IPM Ventures

e-Disclosures and the trail of electronic footprints

The title is not a detective novel for techies and lawyers, but an issue which every business manager needs to be aware. Never before has there been such a trail of written and voice communications to evidence the fact, or intention, of an organisation or person entering into contracts and commitments, some of which may be unintended or unauthorised.

Today 60 billion e-mails are sent every day, and that figure is increasing by the day! Although half of these are unwanted spam, the rest are a cocktail of formal, informal, serious and humorous writings, all sent for different reasons and different motives. In a business context, those e-mails, and all the other electronic records that form part of business activity, are a permanent record of events.

The law has long recognised verbal contracts, but there has always been the hurdle of how to prove a verbal contract has been created when it may be one person’s word against the other. Now, in the electronic and digital age, e-disclosure opens up all forms of electronic medium to scrutiny by the courts, which means that, more than ever before, business managers need to manage the creation and management of their data and the access to that data.

A document is no longer just a written page. It is now anything in which information of any description is recorded. In fact it is anything upon which evidence is recorded in a manner intelligible to the senses or capable of being made intelligible by the use of equipment. So, electronic documents can be found on any form of electronic media, which includes everything from computers, servers, DVD’s memory sticks, mobile telephones, voicemail records, MP3/4 players, and digital cameras. It even includes metadata which is a description of the data itself.

In court proceedings in England, the duty of disclosure even applies to documents that no longer exist, privileged and confidential documents, and documents found or which come into existence during the court proceedings. E-disclosure is a global issue because documents include electronic data sent from and to anywhere in the world in any electronic medium.

Where there is a dispute, there are litigation support software tools to search and dissect your databases including erased e-mails, discarded and hidden data, so the foot-print is always there to be found. For major disputes, computer forensics can investigate and analyse data to reproduce time critical events and communications, break encryption codes and passwords, and locate deleted data.

Re-creating time critical events is also a crucial element of e-disclosure. The courts use key word searches to define the scope of the database search to find information. As e-disclosure is a complex and time consuming process, the English courts apply a relevance test where they limit the scope of discovery to relevant documents and agreeing the key words to be searched on the database. The courts are generally reluctant to exclude a party from inspecting documents, so a big issue for the disclosing party is confidentiality and access to inspect documents. In the US, e-disclosure tends to be used more for a fishing expedition, where the litigating parties go for wider disclosure, although the US courts are moving to the ‘relevance test’.

So for managers, what does this mean for managing the risk of commercially sensitive, or inappropriate, information being disclosed in open court during a commercial, dispute? If a company is involved in legal proceedings, then they need to be aware of how much of their content management systems and data can be retrieved and subject to disclosure to their opponent. Content management systems and user protocols are essential.

Outside legal disputes, and in the normal day to day running of an organisation, managers need to manage the risk of staff deliberately, or unintentionally, sending e-mails or creating e-records that could undermine, or even destroy, the business they work for, if for whatever reason those records were used as evidence against the organisation. Even in routine commercial dialogue with customers and suppliers, staff may be inadvertently making contractual commitments on behalf of their employer, many of which may be unauthorised, and some of which could result in financial loss or damage to their brand and reputation.

For technology businesses and those with branded products or services where protecting and managing the intellectual property rights of the business is vital, the protection of those intellectual property rights and know-how, and managing the risk of deliberate or inadvertent leakage, is critical. Now, in many commercial transactions and tenders, data rooms are being established with controlled access, which records all inspections of that data.

In the technological age of different communication medium, and with increasing regulation on businesses, managers need to set clear Internet User Policy and E-Mail User Protocols for staff, and also to have a set of risk management policies for staff which include protocols for managing the creation and integrity of all e-records and voice-mails created by each member if staff.

If they do not, then if they end up in court, they could be surprised, and very embarrassed, by what their staff have said and done on their behalf. The resulting financial costs could be severe, and at worse, even destroy the business, as some of the biggest companies have discovered to their cost.

© IPM 2008
William Baillieu is a director of Intellectual Property Management Ltd

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