September 26, 2024
Is Intellectual Property Litigation in Your Future? Do This Now!
Whether as a plaintiff or defendant, when faced with an intellectual property lawsuit (or the threat of one), a critical first step a company can take to protect its interests is to preserve its business records relating to the subject matter of the lawsuit.
What should the company do to ensure its business records are preserved? Company management (e.g., an officer, director, or in-house counsel) should promptly circulate a document preservation notice to company personnel.
What is a document preservation notice? A document preservation notice is a company directive that information related to the subject matter of the lawsuit be maintained. The notice requires company personnel to retain the relevant records and other information as they are kept in the ordinary course of business. Additionally, the notice directs that the company’s document retention/destruction protocols as to such records is suspended.
What types of records need to be maintained? All of them. This includes physical papers and files, and all forms of electronic files (e.g., emails, voicemails, text messages, letters, memos, spreadsheets, presentations, websites, technical data, and the like). Keep in mind that some electronic records may be ordinarily maintained in proprietary formats or used with custom programs, such as for CAD/CAM/CAE, accounting, supply chain and inventory management systems, or other specialized machines or equipment. Additionally, some electronic records may still exist in computer archives or other offline storage, so suspension of the company’s document retention/destruction policy may be vital to preserving these records.
Who should receive the document preservation notice?
- Anyone that may possess records potentially relevant to the subject matter of the anticipated litigation;
- Individuals responsible for implementing the company’s document retention/destruction protocols (e.g., the IT department); and
- Anyone else with a “need-to-know.”
What else should the document preservation notice convey? The document preservation notice should also instruct company personnel to minimize any intra-company communications about the lawsuit and its subject matter, except with legal counsel. Further, the memo should direct company personnel not to engage any persons outside the company concerning the lawsuit and refer any inquiry about the matter to legal counsel.
Why should the company limit its internal communications? The document preservation notice instructs company personnel to refrain from any communications (both intra-company and otherwise) regarding the subject matter of the litigation or the lawsuit itself, except with legal counsel. Inaccurate, misinformed, impulsive or emotional communications can potentially be used against the company, so personnel should be instructed to refrain from engaging in such conduct. Moreover, avoiding unwarranted communications can also provide time for the company to engage legal counsel to address issues relating proportionally and appropriately to the litigation or its threat.
Why is encouraging communication with legal counsel important? The document preservation notice also directs company personnel having information or questions to speak with the company’s legal counsel. The more facts, information, and opinions the corporate legal counsel is provided the better advice the corporation can receive. Legal counsel can also help guide employees and executives on how to navigate, what are often challenging business and personal matters and relationships. The advice of legal counsel can often help the company find an alternative path forward that avoids or reduces the disruptions to business operations that invariably come with intellectual property litigation. This can result in a faster resolution, with a business focused mindset. Lastly, instructing company personnel to speak with legal counsel allows for full disclosure of all relevant facts under attorney-client privilege. Meaning, company personnel can freely express thoughts, opinions, and emotions without risk of them necessarily being disclosed in the litigation.
Why should you initiate a document preservation notice? Not only can a document preservation notice be crucial to preserving a case, but some courts have also found that document destruction occurring after notice of anticipated intellectual property litigation can result in a loss of a company’s valuable intellectual property. See e.g., Hynix Semiconductor Inc. v. Rambus Inc., 645 F.3d 1336, 1344 (““Rambus had spoliated documents in contravention of a duty to preserve because litigation was reasonably foreseeable prior to Rambus’s second shred day and held the patents unenforceable.”).
By taking this important first step, companies can avoid common pitfalls, protect valuable intellectual property, and position themselves for the best possible outcome in intellectual property litigation.
Harness IP is celebrating more than 100 years as an intellectual property law firm. Founded in 1921, the firm currently holds a No. 2 ranking from IAM Media for providing counsel to 44 companies with the largest portfolios of issued U.S. patents. The firm also ranks No. 6 for filing the most patent applications on behalf of those companies. Harness IP’s attorneys and IP professionals focus exclusively on patents, trademarks, global IP management, intellectual property litigation and other IP rights. The firm has offices in metropolitan Dallas, Detroit, St. Louis, and Washington, D.C. Visit www.harnessip.com for more information.