Studios allege RealNetworks execs and attorneys 'sanitized' evidence in DVD-ripper case; seek sanctions for spoliation

The fight between the major movie studios and RealNetworks over the RealDVD ripping software has not received much attention since last fall, when Real released the software, only to pull it from the market a few days later after an order from a federal court.

The studios have moved for a preliminary injunction, which is set for a hearing April 1 (no joke). In the meantime, the parties have been engaging in expedited discovery. And it's been ugly. Today, via Wired, we learned a bit -- but not nearly enough! (more on that later) -- about just how ugly.

On Feb. 25, the studios moved for sanctions, charging that Real executives and attorneys "took active steps to sanitize the discovery record" by actively and willfully destroying relevant documents that should have been turned over in discovery. The juciest allegations involve a former Real Senior Program Manager named Nicole Hamilton, who was working on a RealDVD-related project and who was apparently terminated a few days before Real initiated this litigation by seeking a declaration that RealDVD is legal. Hamilton says that, before leaving Real, she turned over 3 or 4 spiral notebooks to 2 execs there. (See page 20 of this document). But Real now says it doesn't have them. (See page 19). Where did the notebooks go? Inquiring bloggers want to know!

It's very hard to evaluate the merits of the studios' claims, because much of their motion is redacted. Thus we get to read tantalizing sentences like, "Even more alarming, [REDACTED]..." (page 1) and "To take another egregious example, [REDACTED]...." (page 2). Torture! The studios seek an order for Real to preserve evidence, and a variety of evidentiary sanctions. Though they claim that Real's alleged spoliation "irreparably impaired the integrity of the judicial process," they have not gone all the way and asked for the judicial death penalty (i.e., terminating sanctions).

Real has not yet filed a true opposition to the sanctions motion so we don't know exactly what its substantive  response will be; what it has filed so far is simply a brief opposing the studios efforts to have their sanctions motion heard on shortened time. What I found most striking about Real's brief is its oddly measured tone. Usually, a party accused of spoliation reacts with righteous indignation (feigned or...real), but this brief seems to lack a certain fire in the belly. Instead we get very carefully crafted sentences like "Real is currently maintaining all documents related to this case." "[C]urrently"? (my emphasis). What about prior to "currently"?

But my favorite part of Real's brief is the label its attorneys at Wilson Sonsini came up with to describe Hamilton: "vindictive former employee." I've heard about lots of "disgruntled former employees" ("DFE"s in the trade), but Hamilton must have some very interesting things to say to earn the "vindictive" award. (We are again tortured in footnote 3 of the studios' brief, which tells us, "It is now clear why Real wished to avoid Ms. Hamilton's deposition. She testified, inter alia, that [REDACTED]...." Footnote 1 of Real's brief does reveal that Hamilton testified that someone "directed the deletion of email," which Real disputes.)

The studios want a hearing date of March 16 on the sanctions motion, but it's unclear whether that will happen, given Real's opposition to the expedited schedule. Should be an interesting one.

To get a sense of what the underlying dispute is about, I suggest reading the studios' TRO motion and Real's opposition. Much more on the substance of this case later.