Let’s Start Getting E-Discovery Right

In our webified world, disputes erupt all the time about who’s stepping on whose intellectual property and what kind of evidence you need to bring to court to prove a case. Google’s battle with American Blind & Wallpaper Factory, a 50-year-old home decor company in Livonia, Mich., intrigues me for two reasons.

One is the IP debate. The other is the skirmish over electronic evidence.

Google sells advertisements that pop up next to search results. Someone types “american blinds wallpaper” in Google’s search box and sponsored links, sometimes to companies that compete with American Blind, appear in a shaded box to the right of the main search findings.

Is American Blind right when it says Google infringes on its trademarked name, as the company claims in its ongoing 2003 lawsuit? Or is Google right when it counters that everyday terms such as “blind,” “wallpaper” and “factory” can’t be protected in this context? Some smart judge will figure it out, Google and American Blind will adjust and Web commerce will continue apace.

The second point — and this irks me — is that four years after the suit was filed, there are no legal decisions to enlighten us. Why?

Because the two sides continue to fight about electronic evidence.

And that’s the practical lesson for CIOs today.

Sometimes it’s sound legal strategy to slow the production of e-mail, financial statements, memos and other documents demanded by the opposing party — within legal bounds, of course. No sense turning over too much information too quickly to the guy who wants to hang your corporate pants out to dry.

But watch out. Just because lawyers may not readily shower data on the other side doesn’t mean CIOs don’t have to keep it, sort it and produce it quickly when needed. We’ve talked about that before and you can find tips on managing electronic discovery here. Yet, ineptitude and flawed communications from managers to employees can mire companies in expensive squabbles about evidence.

Even after filing a lawsuit, or being served with one, a company might not stop its regular data destruction procedures, as it is supposed to do. So employees continue deleting their e-mail and storage servers continue overwriting pertinent e-mail archives. Other times, employees may be told to preserve documents and correspondence, but they forget or choose not to.

Philip Morris USA had to pay $2.75 million in fines when, during tobacco litigation in 2004, some senior managers failed to save printouts of their e-mail, as they should have. In a sex discrimination case against WestLB filed by a former employee in 2004, that bank’s CIO had to sit on the hot seat, deposed in 2005 about policies and technology installed by predecessors for preserving e-mail and documents going back to 2000. He couldn’t answer some questions and had to admit that some pertinent e-mail was probably overwritten.

In the American Blind case, Magistrate Judge Richard Seeborg ruled in June, in U.S. District Court in San Jose, Calif., that the company undisputedly k new and understood that e-mail is subject to production–at the outset it gathered and produced all e-mail between it and Google. It appearts, however, that its employees were never adequately instructed as to what was relevant or how to search for such material when responding to discovery thereafter.”

Seeborg continued: “It appears likely that relevant materials may have been lost or destroyed as a result of that indifference…The evidence demonstrates willful indifference on the part of American Blind with respect to fulfilling its discovery obligations.”

Youch. Not good. Nor was the resulting $15,000 penalty American Blind was forced to pay Google.