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ELECTRONIC NEWSLETTER


The Abelman Firm Intellectual Property Report

April 1, 2004

Volume 3, Issue 2

Topics

Calendar (See Below)

News

Trademarks and Unfair Competition

Domain Names and Other Internet Matters

Discussions

Calendar 2004   top

Marie Anne Mastrovito and Anthony A. Coppola, Partners, Abelman, Frayne &Schwab
April 1 - 2 WIPO - Seminar on the Madrid System of International Registration of Marks Geneva, Switzerland
April 1 - 2 PLI - Handling Intellectual Property Issues in Business Transactions. Atlanta, GA
April 1 - 2 ABA - 19th Annual Intellectual Property Law Conference. Washington, D.C.
April 2 Suffolk University Law School - Intellectual Property Law Concentration Conference, Sophisticated Licensing Issues, Boston, MA.
April 7 - 8 INTA - Workshop on Electronic Filing Chicago, IL; New York, NY; Dallas, TX; Palo Alto, CA
April 12 - 14 Jupiter Research - Digital Rights Management Strategies 2004 New York, NY
April 15 - 16 PLI - Cable Television Law 2004: Competition in Video, Internet and Telephony San Francisco, CA
April 15 - 16 PLI - Cable Television Law 2004: Competition in Video, Internet and Telephony Beverly Hills, CA (Videoconference)
April 22 Joint Patent Practice CLE, Inc. - 20th Annual Joint Patent Practice Seminar New York, NY
April 22 - 23 PLI - Handling Intellectual Property Issues in Business Transactions. Chicago, IL
April 22 - 23 ALI-ABA - Fifth Annual Advanced Course Study for Inside and Outside Counsel - Litigating Trademark, Domain Name and Unfair Competition Cases Chicago, IL
April 22-23 The Center for Negotiation Strategy - Cutting Edge Negotiation Strategy for Lawyers New York, NY
April 26 - 27 ACI - A Tactical and Practical Guide to Freedom to Operate - Analysis, Opinion Writing, Strategies for Minimizing Risks in the Pharmaceutical, Biotech and Chemical Industries San Francisco, CA
May 1 - 5 INTA - Annual Meeting. Atlanta, Georgia.
May 3 - 4 PLI - Handling Intellectual Property Issues in Business Transactions. San Francisco, CA.
May 12 - 14 LES - LES 2004 Spring Meeting New York, New York
May 13 - 15 AIPLA - 2004 Spring Meeting. Dallas, TX
May 14 LSI - Calculating and Proving Patent Damages Stamford, CT
May 17 - 19 ACI - 13th National Advanced Corporate Counsel Forum on ADVERTISING LAW Chicago, IL
May 19 PLI - Advanced Seminar on Trademark Law 2004 New York, NY
May 20 - 21 Euro-Legal - 9th Annual IP Licensing Conference London, UK
May 20 - 21 The Center for Negotiation Strategy - Cutting Edge Negotiation Strategy for Lawyers Washington, DC
May 24 - 25 PLI - 45TH Annual Antitrust Institute. San Francisco, CA.
May 24 - 25 PLI - Advanced Seminar on Copyright Law 2004 New York, NY
May 24-26 ITMA - 2004 London International Meeting London, U.K.
May 27 NYIPLA - NYIPLA Annual Meeting New York, NY
June 2 PLI - Patent & High Technology Licensing New York, NY
June 2-5 ECTA -23rd Annual Conference Funchall, Madeira, Portugal
June 2 - 6 FICPI (ABC Section) Meeting of the American, British and Canadian National Section (ABC) and National Associations of FICPI New Castle, New Hampshire, U.K.
June 4 - 5 The Center for Negotiation Strategy - Cutting Edge Negotiation Strategy for Lawyers New York, NY
June 9 - 13 AIPLA - Summer IPL Conference Toronto, Canada
June 11 AIPLA - Advanced Biotechnology/Chemical Patent Practice Seminar, Seattle, WA
June 11 AIPLA - Advanced Computer/Electronic Patent Practice Seminar Seattle, WA
June 16 - 20 ABA - 11th Annual Summer Intellectual Property Law Conference. Toronto, Canada.
June 18 AIPLA - Advanced Biotechnology/Chemical Patent Practice St. Louis, MO
June 18 AIPLA - Advanced Computer/Electronic Patent Practice Seminar St. Louis, MO
June 19 - 24 AIPPI - XXXIXTH World Intellectual Property Congress. Geneva, Switzerland.
June 21 - 22 PLI - Advanced Patent Prosecution Workshop 2004: Claim Drafting & Amendment Writing San Francisco, CA
June 23 - 25 PLI - Fundamentals of Patent Prosecution 2004: A Boot Camp for Claim Drafting & Amendment Writing New York, NY
June 25 AIPLA - Advanced Biotechnology/Chemical Patent Practice Wilmington,DE
June 25 AIPLA - Advanced Computer/Electronic Patent Practice Seminar Wilmington, DE
June 28 - 29 PLI - Intellectual Property Antitrust 2004. New York, NY.
June 29 PLI - Patent & High Technology Licensing 2004 San Francisco, CA
June 30 PLI - Patent & High Technology Licensing 2004 Beverly Hills, CA
July 15 - 16 PLI - What Every Litigator Must Know About Intellectual Property. New York, NY.
July 15 - 16 PLI - What Every Litigator Must Know About Intellectual Property (Videoconference). Boston, MA.
July 19 - 23 ICAAN - Mid-year Meeting Kuala Lumpur, Malaysia
August 7 - 13 ABA IPL Section, ABA Annual Meeting, Atlanta, GA
September 14 - 17 MARQUES - 18th Annual Conference. Rome, Italy.
September 21 - 22 INTA - Famous and Well-known Marks Forum Brussels, Belgium
September 30 - October 1 ITMA - ITMA Autumn Conference Birmingham, England, UK
October 3 - 6 INTA - Trademark Administrator Conference 2004.
October 7 - 9 FICPI - The 8th Open Forum Venice, Italy
October 28-29 The Sedona Conference - 5th Annual Patent Litigation Conference, Sedona, AZ
October 14 - 16 AIPLA - 2004 Annual Meeting. Washington, D.C.
October 17 - 21 LES - 2004 Annual Meeting Boston, MA
October 21-23 ECTA -48th Council Meeting Copenhagen, Denmark
October 27-28 The Center for Negotiation Strategy - Cutting Edge Negotiation Strategy for Lawyers New York, NY
November 4-5 The Sedona Conference- 6th Annual Antitrust Law & Litigation Conference, Sedona, AZ
November 10 - 13 INTA - INTA Leadership Meeting. Phoenix, AZ.
November 18-19 The Center for Negotiation Strategy - Cutting Edge Negotiation Strategy for Lawyers San Francisco, CA
December 1-2 The Center for Negotiation Strategy - Cutting Edge Negotiation Strategy for Lawyers Century City, CA
December 1 - 5 ICAAN - Year-End Meeting Cape Town, South Africa
December 2 - 3 INTA - International Forum 2004 Prague, Czech Republic

NEWS

Trademarks and Unfair Competition

OAPI: Extensions of Existing Registrations To New Members Possible At Any Time    top

African Intellectual Property Organization ("OAPI") trademark registrations extend only to the member countries that were parties to OAPI at the time of filing of the application. Extensions to member states that subsequently accede to OAPI are not automatic: applications for such extension must be filed. Formerly, such extension requests had to be filed within 18 months of the accession of the new member state. Effective December 18, 2003, extensions may be requested at anytime.

The following countries are currently members of OAPI: Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, Gabon, Guinea, Guinea Bissau, Ivory Coast, Mali, Mauritania, Niger, Senegal, and Togo.

Saudi Arabia: Joins Paris Convention    top

Saudi Arabia's accession to the Paris Convention for the Protection of Intellectual Property ("Paris Convention") became effective March 11, 2004. The Paris Convention provides, as its full title suggests, standards for the protection of industrial property in all its forms including trademarks and patents. Established in 1883, the Paris convention currently has 167 member states.



Domain Names and Other Internet Matters

Proposals for New Top Level Domains    top

In response to an proposal issued in December 2003, the Internet Corporation For Assigned Names and Numbers (ICANN) received applications for new Top Level Domains. The applications will be subject to review and no timetable is currently set for a decision whether to implement these proposed Top Level Domains. The ten new proposed Top Level Domains are:

.asia, sponsored by DotAsia Organization Limited (Hong Kong)
.cat, sponsored by Fundació puntCAT
.job, sponsored by the Society for Human Resource Management (US)
.mail, sponsored by the Anti-Spam Community Registry (UK)
.mobi, sponsored by Mobi JV (Finland)
.post, sponsored by Universal Post Union (Switzerland)
.tel, sponsored by Pulver.com (US)
.tel, sponsored by Telname Limited (UK)
.travel, sponsored by the Travel Partnership Corporation (US)
.xxx, sponsored by the International Foundation for Online Responsibility (Canada)

United States: Fraudulent Online Identity Sanctions Act Proposed    top

House Bill HR 3754, Fraudulent Online Identity Sanctions Act, proposes increased penalties for parties knowingly providing false contact information when registering domain names. The bill is intended to enhance the accuracy of "whois" searches and to discourage identity thieves, cybersquatters and other online fraud.


Discussions

New Trademark Case Highlights Abuse of a Computer Tool    top

Frank Terranella, Associate, Abelman, Frayne & Schwab

When a new trademark is searched, the question often arises whether a similar mark found in the search is being used on goods or services related to the use under consideration. A recent case highlights a method that the Trademark Office is using more and more to show that goods or services are related.

The case involved a trademark application for BIG FISH MUSIC covering "music publishing services." The Examiner refused registration due to the presence on the registry of BIG FISH FILMS for "film production services" (In re Charles C. Tennin, d.b.a. Big Fish Music, Serial No. 76088749 (January 22, 2004)). The Examiner claimed that music and film services are related and that as a result there was a likelihood that consumers would be confused and would think that these services came from the same company. This likelihood of confusion is an absolute bar to registration under Section 2(d) of the Lanham Act.

The applicant responded to the refusal by pointing out that numerous other parties have registered BIG FISH for other goods and services. He also argued that the customers of the two companies were completely different. In response to that, the Examiner put forward evidence to show that music publishing was related to film production.

The Examiner did a search of the Trademark Office database and pointed to 12 registrations in which both music and film services were offered under the same mark. The Examiner wrote that "Clearly these registrations show that many companies are engaged in the practice of offering both applicant's services and the registrant's services. Thus applicant's services are in the same channels of trade as the registrant's services. These third party registrations show that consumers may believe that applicant and the registrant are in fact one company that is providing both services."

This use of third party registrations to show similarity of goods and services has become standard practice in the Trademark Office. With computer databases accessible on every desktop, searches to find registrations containing both the applicant's and the registrant's goods or services are now easy to do. Moreover, the chance of finding such registrations is increasing. Because of the number of mergers and the resulting expansion of trademarks across unrelated areas of business, there are many marks on the registry covering goods as different as coffee and computers. In fact, it would be difficult to find two types of goods that are not offered under a single trademark. The question is how probative such evidence should be.

While some panels have readily accepted such evidence, in the BIG FISH case, the Trademark Trial and Appeal Board (TTAB) apparently was not persuaded. It noted that of the 12 registrations offered by the Examiner as showing that film production is related to music publishing, five were based on foreign registrations rather than use "and hence they have very limited persuasive value." This seems reasonable enough. In many cases a mark registered based on a foreign registration is not in use and thus its existence on the registry does not reflect the reality of the marketplace.

But then the TTAB went one step further, in rejecting the Examiner's evidence it wrote, "Four of the remaining six registrations, like the five registrations based on [foreign registrations] reflect ownership by Europeans, and therefore are less probative, in our view, of commercial realities in the United States." Given the breadth of European ownership of U.S. businesses, this is an astounding statement. The TTAB would simply reject out of hand any similarity between businesses where a European company owns one of the marks. It would reject any similarity despite the fact that the mark is in use in the United States.

While the use of third party registrations to show the similarity of goods and services is a tool that can be abused, discrediting registrations based on their owner's residence is not true to the spirit of the Lanham Act. If a mark is registered based on use, it should be considered to be present in the U.S. marketplace, regardless of the citizenship of its owner.

So here although the TTAB may have reached the correct result in rejecting the Examiner's database evidence, the method it used to reach that result is quite troubling. It's a trend we'll be watching carefully.

License Agreements   top

Julie Seyler, Partner, Abelman, Frayne & Schwab

The purpose of a License Agreement is to allow a third party, the "Licensee", to use a trademark owned by a separate corporate entity, the "Licensor". While the specifics of the License Agreement will change depending on the commercial aspects of the Agreement, every License Agreement must contain the following terms and conditions:

  1. The geographic territory of the Licensee. Will it be limited to the United States, other specific countries or worldwide?
  2. Is it exclusive or non-exclusive? If non-exclusive the Licensor has the opportunity to license the property to another third party. If exclusive, the Licensee is the only licensee permitted to use the trademark on the licensed goods.
  3. The trademarks that are permitted to be used under the license.
  4. The goods that are permitted to be manufactured and sold under the License.
  5. Provisions relating to how the Licensor will maintain quality control over the goods and the manner of use of the trademark on the licensed goods. Issues to be considered include:
    1. When and where can the Licensor inspect the goods:

      1. Does the Licensor have the right to enter the premises of the Licensee or is the Licensee only obligated to deliver sample goods to the Licensor.

      2. How often must the Licensee present goods for inspection to the Licensor?
      3. Will the Licensor submit specifications to the Licensee detailing how the product is to be manufactured or will the Licensee manufacture samples based on its own quality standards and the Licensor will merely approve these samples for commercialization?
    2. Labels, packaging and advertisement.
      1. The Licensor must have the right to approve the labels, packages and advertising upon which the trademark appears prior to the use.
      2. The Licensee may require that a specific marking legend be used indicating that the trademarks are used under license.
  6. The duration of the license and whether it is renewable.
  7. Termination provisions.
    1. Will there be a permitted sell-off period if terminated other than due to a breach?
  8. Governing law and courts should be specified.
  9. Royalty provisions must be specified.
    1. Will there be minimum royalties or minimum sales required?
    2. Will the royalties be based on net or gross sales?
    3. If sales will be made outside of the U.S., a basis for conversion of the foreign currency into U.S. dollars should be established.
  10. Recordal of License agreement.
    1. The U.S. does not require that license agreements be recorded.
    2. If the agreement includes countries outside the U.S. it is important to consider whether the license agreement needs to be recorded with the local trademarks office.

International Trademark Registration - The Basics Of "One"   top

Peter J. Lynfield, Partner, Abelman, Frayne & Schwab Donna Furey, Associate, Abelman, Frayne & Schwab

What is an international trademark registration?

An international trademark registration is a bundle of national trademark registrations rolled into "one" registration. "One" is the key-there is "one" registration number, "one" registration date, "one" ten-year renewal term and date, "one"attorney, "one" place to file the application, "one" place to pay fees, "one" place to record changes in ownership. However, the theory of "one" only applies if you are one of the lucky "ones"!

International trademark registration rights are created through the Madrid system. The Madrid system is made up of two treaties-the Madrid Agreement of 1891 ("Agreement") and the Madrid Protocol of 1989 ("Protocol"). The Protocol was adopted to update the Madrid Agreement and to encourage more countries to adopt the Madrid system. The Madrid system is managed by the International Bureau of the World Intellectual Property Organization (WIPO) in Geneva, Switzerland. The Protocol was recently adopted by the United States and became effective on November 2, 2003. For the most current list of countries which are signatories to these treaties go to WIPO's website, http://www.wipo.int/treaties/documents/english/word/g-mdrd-m.doc.

How do you obtain an international trademark registration?

First, in order to obtain an international trademark registration, the trademark owner must be a domicile or national of a country which is a signatory ("Contracting State") to one or both of the treaties of the Madrid System or the trademark owner must have a "real and effective industrial or commercial establishment" in a Contracting State.

Second, the trademark owner must have a trademark registration (under the Agreement) or a trademark application or registration (under the Protocol), in the Contracting State or home country. Once an application or registration is in place in the home country ("home mark"), the trademark owner may file an international application based on that home mark. The international application and applicable fees are filed through the home country trademark office and must be for the same mark and the same goods or services as the home mark. In the international application, the trademark owner designates the countries where trademark protection should be extended. The trademark owner must pay a fee for each country designated and will only be entitled to designate countries which are signatories to the same agreement(s) as the home country, e.g., the home country and the designated country both signed the Protocol. Also, if the international application is filed within six months of the date the home application was filed, it may be possible to claim the date the home application was filed as the effective date or priority date of the international application under the Paris Convention.

Third, the home trademark office certifies the filing date of the international application and confirms that the applicant, trademark and goods/services of the application are the same as the home mark and then forwards it to WIPO. WIPO checks that all the basic filing requirements have been met and fees paid. If everything is in order, WIPO issues an international registration certificate to the owner and publishes the mark in the WIPO Gazette of International Mark. Thereafter, WIPO notifies the trademark offices in the countries where extension of trademark protection has been requested. Each country conducts its own separate examination of the request for protection just as it would for any application filed directly in that country.

Consequently, there is a possibility the extension may be refused by any or all national trademark offices. Furthermore, an extension may be opposed by another party. In either event, it would be necessary to engage local counsel to overcome the problem. However, if you are a lucky "one", the application may sail through the national trademark office procedures in every country without a ripple of resistance.

What are the advantages and disadvantages of an international trademark registration?

The main advantages of filing an international trademark registration are ease of administration and cost savings, that is, if you are a lucky "one" with a smooth sailing application. Moreover, "one" application may cover up to three classes of goods and/or services. On the other hand, if the home mark covers a narrow list of goods, the international registration will be confined to those goods.

Whereas, the disadvantages to filing an international trademark registration are:

  1. If the home application/registration is rejected/cancelled/withdrawn/limited within the first five years of registration, the international registration and all extensions of protection will suffer the same fate. If the demise of the home mark is caused by a third party, it is known as a central attack. The trademark owner then has the option of transforming the extensions into individual national applications in the designated countries which will require retaining local counsel and paying additional filing fees. Then again, if the home mark survives the five-year period, the international registration becomes independent of the home mark.
  2. If an extension is refused or opposed in any country, it will be necessary to retain local counsel.
  3. The international registration may only be assigned to an entity that is domiciled, is a national or has a "real and effective industrial or commercial establishment" in a country that is a Contracting Party to the Madrid System.
  4. Contracting parties may require trademark owners to comply with national laws in order to maintain a registered extension of protection, i.e., proving use of the mark in that country. Extensions may be vulnerable to cancellation for non-use in some countries.
  5. If the international registration is not renewed and therefore expires, all corresponding extensions will expire.
  6. If the home application is opposed or held up due to local procedures, the validity of the extensions may be in doubt until the opposition or rejection is finally overcome. For example, under current U.S. practice, such a holdup could take a year or longer to resolve.

Ultimately, the facts and circumstances of trademark use and ownership will determine whether you will be one of the lucky "ones" who will benefit from ownership of an international trademark registration. Just as every trademark is unique, so too will be the application process for each trademark owner.

Please note that this article is meant to outline the basic concepts of international trademark registration and it is not meant to be a comprehensive analysis. Therefore, please consult a trademark professional in order to determine what type of trademark protection will best suit your needs.

The Great Advantages Of Copyright Registration   top

Alan J. Hartnick and Caridad Piñeiro Scordato, Partners, Abelman, Frayne, & Schwab

Thirty dollars to register a work with the U.S. Copyright Office - why bother? Registration is not a requirement for legal protection. Some publishers in their contract with authors state that they "may" register in the name of the author. Should the author care? Should the "may" become a "will", so as to require registration? Yes.

Registration should be done as soon as possible for various reasons. If someone infringes before you register, you lose many of the inducements for prompt registration. In addition, you have a practical problem: If you are a U.S. citizen, you cannot commence a law suit until you register. Registration can take months. A few courts have allowed a copyright action to continue without the issuance or rejection of a registration if you have filed. However, the majority view is that the Copyright Office must either issue the registration or reject it before the action can proceed. Despite this, two Second Circuit courts have allowed a copyright infringement action to proceed without either the issuance or rejection of a copyright registration.

The cautious view is to register before there is any possibility of infringement. There are some other very important benefits of prompt registration:

  1. With a registration, statutory damages and attorneys' fees will be available. This is beneficial as the possibility of attorney's fees may make it easier to engage a lawyer. Further, it is sometimes difficult to prove actual damages and profits; statutory damages favor the copyright owner. Statutory damages can be high: from no less than $750 to no more than $30,000 for each work infringed. If the infringement was willful, the Court can increase the award to no more than $150,000.
  2. The registration is a public record. This is particularly important for copyright management systems.
  3. If registration is made within five years of publication, the registration is prima facie evidence of the validity of a copyright and all the facts stated in the certificate.
  4. Registration allows the owner of the copyright to record the registration with the U.S. Customs Service for protection against the importation of infringing copies, and
  5. If you are a U.S. citizen, you need a registration to go to court.

Registration is easily accomplished. An application form may be from the Copyright office's website at www.copyright.gov. To file the application, you will need:

  1. A properly completed application form. For literary works, use Form TX (and there is a simplified version).
  2. A non-refundable filing fee of $30 for each application, (Do not send cash), and
  3. A non-returnable deposit of the work being registered.

As an author, if your publisher does not register, you should in order to obtain the many benefits of a registration. If you are uncertain regarding the correct forms or require additional information, we can help you prepare and file the application for a copyright registration.

How Common Phrases Become Trademarks    top

Frank Terranella, Associate, Abelman, Frayne & Schwab

Most trademarks are made up of a combination of ordinary words that have taken on the task of identifying particular goods or services. They start out as words having one meaning and through the magic of advertising they take on a new meaning. Take for example the words "Just Do It." Twenty years ago they might have simply been the words of a boss to a recalcitrant employee. Now, thanks to millions of dollars of advertising, they are identified with Nike, Inc. and registered in the United States as trademark No. 1,875,307.

But how easy is it for a business to appropriate a common phrase and make it their own? Back in the 1960s, Avis spent a lot of money making the phrase "We Try Harder" its trademark (No. 967,829). And Burger King was able to take the phrase "Have It Your Way" out of the language and make it a trademark (No. 961,016). But Volvo, known for the safety of its automobiles, was unable to turn the words "Drive Safely" into its trademark, despite a multi-million-dollar campaign.

The Volvo case just goes to show that the more commonly used a phrase is, the less likely the public will be willing to associate it with one seller. Another example is Dairy Queen's failure to reach trademark status with its phrase "We Treat You Right." And there also was Domino's failure to get pizza lovers to associate the phrase "Any Way You Want It" with them. Phrases like "Be Happy, Don't Worry" and "Have a Nice Day" have similarly met with this kind of resistance.

Now, we have word that Donald Trump has filed trademark applications for the phrase "You're Fired" for clothing (Serial No. 78353045). It's become associated with Trump due to the success of his television show, "The Apprentice." It's too early to tell whether "You're Fired" will be more like "We Try Harder" or "Have a Nice Day," but Trump is not alone in beating a path to the Trademark Office. There have been at least a dozen applications filed this year for variations on "You're Fired" for a variety of goods and services.

A hit television show or movie will usually cause a rush to the Trademark Office. Depending on the phrase, the rush can go on for many years. For example, in the fall of 2003, there were applications filed to register "Who Ya Gonna Call?" for a pest control company (Serial No. 78/324739) and "Fone Home" for cell phone rentals (Serial No. 78/309520).

As should be obvious, authorship is not really a factor here. Popularizing a phrase doesn't necessarily mean that you own it. HBO found that out when fans of "The Sopranos" registered "Bada Bing" for hair care preparations (No. 2789827), fruit juices (No. 2709523), slot machines (No. 2773972) and fireworks (No. 2783146).

"You're Fired" could be more difficult to turn into a trademark than "Bada Bing" because it is a very common phrase (although there are some sections of New York and New Jersey where you're more likely to hear "Bada Bing" than "You're Fired"). The question will be whether people will associate "You're Fired" with one source for certain goods and services. That in turn will be determined by the amount of advertising dollars The Donald will spend promoting the products he plans to market under that name. Because when it comes to creating trademarks out of common phrases, advertising is key. If you want to "Have It You're Way" you've got to "Just Do It."

Responding To Electronic Data Discovery Requests    top

Anthony A. Coppola, Partner, Abelman, Frayne & Schwab

Relatively new to the litigation arena is the concept of "electronic data discovery ("EDD"). While one might think that this is not such a new concept since it has long been common practice to request that an opposing party produce copies of all of its e-mails relating to a particular issue for a given time period, EDD involves much more. While e-mails comprise a substantial portion of electronic data, EDD actually involves the acquisition and use of electronic data in the litigation discovery process which includes the recovery of e-mails, as well as electronically scanned documents, data bases, accounting systems and various other network applications, PDA's, voice mails, videotapes, zip drives and other means for storing back-up data of computer hard drives.

When presented with discovery requests for electronic data, clients and their counsel are often at a loss as to how to respond. Ignoring the requests is obviously not advisable as failure to produce electronic data in a timely manner exposes one to sanctions ranging from fines to issue preclusion. See Crown Life Ins. Co. v. Craig, 995 F.2d 1376 (7th Cir. 1993); National Ass'n of Radiation Survivors v. Tumage, 115 F.R.D. 543 (N.D. Cal. 1987). Like it or not, EDD is here to stay. Merely producing one's "paper records" is not the answer either as it has been held that electronic documents are discoverable and an earlier paper production is not preclusive. Milwaukee Police Ass'n v. Jones 615 N.W.2d 190 (Wis. Ct. App. 2000); National Union Elec. Corp. v. Matsushita Elec. Ind. Co., 494 F.Supp. 1257 (E.D. Pa. 1980).

There are several steps which one must take in order to effectively address the EDD issue.

  1. Prevent Spoliation
    It has been suggested that counsel should draft standard spoliation letters. Such letters should be sent to clients before litigation occurs and to counsel for an opposing party immediately at the outset of the litigation advising that any and all recycling, back-up and archive deletion policies should be suspended. It is important that both clients and adversaries know that the destruction of any electronic data which is in existence for the relevant time period during the pendency of the litigation is improper and such destruction may expose them to possible sanctions including issue preclusion, or entry of a default judgment. See Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99 (2nd Cir. 2002).
    1. Stay Away from File Deletion Software
      While some companies may find it tempting to use specialized software, such as "CyberScrub" or "Evidence Eliminator" to remove certain data from their hard drives, this is not advisable - particularly once a litigation appears inevitable or has already been commenced. The use of such software, if detected can lead to adverse inferences or, even worse, a declaratory judgment. See Anderson v. Crossroads Capital Partners, L.L.C., 2004 U.S. Dist. LEXIS 1867 (D.Minn. 2004); Kucala Enters., Ltd. v. Auto Wax Co., 2003 U.S. Dist. LEXIS 19103 (N.D.Ill. 2003).
    2. Do Not Modify Retention Policies
      Another possible practice for potential litigants to engage in is to modify their electronic data retention policies at the outset of litigation and destroy documentation earlier than they normally would. Without question, this is not an advisable approach. It is recommended that retention policies be adopted without regard to the start of any particular litigation and followed. In the event of impending or actual litigation, those policies must be suspended to preserve any electronic data that may be relevant to any potential issue of the lawsuit.

  2. Limit the Scope of the Production Requests
    As with any request for the production of documents or things, the requests can be objected to. It is important for counsel to review such requests with an eye toward limiting their scope including determining whether they are privileged, overbroad, unduly burdensome or irrelevant. Where practical, counsel should also attempt to negotiate with opposing counsel for narrower, less burdensome alternatives to the requests and to negotiate an acceptable search protocol that is agreeable to both sides. If an agreement cannot be reached, the option to request a shift of the costs for the production also exits.

  3. Request Cost Shifting/Sharing
    As the producing party, the task of producing electronic data may seem daunting and costly. One possible recourse when faced with the burden of producing massive amounts of electronic data is to ask that the requesting party pay for the production of information over and above the costs for the production of standard paper records and easily retrievable electronic data such as current e-mail files. Courts are split on the issue of cost shifting and for most it is a fact specific determination.

    In the Southern District of New York, the Court in Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) set forth a 7 factor test to determine whether to shift costs for the production of electronic data. Those factors include:

    1. is the request specifically tailored to discover relevant information;
    2. is the information available from other sources;
    3. what is the total cost of the production versus the amount in controversy;
    4. what is the total cost of the production versus the resources available to each party;
    5. what is the relative ability of each party to control costs and its incentive to do so;
    6. what is the importance of the issue at stake; and
    7. what is the relative benefits to the parties of obtaining the information

  4. Never Review Original Electronic Files
    It is important that neither a party nor its counsel review original files when producing EDD. Underlying meta-tags will reveal when a particular document has last been opened or edited and by whom. If these original electronic files are reviewed and then copied onto some form of storage means (CDROM, Zip-Drive, etc.) for production, the underlying usage information may be available to anyone who reviews those files. It is advisable that a duplicate file be made for review prior to production and that it be reviewed using litigation specific software that has the ability to tag, code, redact and annotate documents as well as sequentially (Bates) number them for production. This will avoid any alteration of original data.

    These steps are merely a guideline for approaching the task of EDD. The measures to be taken and the manner by which this data is reviewed and produced is obviously dependant upon the size and resources of the party and the size of the case. Nevertheless, EDD is not to be taken lightly as it is becoming much more commonly used in today's world of litigation.


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