EMail | Non-Disclosure Agreement Case

E-records Impeach Opponent's E-Discovery

Burst.com’s electronic mail records served the company well in its trade secret lawsuit against Microsoft.  Burst had held conversations with Microsoft in which it confidentially (under non-disclosure agreement) revealed trade secrets (nonpublic ideas of an inventor) about Burst's streaming media technology.  Burst later alleged that Microsoft chose to use these trade secrets without Burst’s consent, and without compensation to Burst.  

So Burst sued, claiming misappropriation of trade secrets and breach of contract.  During the discovery phase of the lawsuit, Microsoft was required to reveal all of its e-mail records on the topic, and Microsoft did turn over a large number of e-mails regarding its development and use of streaming technology. 

But a question arose in court whether Microsoft complied fully with the discovery requirements.  Burst contended that Microsoft had wrongfully withheld some e-records or destroyed them.  To support its contention, Burst produced numerous of its own email records showing particular exchanges between Burst and Microsoft, where Microsoft had produced no corresponding records on its end. Stefanie Olsen, “Microsoft ordered to uncover old e-mails,” September 10, 2003.  

This mismatch in email records led the court to suspect Microsoft was being evasive.  The court ordered Microsoft to sift through backup tapes in search for missing e-records (looking for electronically stored information (ESI) in network backup is a tedious and expensive process!).  The court's suspicion, coupled with the order to look through backup, cast Microsoft at a strategic disadvantage, and contributed to company’s decision to settle the case and pay Burst $60 million. Tim Siglin, “Microsoft Settles Burst.com Lawsuit,” March 14, 2005.

Had Burst not retained its e-mail records, it would not have had them when needed to pursue this lawsuit in protection of its intellectual property (IP).

Update:  Records are power.  In this age of super-abundant digital records, if you fail to keep good records (as Microsoft failed in the story above), then you risk that your adversary will possess records that will surprise and embarrass you.  Observe what happened to a Montgomery County police officer in a DUI traffic ticket case.  She testified in court that as she approached the defendant's vehicle, the defendant was in the driver's seat.  But then the defendant dramatically produced a third-party security video showing that the defendant was in fact in the back seat!  The police officer then admitted that she handles lots of cases and she can't remember everything.  The defendant won the trial.  Then the local prosecutor (equivalent to district attorney) indicted the officer for perjury.  Dan Morse, "Montgomery Officer's Testimony in DUI Case Leads to Perjury Charge," Washington Post, Aug. 22, 2009.  Had the officer been keeping more meticulous records of each of her investigations, she could have avoided this mishap.  A police department is wise to equip officers with voice recorders for quick capture of detailed records on-the-spot.

--Benjamin Wright

Mr. Wright is retained by Messaging Architects, specialist in Exchange, Groupwise and other e-data restoration and discovery.

Comments

[Ron Coleman]

Oh, I like this post very much. I demonstrates three key points:

1. While most of us would have done the same thing as the Burst.com attorneys once mismatches were found, their diligence is still commendable.

2. Email retention policies are informed by both ends of this situation.

3. Never trust Microsoft.