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On Tuesday, December 8, 2009, Modavox, Inc. participated in a hearing with Magistrate Judge Gabriel W. Gorenstein, of the U.S. District Court of New York (Southern District), regarding Modavox's pending Motion for Sanctions for Spoliation of Evidence and Evasive Disclosure Practices pertaining to the patent infringement lawsuit filed by Modavox against Tacoda on August 9, 2007.

Modavox's Motion seeks remedial and punitive sanctions related to alleged activities and omissions of Tacoda which resulted in the loss or destruction of evidence, including alteration of evidence and evasive actions taken by Tacoda during discovery. The Motion identifies software Source Code, meta data, and other significant materials that Modavox contends were lost, destroyed or withheld in violation of applicable Court Orders and legal authorities. The Motion further contends that Tacoda had an obligation to preserve this evidence regarding its Source Code and that Tacoda should have known that destruction of such Source Code would materially limit Modavox's ability to fully and fairly prepare its infringement claims for trial.

During the hearing, the parties discussed with Judge Gorenstein the process for addressing the important technical issues raised in Modavox's Motion. Modavox's lead counsel, David Shaub of Shaub & Williams, LLP, informed the Court of Modavox's desire to assist the Court in its technical analysis so as to permit the most expeditious resolution of Modavox's Motion. After a discussion of the options for addressing the issues raised in the Motion, the parties agreed to conduct a conference involving their respective experts to discuss the technical issues forming the basis of Modavox's Motion, after which Modavox could supplement its Motion.

Modavox views this as particularly important because Tacoda, after Modavox's Motion was fully briefed but before the hearing on December 8, produced to Modavox its complete repository of archived source code, which repository is being reviewed by Modavox experts. Modavox intends to illustrate for the Court why Tacoda's latest source code production does not obviate the need for the relief sought by Modavox stemming from the discovery misconduct described in Modavox's Motion.

During the hearing, Modavox's counsel suggested that Modavox be permitted to amplify its explanations of the technical issues and requested sanctions and then re-submit the Motion incorporating any issues resolved or clarified during the conference with experts. Accordingly, the Court issued an Order, dated December 9, 2009, taking the Motion off calendar "without prejudice," permitting Modavox to re-file the Motion. Modavox is in the process of arranging the conference between the parties' experts and intends to re-file the Motion following the holidays. The supplemented Motion will clarify for the Court certain technical facts, per the conference with experts, and will show the Court why the source code repository produced by Tacoda in response to Modavox's Motion does not cure or cleanse Tacoda's loss and/or destruction of relevant evidence of infringement, thus further supporting the requested sanctions.