Grooveshark, Citing Financial Difficulties, Curtails Its Subpoena Demands…

Grooveshark is now substantially reducing its subpoena demands against Digital Music News, based on financial issues and intensifying litigation pressures. In the latest court hearing Tuesday, Grooveshark attorney John Rosenberg of Rosenberg & Giger told LA Superior Court judge Richard Stone that the subpoena exercise was becoming “enormously expensive” for the company, the latest of several, vitriolic complaints across earlier conference calls and hearings.  “My client is a startup as well,” Rosenberg said.  “Its resources are tight and it is under attack.”

Which means that Grooveshark was more than happy to force Digital Music News through hoops, as long as the damage and expense was our problem.  Initially, Grooveshark attorneys insisted on the ability to search every nook and cranny of Digital Music News’ distributed server cluster, and convinced judge Stone to authorize both data preservation and eventual inspection.  That included servers that contained vast numbers of unused, unallocated data blocks, with the idea that somehow, identifying information from an anonymous comment posted in October was recoverable.

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But that ruling, issued May 15th, created a number of immediate operational limitations and hazards for Digital Music News.  Simply stated, it’s hard to do business when you can’t use your stuff.  The reason is that freezing large blocks of data effectively freezes a number of active projects, simply because routine activity often overwrites earlier, unused and unallocated blocks and would violate the court’s ruling.

Initially, that created an immediate emergency related to simple nightly backups, though the broader problem involved a complete inability to update software packages, tweak existing services, meet project deadlines, expand offerings, and confidently enter into partnerships with other companies.  Indeed, an ongoing project related to archived stories was severely altered by the preservation demand, though the very pressing issue of site backups was resolved at Grooveshark’s expense.

The disruptive issues were well articulated by our lead litigator, the very tenacious Public Citizen attorney Paul Alan Levy.  And, as the process wore on, Judge Stone showed an increasing concern for this business disruption, especially since Digital Music News is an uninvolved, innocent third party to a much bigger lawsuit – despite what Grooveshark alleges.  Ultimately, Stone asked Grooveshark to make a choice: foot the bill for equipment that would effectively allow Digital Music News to resume its status quo business operations, or put the subpoena in jeopardy.  Under a reasonable proposal, we capped those expenses at $15,000, all in, and Stone essentially asked Grooveshark whether its subpoena demands were worth that relatively modest amount.

That answer was no, which is why Grooveshark has now opted to preserve the far less complicated virtual machine images, saved on May 15th.  Those subsets are smaller and more neatly contained, and can be ported to a separate, single server, quarantined for later inspection if it gets to that.

Now, the question is if – and if so, when – it gets to actual inspection.   Levy is now navigating the steps towards an appeal, and we’ll have more updates ahead.