7	Q: When you heard this news what action or actions did you
8	take?
9	A: Well SOP says that we have to perform certain steps.
10	I have the list right here. First we need to attempt to
11	reestablish control. Then we attempt to reestablish connection
12	to the drone. Then we run software and hardware diagnostics on
13	our control, then we reset the system and repeat the previous
14	steps. If that doesn’t work, we deploy a scout to attempt an ad
15	hoc connection. If we can’t, then the drone is considered fully
16	rogue and we ask the Air Force to shoot it down. After that we
17	shut down all the other drones and run full diagnostics.
18	Q: That seems like an awfully high number of steps to
19	casually attend to when there’s a killer UAV on the loose. Why
20	wasn’t the Air Force all ready to go from the start?
21	A: Well we’d tested this model dozens of times and it went
22	without a hitch. They had their jets ready for the first test
23	runs, but this run was one of the last tests before production.
24	Q: So the Air Force considered it unnecessary to monitor a
25	routine test run of a civilian aircraft. That’s understandable.
1	MR. SHERIPAN (cont.): But why did they wait so long to
2	scramble their jets, I wonder?
3	A: Well first they had to get clearance then talk with us
4	and make sure they knew what they were up against.
5	Q: Ah. And how long after the attacks started did this
6	occur?
7	A: About two hours. First we had to run through all the
8	steps, and then we contacted the base like we were supposed to.
9	Q: How long was this meeting held?
10	A: For about an hour.
11	Q: When the jets were scrambled, what time was it, as per
12	exhibit four?
13	A: 17:30 in the afternoon.
14	Q: Will you please show us on the document?
15	A: [complying]
16	Q: Shortly before the jets were scrambled, Edwards [AFB]
17	received a radio message from the Royal Canadian Air Force that
18	a UAV had infringed their airspace. Edwards briefed them on the
19	situation so they could shoot it down, and by 23:00 hours all
20	five UAVs had been destroyed. Is that correct, Mr. Jacobs?
21	A: Yes, sir.
22	Q: So it would seem that all of this talk of “delays” and
23	other such nonsense are greatly exaggerated. It’s just another
24	example of public outcry glossing over the facts. That’s all for
25	now, your honor.

1	THE COURT: Thank you. Mr. Cramen, would you like to
2	re-examine the defendant?
3
4	MR. CRAMEN: Very much so, your honor.
5
6	(Redirect examination)
7
8	Q: Let me ask you something, Mr. Brad. Why wait until the
9	ninth to deactivate your drones? Why not do it as soon as
10	possible?
11	A: They were already shut down; we just had to run full
12	diagnostics. That wasn’t reported as finished until around 12:05
13	on the ninth.
14	Q: Oh, well of course. We wouldn’t want you to run the
15	diagnostic and try to figure out the problem while the drones
16	are killing innocent civilians! No, let’s wait ‘til after!
17
18	MR. SHERIPAN: Objection! He’s badgering the defendant.
19
20	THE COURT: Sustained.
21
22	MR. CRAMEN: Allow me to put that in the form of a question.
23	Mr. Jacobs, why did you not run the diagnostics until after the
24	drones were shot down?
25	A: Actually, we started the tests right after our meeting with

1	MR. JACOBS (cont.): the boys at Edwards. The tests started
2	at 5:14 that afternoon.
3	Q: Why not sooner?
4	A: Because you can’t stick your hand in a car’s engine
5	while it’s running, son! You gotta shut the system down before
6	you check it!
7
8	THE COURT: Mr. Jacobs, please keep in mind what is proper
9	courtroom diction. Do not address the attorneys as “son.”
10
11	MR. JACOBS: Yes, sir. Anyway, we had to attempt everything
12	we could using the network, then we shut it down to do the
13	tests.
14	Q: Switching gears, please state once again how long it
15	took for you to go through the non-responsiveness procedure.
16	A: Two hours.
17	Q: Is that longer than usual?
18	A: Well, yes.
19	Q: What was different about this time?
20	A: The UAVs were firing their weapons at everything. We
21	didn’t know how to do the sixth step since any scout sent out
22	would probably be shot down.
23	Q: And yet you didn’t foresee that that would be a possibility
24	before drafting this CoA [course of action]? I think it’s pretty
25	obvious that when you’re dealing with potentially lethal drones

1	MR. CRAMEN (cont.): you should foresee the possibility
2	that they will turn lethal. And yet, Exosystems neglected to
3	deal with that very consideration. They planned to send a scout
4	to rendezvous with the drone, then hesitated to do so because
5	said drone was rogue, which was why they needed to send a scout
6	in the first place. No further questions, your honor.
7
8	THE COURT: Mr. Sheripan?
9
10	(Cross-examination)
11	Q: Mr. Jacobs, did Exosystems draft the non-responsiveness
12	policy itself?
13	A: No, sir.
14	Q: Then who did?
15	A: A law firm named Johnson and Associates was contracted
16	for that.
17	Q: You don’t say! And while you were discussing what the
18	policy should include, why did you decide that a scout should
19	attempt an ad hoc connection as a last resort?
20	A: For several reasons. One is timeliness, since we’re
21	already prepared to go up there while the Air Force is still
22	putting through orders to scramble their fighters. There are
23	a couple of other reasons, like the cost of building a new drone
24	once the first is destroyed, but that was the main one.
25	Q: But isn’t it risky to send up someone when a UAV is

1	MR. SHERIPAN (cont.): actively firing weapons?
2	A: Well, yes, and that’s why we hesitated to send a scout.
3	After we realized that the policy didn’t technically apply to
4	a hostile drone, then we moved right on to step seven, which was
5	to ask for military help.
6	Q: So, it seems that you had all bases covered and could
7	not have foreseen the exact circumstance that occurred, yet the
8	prosecution claims negligence for a foreseeable risk! It seems
9	like my colleague needs to hit the law books. Thank you.
10
11	THE COURT: And with that being said, let us close shop for
12	the day. We will begin at 10 o’clock tomorrow morning. Jurors,
13	please remember the admonition of this court to discuss nothing
14	with another person, and to not formulate any opinion of the
15	matter until it is turned over to you for decision. Good night.
16
17	(The jury recessed at 16:30 o’clock)
18
19	(End of proceedings for the day.)
20
21	(Recess from 16:30 o’clock until 10:00 o’clock Tuesday, March
22	21^st, 2023.)
23
24

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The Downfall of Exosystems, Day 1

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