Sign Up

Stay current with GH&R Newsletters. Click here to sign up.

E-Commerce News

Don't Touch That Hard Drive!; Sony Reaches a Settlement on CD Software

February 15, 2006

DON'T TOUCH THAT HARD DRIVE!

A Federal Court in Pennsylvania has found that where an alleged file-sharer erases his computer's hard drive supposedly to wipe out the presence of copyrighted materials and programs to distribute them, the Court may infer that that the file-sharer spoiled evidence.  But this fact alone does not require a judgment in favor of the copyright holder.  

Paramount Pictures alleged that John Davis erased the hard drive of his Mac computer shortly after online forensic analysis pegged him as the likely "first propagator" of an unauthorized copy of the movie Lemony Snicket's A Series of Unfortunate Events on the eDonkey file-sharing network. Paramount sought to establish that Davis wiped his drive to obliterate telltale evidence of his file-sharing activities. But according to Davis, Paramount misidentified him.  Davis contended that he only erased his hard drive because of a prior commitment to sell his computer.  Paramount asked the Court to award it summary judgment solely on the basis of Davis' alleged destruction of evidence.

The Court was not wiling to grant Paramount's heavy handed request. This would be a "far more severe sanction" than traditionally justified by an inference of spoilation, the Court concluded. The Court said that it was not aware of any case that would support granting summary judgment based solely on a "spoilation" claim.  According to the Court, the spoilation inference is just that--an inference--and "not a legal conclusion that must be reached when evidence is presented that a party has willfully destroyed relevant evidence." 

The easy lesson from this case is that, in the event of litigation, or even the threat of litigation, it is critically important to maintain the status quo.  Altering the evidence in any way is an invitation to trouble. 

SONY REACHES A SETTLEMENT ON CD SOFTWARE

We reported recently about a suit brought by the Texas Attorney General against Sony BMG Music Entertainment related to Sony's use of a software package inserted in CD's that limited the number of times the CD could be copied. 

In a related matter, plaintiffs in a class action proceeding against Sony relating to the same technology have reached a tentative settlement with Sony.  This settlement will not affect the Texas litigation, but it gives some insight into what might be part of the resolution of that case. 

The lawsuits concern software know as XCP technology.  The software restricts the number of times a user can copy a disc to three.  CD's with XCP would automatically install the copy-protection program when the CD's were inserted in the PC, prior to the user transferring the music to an iPod, or similar device.  According to the lawsuit, Sony added the technology to more than 50 compact discs.  About 4.7 million had been made and 2.1 million sold. 

The settlement requires Sony to do the following: 

  • offer monetary compensation to purchasers of Sony CD's containing the XCP and MediaMax digital rights management software;
  • offer software programs to update and uninstall XCP and MediaMax from all consumers' computers;
  • recall all XCP CD's and refrain from distributing CD's with MediaMax for the next two years;
  • refrain from surreptitious information collection on settlement class members through XCP, MediaMax, and any future content protection software, "without their express and affirmative consent"; and
  • waive contract rights in end-user license agreements for currently installed XCP and MediaMax CD's and software.


For purposes of the proposed settlement, the "settlement class" covered by the agreement, includes "all persons ... in the United States who purchased, received, come into possession of, or otherwise used, one or more MediaMax CD's and/or XCP CDs from August 1, 2003 through the Effective Date."

In addition to the Texas action, the proposed settlement papers indicate that suits are pending in California, Oklahoma, the District of Columbia, New Mexico, and New York State Court. 

The proposed settlement did not resolve the matter of attorneys' fees for plaintiffs' counsel.  The parties informed the Court that the issue of fees was deferred in order to reach agreement on the substance of the dispute as soon as possible.  Of course, how hard could it be for a bunch of lawyers to agree on their fee... maybe there is a little more work to do after all.

This Newsletter is a periodic publication of Graydon Head & Ritchey LLP and should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult your own advisor concerning your situation and any specific legal question you may have.