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IP/Entertainment Case Law Updates

Arista Records LLC, et al. v., Inc., et al.

In a copyright infringement suit brought by fourteen record companies against, a provider of electronic message boards (known as “newsgroups”) where subscribers can upload and download files including digital music files, the court issued sanctions against defendants for spoliation of evidence after striking portions of their expert’s declaration in opposition to sanctions.

The plaintiffs filed suit for direct and indirect copyright infringement against, claiming that provided their subscribers access to hundreds of music newsgroups containing infringing digital music files copyrighted by the plaintiffs and that copies of plaintiffs’ copyrighted works resided on defendants’ servers. The plaintiffs requested Usage Data (i.e., records from the defendants’ servers that reflect actual requests by subscribers to download and upload music files), Digital Music Files (i.e., the physical digital copies of the plaintiffs’ copyrighted sound recordings located on the defendants’ servers), and promotional material on the defendants’ web site that mentioned music and MP3 files.

Before reaching the substance of the motion, the court granted in part the plaintiffs’ motion to strike portions of the declaration of defendants’ expert. The court held that certain of the expert’s opinions, including his conclusions regarding the capabilities of the defendants’ system, merely repeated the hearsay of defendant Reynolds, the operator of, without any independent investigation or analysis. The court denied the plaintiffs’ motion to strike those portions of the expert’s declaration that related to the Usenet in general and Usenet technology that were based on his own expert knowledge.

Turning to the sanctions motion itself, the court found that a party bringing a motion for sanctions must demonstrate 1) that its adversary had control of the evidence and a duty to preserve it at the time it was lost or destroyed; 2) that the adversary had a “culpable state of mind” when the evidence was lost or destroyed; and 3) that the lost or destroyed evidence was “relevant” to the moving party’s claims such that a reasonable trier of fact could find that it would support a claim.

The plaintiffs requested the Usage Data in January, 2008, and requested the Digital Music Files in March, 2008. The court held that the defendants were on notice that they had a duty to preserve evidence on March 8, 2008, at the very latest.

The plaintiffs asserted that the defendants disabled access to their music newsgroups, took affirmative steps to delete the Digital Music Files by reconfiguring their servers to overwrite the Digital Music Files making them irretrievable, and failed to preserve the Usage Data and Digital Music Files. The court rejected the defendants’ argument that they did not have a duty to preserve transient data, finding that defendants did have such a duty because they were on notice regarding specific types of data requested by the plaintiffs.

In finding the defendants were culpable and acted in bad faith, the court rejected the defendants’ argument that their actions were not culpable because the Digital Music Files expired off their servers in the normal course of business and because they disabled access to the music groups at the request of plaintiffs. Detailed evidence about the defendants’ operations on and after March 8 revealed that defendants took affirmative steps to reconfigure their servers to delete the Digital Music Files and to overwrite them. In addition, the court stated that “even assuming plaintiffs had asked defendants to disable the newsgroups, defendants still had an obligation to preserve the data requested in discovery.”

Regarding relevance of the lost or destroyed evidence, the court stated that “when evidence is destroyed in bad faith, that alone is sufficient to support an inference that the missing evidence would have been favorable to the party seeking sanctions and thus relevant.” Even if that were not the case, the court held that the requested data was relevant because the Usage Data and Digital Music Files “would have been critical in showing the extent to which defendants’ service was used for the purpose of copyright infringement – a key inquiry under each of the three theories of secondary copyright infringement alleged by plaintiffs.” In addition, evidence of the volume and proportion of the infringement occurring on the service “is also relevant to rebutting defendants’ affirmative defense that defendants’ service has commercially significant non-infringing uses – a key defense to contributory copyright infringement.”

Declining to issue a case-dispositive sanction, the court ordered an adverse inference instruction “precluding the defendants from challenging any statistical evidence of infringement via the service presented by plaintiffs on the grounds that it does not fairly and accurately reflect pre-spoliation usage of defendants’ servers.” The court also granted the plaintiffs’ request for attorneys’ fees relating to the issue of spoliation.

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