United States: Guilty Of Spoliation

PersonalWeb Technologies, LLC and Level 3 Communications, LLC v. Google Inc and Youtube, LLC, Case No. C13-01317-EJD (Magistrate Judge Lloyd)

Here's a quiz to tickle your brain.

In June you began discussing future litigation against other companies during weekly company lunch meetings.  In July you acquired the patents needed to sue those companies.  In December, you filed a lawsuit against those companies.

When do you begin preserving evidence?

If you answer July, then give yourself a cookie – at least a Northern California tasty variety, that is.

When to start preserving evidence was the precise issue that Magistrate Judge Lloyd recently answered in a patent infringement case.  Google, the defendant in the action, requested sanctions against Plaintiff PersonalWeb, alleging that PersonalWeb systematically deleted relevant emails it was under a duty to preserve.  Specifically, Google argued that PersonalWeb should have preserved evidence in June, when litigation became reasonably foreseeable because PersonalWeb was discussing future litigation at the time.  Google claimed that this future litigation was part of PersonalWeb's business strategy to acquire patents in order to sue major companies.

Magistrate Lloyd agreed that PersonalWeb acquired patents with an eye toward litigation.  However, he refused to accept the premise that litigation was reasonably foreseeable before PersonalWeb even acquired the patents, which was in July.  He concluded that PersonalWeb's duty to preserve evidence was triggered in July when it acquired the patents necessary to initiate litigation. PersonalWeb, however, did not implement a litigation hold until December, after it filed suit against Google and other companies.  Magistrate Lloyd therefore found that PersonalWeb was guilty of spoliation because it failed to timely implement a litigation hold.

It is important to note that Magistrate Lloyd concluded that PersonalWeb engaged in spoliation of evidence only because PersonalWeb was analyzing Google technology and openly discussing litigation prior to acquiring the patents at issue.  It appears that had PersonalWeb acquired the patents without ever discussing future litigation, the duty to preserve evidence would not have triggered so soon – or at least the question of whether a preservation requirement existed would have been closer.

As for sanctions, Magistrate Judge Lloyd did not think that PersonalWeb willfully destroyed evidence to gain an unfair advantage in its upcoming litigation.  Rather, PersonalWeb's motivation behind the email destruction policy was business-related, i.e., to save costs.  Furthermore, he found that Google suffered little, if any, prejudice as a result of the spoliation.  As a result, he awarded Google monetary sanctions sufficient to reimburse it for reasonable attorneys' fees and costs associated with the spoliation-related discovery and motions practice.

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