"Defendants' conduct during discovery in this case has been obstreperous," Judge Florence-Marie Cooper wrote in an opinion issued last week. "They have engaged in widespread and systematic efforts to destroy evidence and have provided false testimony under oath in an effort to hide evidence of such destruction."

Specifically, Cooper found that TorrentSpy destroyed users' IP addresses and forum posts and altered the site's directory headings, depriving the movie companies of evidence they would have presented at trial.

"Plaintiffs have convinced the court that their ability to prove their case has been inalterably prejudiced by defendants' willful spoliation of evidence, making terminating sanctions the only effective recourse," she held.

TorrentSpy lawyer Ira Rothken vowed to appeal Cooper's "draconian sanction."

Not surprisingly, MPAA cheered the ruling. "It was a very sensible decision," said John Malcolm, MPAA executive vice president, worldwide antipiracy director. "It's very, very clear that the defendants in this case went out of their way to destroy evidence that they knew would be damning to their defense."

MPAA sued TorrentSpy last year, claiming the company offered users access to thousands of copyrighted television programs and movies, including "Batman Begins," "The Italian Job" and "The Simpsons."

Among the materials that the MPAA sought were directory headings showing names of specific TV shows such as "According to Jim" and "American Idol," available for download on TorrentSpy.

Cooper found that TorrentSpy altered its Web site by deleting those headings and moving the torrents that had been filed there to headings such as "TV-Unsorted." She also found that some forum threads were deleted, including one on how to bypass copyright restrictions on electronic games.

Rothken maintained that TorrentSpy had only been trying to abide by its privacy policy. "It was looking to honor the integrity of its policy privacy, and to protect user IP addresses and user data," he said. "One person's willful destruction of evidence is another person's willful compliance with its privacy policy."

TorrentSpy's sweeping privacy policy offers users broad assurances that their information won't be shared.

"TorrentSpy.com is committed to protecting your privacy," the policy states. "TorrentSpy.com will not collect any personal information about you except when you specifically and knowingly provide such information."

Damages in the case will be determined in the next phase. U.S. law calls for a maximum penalty of $150,000 per copyright violation instance.

MPAA said that in early 2008, it will seek a copyright infringement injunction against TorrentSpy.

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