In Realnetworks, Inc., et. al. v. DVD Copy Control Assoc., Inc., et. al., 2009 U.S. Dist. LEXIS 38221(N.D. Cal. May 5, 2009), U.S. District Court Judge Marilyn Hall Patel granted, in part, defendants' motion for sanctions for spoliation of evidence.

In September 2008, plaintiffs sought a declaratory judgment that in marketing and selling their product "RealDVD" they had neither breached a license agreement with DVD Copy Control Assoc., Inc. ("DVD CCA"), nor violated the anti-circumvention provisions of the Digital Millennium Copyright Act, 17 U.S.C. sections 1201, et seq. ("DMCA"). That same day, several defendants filed an action in the Central District of California alleging that plaintiff, Realnetworks, Inc., ("Real") did, in fact, breach the license agreement and violated the DMCA.  The suit was transferred to the Northern District of California. 

In October, Real's legal department emailed a "document preservation memorandum" to its RealDVD team, instructing them to preserve relevant electronic and hard copy documents. Real's CEO likewise sent a similar email to all Real employees. Defendants alleged that Real employees were fully knowledgeable about the litigation in early 2007 and carefully crafted documents to avoid using words and phrases that might be subject to keyword searching.  Defendants took the deposition of a former employee who testified that she was told by their supervisor to delete certain relevant documents and emails. The same employee, who was terminated one week prior to the start of litigation, testified that, prior to her departure, she gave Real four notebooks that may contain relevant information.  Real maintained that she had only turned in one notebook, but Real did not produce it. Nor did they know what happened to it.

The court ruled that Real knew that there was probably litigation and thus had a duty to preserve in early September 2008. While Real's employees maintained that they did not delete relevant emails in the ordinary course of business or since the litigation hold, the court noted the "obvious gap" between September 2008 and October 2008 where Real did not have a preservation policy in place for potentially relevant documents or data.  Defendants did not allege that Real willfully destroyed relevant data during this time period, but did challenge the breadth of Real's hold notice.  The court found that Real's preservation policy was sufficient for comprehensive preservation of evidence and instructed the parties to negotiate and file a stipulated proposed preservation order for all existing and future documents related to the litigation.

The court ruled that vague assertions that employees were unaware of their obligation to preserve where insufficient to warrant sanctions.  In addition, the court found insufficient defendants' allegations that employees intentionally deleted emails prior to the time that Real had a preservation obligation.  Other spoliation allegations had since been cured when Real produced the documents at issue, thereby negating any prejudice on defendants.  However, the court held that sanctions were appropriate for Real's failure to preserve and produce the former employee's notebooks and ordered Real to pay defendants' cost of pursuing the evidence of spoliation and costs incurred in bringing the motion for sanctions. In addition, the court ordered the redeposition of a Real supervisor who purportedly told employees to delete potentially relevant documents.