This summary of Victor Stanley v. Creative Pipe et al., provided by Ron Schutz of Robins, Kaplan, Miller & Ciresi is a cautionary tale for patent prosecutors served with subpoenas (or about to be). If the appropriate steps are not taken to preserve documents or, even worse, if documents are destroyed, the consequences can be severe.
The Gang That Couldn’t Spoliate Straight (Updated)
Topic: Available sanctions for repeated, egregious, willful spoliation.
Plaintiff Victor Stanley brought claims for copyright infringement, patent violations, and unfair competition against defendant Creative Pipe and its owner, Mark Pappas. Despite four specific court orders regarding preservation of electronically stored information (“ESI”), Victor Stanley demonstrated that Pappas had repeatedly and deliberately destroyed extensive quantities of ESI crucial to Victor Stanley’s case. Exasperated and appalled, Chief United States Magistrate Judge Paul W. Grimm undertook an extensive review of the law of spoliation throughout the circuit courts in order to craft the most effective set of sanctions possible. The Magistrate’s opinion acknowledges the “collective anxiety” that exists due to a lack of a uniform standard governing the duty to preserve and then attempts to synthesize existing case law in order to provide a cohesive analytical framework for future spoliation disputes. After reviewing all available sanction options, Magistrate Grimm recommended that the district court enter a permanent injunction and default judgment as to Victor Stanley’s copyright claim. Magistrate Grimm also directly ordered an award of all costs and attorneys’ fees incurred by Victor Stanley in proving spoliation over the course of the litigation as a monetary sanction. Notably, the acts of spoliation were deemed civil contempt, allowing the magistrate to order that Pappas be jailed for up to two years “unless and until” payment of the ordered sanctions occurs.