I/P Engine, Inc. v. AOL, Inc. et al

Filing 998

Memorandum in Support re 978 MOTION for Order to Show Cause UNDER RULE 37 FOR NONCOMPLIANCE WITH AUGUST 13, 2013 ORDER, 993 MOTION for Leave to File Supplemental Memorandum Setting Forth Additional New Facts Justifying Its Request for Default Judgment in I/P Engine's Motion for Defendants to Show Cause Under Rule 37 for Noncompliance with the August 13, 2013 Order, 995 MOTION to Seal Supplemental Memorandum Setting Forth Additional New Facts Justifying Its Request for Default Judgment in I/P Engine's Motion for Defendants to Show Cause Under Rule 37 for Noncompliance with the August 13, 2013 Order Along with Exhibits A and C and the Declaration of Charles J. Monterio, Jr. in Support of I/P Engine's Supplemental Memorandum of Additional Facts filed by I/P Engine, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C)(Sherwood, Jeffrey)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
NORFOLK DIVISION

I/P ENGINE, INC.,
Plaintiff,
v.
AOL, INC. et al.,
Defendants.

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Civ. Action No. 2:11-cv-512

PLAINTIFF I/P ENGINE, INC.’S SUPPLEMENTAL MEMORANDUM SETTING
FORTH ADDITIONAL NEW FACTS JUSTIFYING ITS REQUEST FOR DEFAULT
JUDGMENT IN I/P ENGINE’S MOTION FOR DEFENDANTS TO SHOW CAUSE
UNDER RULE 37 FOR NONCOMPLIANCE WITH THE AUGUST 13, 2013 ORDER
Additional evidence supporting sanctions against Google came to light during the
deposition of Mr. Bartholomew Furrow, which was conducted after I/P Engine filed its reply in
support of its Motion to Show Cause. Mr. Furrow’s testimony revealed that Google has (1)
deleted relevant electronic records, (2) purposefully avoided producing relevant launch
documents, (3) withheld relevant English-language descriptions of the changes to its source
code, and (4) withheld relevant

documents until well after this Court’s deadline for

production. There is no explanation for this pattern of behavior other than gamesmanship. I/P
Engine filed its motion because it expected to see such documents (e.g., launch documents and
emails) – something it had seen previously during discovery before trial, as Google has
historically created such documents.
Mr. Furrow’s deposition confirmed I/P Engine’s suspicions – Google actively contrived
to at least obfuscate the facts and made it as hard as possible for I/P Engine to obtain the relevant
facts to understand what changes Google made to its AdWords system. Google should be
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sanctioned for the intentional spoliation of relevant material with default judgment, or at a
minimum, an adverse inference that the deleted evidence would have shown no more than
colorable differences.
I.

GOOGLE SHOULD BE SANCTIONED WITH DEFAULT JUDGMENT, OR AT
A MINIMUM, AN ADVERSE INFERENCE FOR INTENTIONAL SPOLIATION
OF HIGHLY RELEVANT COMMUNICATIONS RELATING TO ITS ALLEGED
DESIGN-AROUND OF ITS ADJUDICATED INFRINGING ADWORDS SYSTEM
Google intentionally failed to preserve relevant evidence. Google is, and has been,

“under a duty to preserve what it knows, or reasonably should know, is relevant in the action, is
reasonably calculated to lead to the discovery of admissible evidence, is reasonably likely to be
requested during discovery, and/or is the subject of a pending discovery request.” Samsung
Elecs. Co., Ltd. v. Rambus, Inc., 439 F. Supp. 2d 524, 543 (E.D. Va. 2006), vacated on other
grounds, 523 F.3d 1374 (Fed. Cir. 2008) (citation and quotation marks omitted).1 At this
juncture, it cannot be disputed that Google knows that evidence related to the alleged changes it
made to its AdWords system (which it believes alters its adjudged infringer status) is relevant.
Yet, Mr. Furrow testified that
(Ex. A,
Furrow Dep. 136:2-22)

(Furrow Dep. 137:13-15). Mr. Furrow explained that

(Id. at 136:14-18).
1

I/P Engine and Google have been in the present litigation since September 2011. Google was
obligated to “suspend its routine document retention/destruction polic[ies] and put in place a
‘litigation hold’ to ensure the preservation of relevant documents.” Zubulake v. UBS Warburg
LLC, 220 F.R.D. 212, 218 (S.D.N.Y. 2003).
2

But, based on Google’s own website, electronic conversations that occur through Google
Talk or Google Hangouts are logged and retained by default unless the user intentionally disables
the feature. See Ex. B.
2

Deleting evidence – whether in

bad faith or inadvertently – amounts to spoliation; spoliation that has prejudiced I/P Engine. See
Silvestri v. Gen. Motors Corp., 271 F.3d 583, 590 (4th Cir. 2001) (“Spoliation refers to the
destruction or material alteration of evidence ... for another’s use as evidence in pending or
reasonably foreseeable litigation.”).3 In the Fourth Circuit, this is grounds for an adverse
inference. See Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 156-57 (4th Cir. 1995) (applied
adverse inference where “[t]he party knew the evidence was relevant to some issue at trial and
that his willful conduct resulted in its loss or destruction,” and not merely from a party’s
“negligent loss or destruction of evidence.”); see also Silvestri, 271 F.3d at 595 (granting default
judgment based on spoliation); VideoJet Sys. Int’l, Inc. v. Eagle Inks, Inc., 251 F.3d 170 (Fed.

2

This is akin to failing to turn off auto-delete after a party knows that its duty to preserve has
been triggered. See e.g., Apple Inc. v. Samsung Elecs. Co. Ltd., 881 F. Supp. 2d 1132, 1149
(N.D. Cal. 2012) (the court held that failure to turn off an email auto-delete function alone
constituted willful spoliation).

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In the Fourth Circuit, any level of fault, whether it is bad faith, willfulness, gross negligence,
or ordinary negligence, suffices to support a finding of spoliation. See Victor Stanley Inc. v.
Creative Pipe, Inc., 269 F.R.D. 497, 529 (D. Md. 2010) (“In the Fourth Circuit, for a court to
impose some form of sanctions for spoliation, any fault ... is a sufficiently culpable mindset.”);
Goodman v. Praxair Servs. Inc., 632 F. Supp. 2d 494, 518 (D. Md. 2009) (listing bad
faith/knowing destruction, gross negligence, and ordinary negligence as three states of mind to
satisfy culpable deletion element); Pandora Jewelry, LLC v. Chamilia, LLC, No. CCB–06–3041,
2008 WL 4533902, at *9 (D. Md. Sept. 30, 2008) (“The Fourth Circuit requires only that the
party seeking sanctions demonstrate fault, with the degree of fault impacting the severity of
sanctions.” (citing Silvestri v. Gen. Motors Corp., 271 F.3d 583, 590 (4th Cir. 2001))); Samsung,
439 F. Supp. 2d at 540 (noting that spoliation can occur when destruction of evidence is willful
or the result of inadvertent, albeit negligent, conduct).
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Cir. 2000) (same); Taylor v. Mitre Corp., No. 1:11-cv-01247, 2012 WL 5473715 (E.D. Va. Sept.
10, 2012) (same).
II.

GOOGLE’S CONDUCT IS ALSO SANCTIONABLE BECAUSE IT ALTERED
ITS GENERAL BUSINESS PRACTICES TO AVOID CREATING RELEVANT,
DISCOVERABLE DOCUMENTS
Mr. Furrow’s deposition testimony also shows that Google changed its general business

practices to avoid creating relevant documents for the sole purpose of thwarting I/P Engine’s
discovery in this proceeding. Mr. Furrow testified that

(Furrow Dep. 191:25-192:7),
At his deposition, Mr. Furrow explained that

(Furrow Dep. 192:21-24.)
(Id. at 193:6-21).
(Furrow Dep. 194:10-17).
III.

GOOGLE’S WITHHOLDING AND UNTIMELY PRODUCTION OF HIGHLY
RELEVANT DOCUMENTS IS ADDITIONAL SUPPORT FOR I/P ENGINE’S
MOTION FOR SANCTIONS
Google also withheld and failed to timely produce documents that it knew would aid I/P

Engine in determining how New AdWords works – a failure that has severely prejudiced I/P
Engine. First, Google withheld English-language descriptions of the source code from I/P
Engine, leaving I/P Engine to sort through the underlying source code (968 source code files and
almost two million lines of code (D.I. 982 at 3)) without the aid of these descriptions. Monterio
Decl., ¶¶ 5-6. Mr. Furrow testified that

(Furrow Dep. 229:16-230:22). Google did not produce these descriptions until after Mr.
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Furrow’s deposition, and only in response to a request from I/P Engine. Monterio Decl., ¶¶ 5-6.
But a prejudice because of the delay remains. Google’s production came the same day as I/P
Engine’s deadline to serve its expert reports, forcing I/P Engine to serve its reports without
having sufficient time to consider and analyze these descriptions. Id.
Second, Google withheld relevant

documents again until the same day as I/P

Engine’s deadline to serve its expert reports (after I/P Engine had already sorted through the
source code). Monterio Decl., ¶¶ 7-8. Mr. Furrow confirmed that
(Furrow Dep. at 137:9-12; 138:13-14). These documents
would have similarly aided I/P Engine’s analysis of the source code. Monterio Decl., ¶¶ 7-8.
IV.

CONCLUSION
Google has no justification, reasonable or otherwise, for its conduct, and I/P Engine,

though it has served its expert reports, has been greatly prejudiced because of it. This Court
should impose sanctions against Google by entering default judgment against Google that the
alleged changes to New AdWords are no more than colorably different than Old AdWords, as
requested in I/P Engine’s motion, or at a minimum, drawing an adverse inference against Google
that the deleted evidence would have shown no more than colorable differences between New
AdWords and Old AdWords; a lesser sanction would not cure the prejudice against I/P Engine.

Dated: October 7, 2013

By: /s/ Jeffrey K. Sherwood
Donald C. Schultz (Virginia Bar No. 30531)
W. Ryan Snow (Virginia Bar No. 47423)
CRENSHAW, WARE & MARTIN PLC
150 West Main Street
Norfolk, VA 23510
Telephone:
[phone]
Facsimile:
[phone]
Jeffrey K. Sherwood (Virginia Bar No. 19222)
Frank C. Cimino, Jr.
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Kenneth W. Brothers
Dawn Rudenko Albert
Charles J. Monterio, Jr.
DICKSTEIN SHAPIRO LLP
1825 Eye Street, NW
Washington, DC 20006
Telephone:
[phone]
Facsimile:
[phone]
Counsel for Plaintiff I/P Engine, Inc.

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CERTIFICATE OF SERVICE
I hereby certify that on October 7, 2013, the foregoing, was served via the Court’s
CM/ECF system on the following:

Stephen Edward Noona
Kaufman & Canoles, P.C.
150 W Main St
Suite 2100
Norfolk, VA 23510
[e-mail]
David Bilsker
David Perlson
Quinn Emanuel Urquhart & Sullivan LLP
50 California Street, 22nd Floor
San Francisco, CA 94111
[e-mail]
[e-mail]
Robert L. Burns
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Two Freedom Square
11955 Freedom Drive
Reston, VA 20190
[e-mail]
Cortney S. Alexander
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
3500 SunTrust Plaza
303 Peachtree Street, NE
Atlanta, GA 94111
[e-mail]

/s/ Jeffrey K. Sherwood

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