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April 2009
Your Company Wants to File a Lawsuit? Think Again…
By Bob Wishart

     What if your company had reason to believe that its competitor had violated one or more of its trade secrets? Would you have the information needed to prove your claim? Would this information be stored electronically? What other types of information would you need to pursue your claim—would it be in your competitor’s possession? If so, how would you gain access to it?

     Filing suit may be necessary to halt the trade secret violation and to collect any damages your company has incurred. Additionally, filing suit may be necessary to protect the trade secret status of the information being unlawfully used by your competitor. However, filing a lawsuit is an expensive undertaking and in today’s electronically dependent world, it can be even more costly and complex than ever before.

     To pursue your company’s claim, you will need to provide specific factual information to your attorney which relates to your claim. Your attorney will then draft, file and serve the complaint on your competitor. He or she should also send a litigation hold letter to your competitor to ensure that tangible information as well as electronically stored information (ESI), is preserved for the pending litigation.

     ESI has a broad definition under relevant procedural rules and typically includes all information which is electronically, magnetically or optically stored on your computer, voice mail, cell phone, and/or on any portable storage such as CD, DVD, thumb drive, etc. This definition typically includes e-mails, word processing documents, spreadsheets, online access data (e.g. temporary Internet files, history, cookies), back-up and archival files.

     Your competitor will then be required to preserve and maintain all ESI in its native format. Most parties to litigation are shocked to find that this duty of preservation may also extend to current and former computers, and other media devices including personal digital assistants, voice-messaging systems, online repositories, portable devices and media such as zip drives, thumb drives, and CDs or floppy disks; and cell phones.

     Under relevant procedural rules, adequate preservation of ESI may also require more than simply refraining from efforts to destroy or dispose of such evidence; parties have been required to take steps to prevent loss of ESI due to routine operations. Be careful—as a plaintiff, you too will be required to preserve ESI related to the pending litigation. As a result, you should also discuss your responsibilities vis-à-vis ESI with your attorney, who will undoubtedly immediately request a copy of your company’s document retention/destruction policy to ensure that no further potentially relevant data in your possession is destroyed.

     Once your company has filed suit to protect its trade secret rights, your competitor will have an opportunity to answer and assert any claims it may have against you. The next litigation phase will be discovery; this phase permits both parties to serve questions, which must be responded to in a detailed fashion, as well as requests for documents. Discovery is a powerful fact finding tool because under current discovery rules, a litigant is permitted to gain access to information which is directly related to the lawsuit but also to information which may lead to discoverable information.

     This broad discovery standard, along with ESI and document retention/destruction policies, has changed the face of how discovery is conducted. While you as a plaintiff, will likely be able to gain access to information necessary to prove your case, if this information is ESI, it may take your attorney and his or her paralegals much longer to sift through the volumes of information provided by your competitor in response to your discovery requests—a classic case of being careful what you ask for.

     Additionally, if ESI is involved it may be necessary to retain computer experts to assess the ESI and determine whether it was been altered or whether vital information has been deleted or “scrubbed” from a computer with special software. All of these variables can and will drive up the costs of maintaining your company’s lawsuit against its competitor.

     Let’s put the shoe on the other foot and assume that your company is the one which has been sued for trade secret protection: how would you access e-mails related to this dispute and how many e-mails do you think you would find? Would these e-mails be saved on a server or individual computers or perhaps even both? Have any of these computers been repurposed or assigned to other employees? Please join us next month as we discuss the implications of ESI on your company, now a defendant in this lawsuit.

     Bob Wishart is a founding partner and head of litigation of Wishart, Norris, Henninger & Pittman, P.A., a law firm which focuses on helping business owners define and achieve their business and personal objectives. Contact him at 704-364-0010 or visit www.wnhplaw.com.

Bob Wishart is a founding partner and head of litigation of Wishart, Norris, Henninger & Pittman, P.A.
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