Record labels win major discovery rulings in Usenet.com case; judge rules expert didn't do adequate work, defendants didn't preserve evidence

The recording industry won a major victory today in its fight against Usenet.com, as a federal magistrate judge granted discovery sanctions that will significantly impair the service's ability to defend itself against a copyright suit brought by the major labels. As CNET explained when the suit was filed in late 2007:

The lawsuit claims Usenet.com encourages its customers to pay up to $19 a month by enticing them with copyrighted music, and asks for a permanent injunction barring the company from "aiding, encouraging, enabling, inducing, causing, materially contributing to, or otherwise facilitating" copyright infringement.

There are some differences between Usenet.com and some of the other newsgroup providers that will help the RIAA. Usenet.com boasts that signing up for an account "gives you access to millions of MP3 files and also enables you to post your own files the same way and share them with the whole world."

Clearly they didn't run that language by their lawyers first.

Yesterday's extremely detailed 73-page order in the case included two major rulings. First, Magistrate Judge Theodore Katz of the Southern District of New York struck much of an important declaration by Usenet.com's expert David Farber, a computer science professor at Carnegie Mellon University (and EFF board member). In what must be an embarrassing blow to the professor, Katz found that Farber relied on "misleading and erroneous" information supplied by one of the defendants, and did not do sufficient independent investigation of facts that he relied on in his declaration:

Farber does not simply rely on erroneous data; his opinions are merely a restatement of Defendant Reynolds' views and are not the product of independent analysis.... An expert who simply repeats the hearsay of the client who retained him, without any independent investigation or analysis, does not assist the trier of fact in understanding matters that require specialized knowledge. That, in fact, is what Professor Farber has done in offering opinions about Defendants' system.

Such harsh words from a judge can deal a devastating blow to an expert's career; the court's words can be expected to dog Farber in all future cases on which he is retained.

In the other significant ruling, the court found that the defendants failed in their obligation to preserve large amounts of highly relevant information stored on its servers, "destroyed highly incriminating promotional materials," "provided misleading information" -- and did so intentionally, in "bad faith." As a sanction, the court ordered that the jury (assuming the case goes to trial) will be instructed that it may draw certain adverse inferences against defendants, including the inference that the missing evidence would have been unfavorable to the defendants. In addition, defendants will be precluded from challenging certain evidence presented by the labels establishing the amount of infringement facilitated by defendants' system. Lastly, defendants will have to pay plaintiffs' attorneys' fees and costs incurred in determining that the spoliation had occurred, and in litigating the sanctions motion.

Congrats to the team at Jenner & Block (home of C&C's favorite Obama appointee so far) for litigating, and largely winning, this difficult motion. Then again, they have plenty of practice dealing with similarly misbehaving defendants.

(h/t Recording Industry vs. The People)