You may have heard how important it is to preserve evidence related to a legal proceeding. Failing to do so can cost you serious amounts of money and might trigger serious evidentiary sanctions that essentially could gut your legal case.

That's why companies and individuals take great care to retain relevant evidence not only in document form, but also electronic evidence. But this is not the end of the story.

The recent case of APC Filtration, Inc. v. Becker provides a classic example of how parties can get it wrong when it comes to maintaining evidence.

In this federal case from Chicago, the plaintiff company, APC Filtration, had asserted trademark misappropriation allegations against the defendants, a competing company and its founder who had previously been the national sales manager for APC. In discovery, the defendants were unable to produce information bearing on contacts between them and a former supplier for APC, and a significant prospective customer of APC. Here is where the plot thickens.

The defendant founder of the competing company, within days of receiving the plaintiff's complaint, disposed of his computer. He did so by taking the device 20 miles away to a construction site to get rid of it in a dumpster.

Doesn't look good, does it? The defendant founder argued that his conduct was proper because he had been told that his computer had crashed and that it was beyond repair.

The judge did not buy this excuse and found that the founder's conduct was in bad faith. The judge also determined that this conduct violated a court order that required production of all records of communications with the plaintiff's former supplier and prospective customer--records that may have been contained on the disposed and destroyed computer.

The plaintiff requested maximum sanctions, including a default judgment against the defendants. The court did not go quite that far, but did order that the defendants had to pay the plaintiff's attorney's fees and costs (which included the cost of a computer forensics expert) relating to the discovery proceedings.

Because evidence on that score was not preserved, the judge, as an evidentiary sanction, also concluded that the defendants sought to siphon away the supplier and prospective customer from the plaintiff.

The judge did not enter a default judgment against the defendants, as requested by the plaintiff, because the plaintiff was able to obtain some of the documents that likely were on the destroyed computer from third parties.

There's a clear lesson here. When faced with potential or actual legal proceedings, it's never a good idea to get rid of evidence. Even if you fear it may hurt your side of the case, don't make a rash--and wrongheaded--decision. You'll only be hurting your chances in court.

Biography

Eric Sinrod is a partner in the San Francisco office of Duane Morris. His focus includes information technology and intellectual property disputes. To receive his weekly columns, send an e-mail to with the word "Subscribe" in the subject line.

Disclaimer: This column is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author's law firm or its individual partners.

Reprinted with permission from CNET News.com.