In Victor Stanley, Inc. v. Creative Pipe, Inc., the United States District Court for the District of Maryland ordered sanctions in the form of default judgment on the primary copyright infringement count, attorneys fees and costs, and a civil contempt order providing for two years in prison for the key employee responsible for the spoliation unless and until monetary sanctions are paid in full.  2010 WL 3530097 (D. Md. Sep. 9, 2010). 

There, the Plaintiff alleged that an employee of the Defendant, a competitor, logged onto the Plaintiff's website under an alias, downloaded proprietary materials, and used those materials to design and manufacture competing products.  The Court found numerous instances of discovery misconduct on the Defendant's behalf, including instructing business contacts in Argentina to destroy all email references to the Plaintiff, failing to institute a litigation hold, deleting thousands of files from a key employee's laptop on the eve of discovery hearings, disposing of an external hard drive which contained thousands of transferred files, running Microsoft Windows Disk Defragmenter to render deleted files unrecoverable, and using third-party software such as Easy Cleaner and CCleaner to permanently and irretrievably delete internet history.

Looking to the three prerequisites for sanctions, a duty to preserve, culpability and relevance, the Court found that Defendants misconduct took place after the filing of the complaint and that the Defendant, through the key employees, intentionally deleted thousands of files and ran programs to ensure their permanent loss following preservation orders and on several occasions, immediately prior to discovery hearings.  In addressing sanctions, the Court granted default judgment on the primary count and ordered all costs and fees as a monetary sanction.  In addition, the Court reviewed the use of criminal and civil contempt as a sanction, concluding that the necessary costs on the United States Attorney General, and likelihood that it would pursue a criminal contempt case, necessitated civil contempt in its' place.  Accordingly, the Court ordered the Defendant's key employee to serve two years in prison unless and until the awarded attorneys' fees and costs are paid in full. 

For a copy of the full opinion, click here.