EMI Music and Universal Music Group won court sanctions yesterday (Oct. 25) against venture capital firm Hummer Winblad for deleting e-mails related to the original Napster.
In the ongoing litigation over investments by Hummer Winblad and Bertelsmann in Napster, which was found to have infringed music copyrights, the two major labels requested the District Court in San Francisco to sanction the firm for destroying e-mail evidence. The arguments centered on when (i.e., during which period of time) the firm had an obligation to preserve all of the relevant e-mails.
Under California law, as soon as Hummer Winblad knew (or reasonably should have known) that there was a potential legal claim against the firm, it had a legal obligation to preserve evidence relevant to the claim.
Hummer Winblad argued that its personnel routinely deleted e-mails on their system without regard to whether the e-mails were relevant to the Napster litigation; it did not intentionally delete any relevant e-mails.
The court decided that as of June 2000, Hummer Winblad had a duty to suspend any existing policies related to deleting or destroying files. Even though the firm did not willfully or intentionally delete the e-mails, it had a duty to preserve all relevant documents related to the litigation, which it failed to do.
Since the absence of this evidence could prejudice the labels’ claims, the court ordered that certain evidence, which could be favorable to Hummer Winblad, may be excluded from the case. The court will decide which evidence will be excluded at the time that a motion for summary judgment may be heard or at a later trial.
If the case proceeds to trial, the labels are also entitled to insist that the court give certain instructions to the jury that may benefit the labels in their case against Hummer Winblad.
The court also ordered the venture capital firm to pay the reasonable attorney’s fees that the labels incurred in connection with their motion. The amount will be determined at a later date.
The labels declined to comment. Hummer Winblad could not be reached for comment.
