• Top 10 Recommendations For Creating Enforceable Online Agreements
• Newly Enacted California Online Marketing Laws
• Gathering Evidence In The Digital Age

Mr. Pais is a partner in the Intellectual Property Group at Fenwick in Mountain View, CA. Ms. Melaugh is a law student at Hastings in San Francisco. She was a 2004 summer associate at Fenwick.

Because the law interpreting the enforceability of online agreements continues to evolve, companies that want to create binding agreements with their online customers still face significant challenges. While the enforceability of an online agreement ultimately depends on the particular circumstances of that transaction, companies seeking to improve the likelihood that their current online agreements will be upheld should consider the following ten recommendations:

10. Do a Risk/Benefit Analysis on Each Remedy

For consumer agreements, do a risk/benefit analysis on each remedy limitation. If arbitration is desired, make sure it is:

1. Equitable;
2. Does not impose undue costs on the consumer (as an absolute amount or relative to the size of the transaction); and
3. Does not effectively deprive the consumer of a remedy for disputes.

Possible accommodations are:

1. Using consumer rules;
2. Having the company pay costs on a sliding scale; and
3. Selecting a neutral forum for arbitration.

9. Select a Rational Jurisdiction

1. Select a choice-of-law jurisdiction that has a rational connection to the transaction.
2. Balance the use of exclusive jurisdiction and venue clauses against the risk that a court will find them unconscionable where consumers or low-valued transactions are concerned.

8. Avoid Unilateral Modification Terms

Do not insert terms that allow the company to change the contract unilaterally.

7. Record Evidence of User Acceptance

1. Record evidence of user acceptance and the formation of each online agreement using a consistent, auditable process.
2. By procedure — evidence that the only way to access product or service is to scroll through terms and click "I accept."
3. Where practical, keep records of time, date and source of acceptance.
4. Employ user registration or electronic signatures.

6. Require Acceptance Before Delivery or Payment

1. Require acceptance before payment or delivery.
2. If payment and delivery occur before acceptance, then you need to ensure that the customer receives:
1. Notice before payment or delivery that contractual terms will be provided later;
2. A reasonable opportunity to review those terms after they are provided;
3. For time — sensitive transactions, e.g., ticket sales, provide consumer with opportunity to review terms outside of the time-sensitive window; and
4. A right to return the product or terminate the service without incurring costs, or a right to a refund if the customer does not agree to the terms.

5. Make Rejection Clear and Simple

1. Provide a clear, simple method for customers to reject the contract.
2. Allow users to exit the process at any time.
3. Do not require the customer to take additional steps or expend effort/money to reject the product or service once the contract has been rejected.

4. Make Assent Unambiguous

1. Secure an affirmative, unambiguous manifestation of assent to the agreement from the customer.
2. The more the customer has to do, the better. Examples include:
1. Mouse click "I accept" or "I agree" button;
2. Type "I agree" and submit (speed — bump for users, but more deliberate);
3. "I accept" checkbox next to each provision — especially any unusual or onerous provision; and
4. Offer alternative "I don't agree" option with an explanation that the user cannot use or access the product or service.

3. Condition Use on Acceptance

1. Expressly state that the user's access to or use of the product or service is subject to these terms.
2. Expressly state that you will not provide the product or service except pursuant to these terms.

2. Provide Notice of All Terms

1. Draw attention to the online agreement.
2. Make sure the customer sees it, e.g. , no "below the fold," small print or hidden text.
3. Place the "accept" option at the end of all terms. Require the user to scroll though all terms before making the acceptance action.
4. Consider requiring the user to check an "I accept" box for each provision, especially for an unusual or onerous provision.
5. No link to terms or scroll boxes.
6. Advise user to print and keep a copy of the agreement.

#1 Tip for Creating an Enforceable Contract:

Draft in plain English.

Other Considerations
Anticipate Possible Challenges

1. Anticipate possible challenges based on public policy grounds.
2. Some states (e.g., California) will invalidate a contract on public policy grounds if it precludes class actions, so avoid expressly barring class action suits or prohibiting consolidation of claims.

Browse-wrap Agreements

1. Use browse-wrap if the terms merely provide an affirmative license under your intellectual property rights with restrictions no greater than those provided under intellectual property law, e.g., by limiting copying or redistribution of content on the website, or limiting use of your trademarks. This is often the case with website terms of use that provide content but not products or services.
2. Do not attempt passive imposition of material contractual conditions going beyond the exercise of your intellectual property rights such as choice of law, choice of forum or arbitration clauses.
3. If the contract requires those terms, follow the click-wrap recommendations above.

Remember that Contracts with Minors are Unenforceable
Assess risk that the person contracting is underage and determine which practice is most appropriate:

1. Include browse-wrap agreement limiting use of the site/service/product to adults;
2. Require affirmative agreement, e.g., clicking box, that the user is an adult;
3. Require user to type in their year of birth;
4. If the user is under-age, reroute and deny service;
5. Require a credit-card number, even if no charge is needed; and
6. Require a credit-card number, bill the card a nominal amount and credit the money back to the user to ensure a valid card.

Use Secure Encryption for Sensitive Information
Implement appropriate protections such as secure encryption for any communication or transmission that:

1. May involve personal, private or confidential information;
2. Gives rise to fraud risks (such as credit-card numbers or social security numbers); and
3. Requires verification of the integrity of the received communication.

(Originally published by Fenwick & West LLP. Reprinted with permission. The authors give special thanks to Michael L. Taviss, vice-president and general counsel of MegaPath Networks Inc., and Gordon Yamate, vice-president and general counsel of Knight-Ridder, Inc., for their contributions to this article.)

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1. Overview

As businesses and consumers increasingly rely on the benefits of the electronic marketplace, privacy advocates are fervently pressing forward legislation to counter the ease by which the digital world can circumvent our nation's current paradigm of consumer protection.

Currently, if a business were to market or allow a third party to market to its end-user in violation of its own privacy policy, the business would be subject to an enforcement action by the Federal Trade Commission (the "FTC") under Section 5 of the FTC Act, which prohibits unfair or deceptive trade practices. However, for most types of businesses (e.g., companies which are not financial institutions or that do not collect patient information or personal information from children) there are no laws requiring that a privacy policy be posted and, as such, businesses can easily avoid violating Section 5 by electing not to publish a privacy policy.

California has taken a leadership role in attempting to close this perceived loophole, and others, in order to afford its consumers stronger privacy protection. In doing so, however, California may be alienating businesses who feel overburdened by varying state regulations. While many bills have been tied up in the California Assembly over just such concerns, two important pieces of privacy legislation have recently prevailed, AB 68 and SB 27. AB 68 became effective on July 1, 2004, and SB 27 will become effective on January 1, 2005.


2. AB 68


1. At a Glance

AB 68, which is now codified in Section 22575 of the California Business and Professions Code, is a sweeping and broadly written law which requires websites or online services to post privacy policies on their sites and to comply with them.


2. Who It Applies To

AB 68 applies to any operator of a commercial website or online service that collects personally identifiable information ("personal information") through the Internet about individual consumers residing in California who use or visit its commercial website or online service.


3. What It Requires From Businesses

AB 68 requires an online business to post its privacy policy on its website or, if the business is an online service with no website, to make that policy available by other reasonably accessible means. At a minimum, the privacy policy must:


1. identify the categories of personal information collected, and categories of third parties with whom the operator may share such information;
   
   
2. provide a description of how a consumer can review and request changes to any of his or her personal information to the extent the business maintains a process for doing so;
   
   
3. describe the process by which the operator of the website or online service will notify consumers of material changes to its privacy policy; and
   
   
4. identify the effective date of the privacy policy.
   
   


4. Consequences for Not Complying

AB 68 will most likely be enforced through the ubiquitous California Business and Professions Code section 17200, California's unfair competition law, leading potentially to civil fines, injunctive relief and restitution. To the extent the privacy policy is misleading or deceptive, the FTC would continue to have authority under Section 5 of the FTC Act to bring an enforcement action.
3. SB 27
1. At a Glance

SB 27, which is now codified in Section 1798.83 of the California Civil Code, requires a business to provide its customers with a list of the categories of personal information the business shares with direct marketers and the names and addresses of such direct marketers within 30 days of a request by a customer. In other words, SB 27 gives customers the right to ask, "What information have you collected from me and with whom was it shared?"


2. Who It Applies To

SB 27 applies to businesses that have established a business relationship with a customer and have disclosed personal information of that customer to one or more third parties who the business knows or reasonably should know will use the customer's personal information for direct marketing purposes. SB 27 defines "direct marketing purposes" as the use of personal information to solicit or induce a purchase, rental, lease or exchange of products, goods, property or services directly to individuals by means of the mail, telephone or e-mail for their personal, family or household purposes. The definition specifically exempts nonprofits, fundraising for politics and certain incidental transfers. Although SB 27 applies generally to all businesses in California, businesses with fewer than 20 full-time or part-time employees are exempt. Furthermore, SB 27 does not apply to a financial institution that is subject to, and is in compliance with, the relevant provisions of the California Financial Information Privacy Act. As with many other consumer protection laws, a business will not be able to circumvent the requirements of SB 27 by requesting a customer to accept a provision waiving his or her rights under the law. The law specifically provides that such a waiver is void and against public policy.


3. What SB 27 Requires From Businesses

SB 27 requires that a covered business provide its customers with either a mailing address, e-mail address or toll-free phone or fax number that the customer can utilize in order to request information concerning the business's disclosure of the customer's personal information. Responses to such requests must be made by the business within 30 days, if the request was made in accordance with the business's instructions, or up to 150 days, depending on the circumstances under which the customer provided the request. The business need not respond, however, to any particular customer request more than once per year.

The information that the business must make available to its customers must be free of charge and must include:

1. the categories of personal information the business collected from the customer (e.g., name and address, e-mail, date of birth, race, religion, occupation, telephone number, education, etc.);
   
   
2. the names and addresses of each third-party direct marketer the business supplied the customer's personal information to during the prior year; and
   
   
3. the type of products or services the third party markets, if such products or services are not reasonably clear from the corporate name of the direct marketer.

Under SB 27, a business need not provide the customer with requested information in a format specifically tailored to a customer, but instead may provide the information in a standardized format. For example, a business could simply direct a customer to the business's privacy policy so long as such policy contains the pertinent information. The law does not make clear, however, whether it is acceptable for a business to list a group of direct marketers whom the business generally shares information with while knowing that the requesting customer's personal information was only shared with a subset of such group.

SB 27 also mandates that each covered business take at least one of the following actions:

1. train all employees (or their supervisors) who have contact with customers in the appropriate procedures for a customer to request and obtain information relating to use of the customer's personal information;
   
   
2. add to the home page of the business's website a link titled "Your Privacy Rights." The link may take the customer directly to the same web page as the business's general privacy policy link, in which case the link should be in the same style and size. If the link does not link directly to the privacy policy, it must be in larger type than the surrounding text or in contrasting type, font or color. The first page following the link must describe the customer's rights under SB 27, and provide the customer with information on how to request information from the business as discussed above; or
   
   
3. make the business's designated contact information for customer requests readily available at every place of business in California where the business or its agents regularly have contact with customers.


4. Opting-In/Opting-Out

SB 27 permits a business that would be required to comply with SB 27 to avoid having to take the steps set forth in the section above if the business adopts and discloses to the public a privacy policy in which the business promises that it will not disclose any personal information of its customers to third parties for such parties' direct marketing purposes unless the customer has the chance affirmatively to opt-in or opt-out of such disclosure for direct marketing purposes. Although SB 27 does not favor one option over the other, opting-in is generally preferred by consumer groups over opting-out as it requires an affirmative action on the part of the consumer to assent to the business's disclosure of personal information.
5. Consequences of Not Complying

Section 1798.84 of the California Civil Code sets forth the civil actions and penalties that may be brought against a business that fails to comply with SB 27. Under 1798.84, any customer who is injured due to a violation of 1798.83 can institute a civil action to recover damages plus attorneys' fees and costs. In addition, the injured customer can recover a civil penalty assessed against the business by the state of up to $3,000 per violation for willful violations and up to $500 for unintentional violations. If a business unintentionally violates 1798.83, and corrects such violation within 90 days of its discovery thereof, no civil penalty will be assessed against the business.
6. Potential Pre-Emption of SB 27

As discussed above, SB 27 regulates information sharing between a business and a third party. A "third party" is defined as a separate legal entity from the business that has an established business relationship with a customer. This definition could arguably cover affiliates of the business. In July 2003, a federal trial court in California reaffirmed that under a key provision of the federal Fair Credit Reporting Act (the "FCRA"), a state may not regulate information sharing among entities affiliated by common ownership or control. (See Order on Cross-Motions for Summary Judgment, Bank of America v. Daly City, U.S.D.C., N.D. Cal., Case Nos. C 02-4343CW and C 02-4943 (Jul. 29, 2003).) Because of the pre-emptive provisions of the FCRA, it appears at least part of SB 27 could conceivably be pre-empted with respect to those provisions covering the sharing of personal information with a business's affiliates. The FCRA's pre-emption provisions were set to expire on January 1, 2004; however, the U.S. Congress repealed the provisions' "sunset clause" indefinitely. Nonetheless, Bank of America, supra, has been vacated and therefore is not binding precedent. Additionally, a recently decided case, American Bankers Ass'n v. Lockyer, from the same court, discussed in detail below, has questioned Bank of America and held that the FCRA would not pre-empt California's right to legislate laws applying to affiliates generally.



4. Pre-emption of other California Privacy Laws

SB 27 is by no means the first nor the last privacy bill signed into law by California's governor only to be threatened with or to be actually preempted by federal law. To the contrary, California has had a long-standing battle with the federal government in this respect. In a letter to U.S. Sens. Richard Shelby ( R-Ala.) and Paul Sarbanes (D-Md.), then-Cal. Gov. Gray Davis wrote, "Rather than preempt important California privacy laws, Congress should consider them as a model for the rest of the nation." Yet, despite the former governor's plea, California's recently enacted "Financial Information Privacy Act," also known as SB 1, is now one step ahead of SB 27 and is in the midst of a pre-emption battle.

SB 1 was signed into law by Gov. Davis on August 27, 2003. The law allows consumers to "opt out" of information sharing practices between affiliated financial institutions. SB 1 also prohibits financial institution from sharing information about consumers with unaffiliated third parties unless the consumer has "opted in" to such sharing. The American Bankers Association along with the Financial Services Roundtable and the Consumer Bankers Association sued California arguing that, similar to the analysis in Bank of America , those provisions of SB 1 which attempt to restrict a financial institution from sharing information with its affiliates should be pre-empted by the FCRA. However, unlike in Bank of America, the court in American Bankers Association has ruled that states may enact stronger financial privacy protection than that afforded by the federal government. Specifically, the court stated that the FCRA is only intended to pre-empt laws that prohibit the sharing of consumer reports among affiliates but not information sharing among affiliates generally. The court then found that the Gramm-Leach-Bliley Act and not the FCRA is the relevant federal law for broad-based restrictions on the sharing of financial information. The Gramm-Leach-Bliley Act, codified in 15 U.S.C. § 6801 et seq., specifically permits states to enact tougher privacy laws. The plaintiffs in American Bankers Association filed an appeal of the lower court's decision on August 2, 2004, so the case is now before the U.S. Court of Appeals for the Ninth Circuit. The outcome of this appeal will, no doubt, affect SB 27 and set a precedent on how California legislates in the future.

Although California may currently have the upper hand in the battle over SB 1, as recently as December 2003, Congress passed, and U.S. President George W. Bush signed into law, the "Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003," or the "CAN-SPAM Act." The CAN-SPAM Act significantly pre-empted California's more stringent SB 186 which was to go into effect on January 1, 2004, the same day as the CAN-SPAM Act. Among other things, SB 186 would have prohibited any person inside or outside of California from sending unsolicited commercial e-mail advertisements to California's citizens except under limited circumstances. The CAN-SPAM Act, which is arguably more business sensitive than SB 186, does not prohibit unsolicited e-mails but merely requires that: (i) certain labels be used in connection with such unsolicited e-mails; (ii) the advertisement in the e-mail not be deceptive or misleading; and (iii) the consumer be able to unsubscribe to such e-mails. In keeping with its balanced approach, and unlike SB 186, the CAN-SPAM Act does not permit a private right of action. Thus, the pre-emption provisions of the CAN-SPAM Act come with a sigh of relief for some Internet marketers concerned with the far-reaching effect of the now mostly defunct SB 186.

5. CONCLUSION

The California online marketing and privacy laws discussed above are most likely the first of many new state privacy laws which are going to affect companies doing business over the Internet. Although the federal government has attempted to pre-empt some forms of state consumer protection laws in order to alleviate over-regulation and confusion, it will not be able to hold back the unrelenting tide of California legislation indefinitely. Fortunately for some online businesses, the requirements of SB 27 and AB 68 may have already been fulfilled. Indeed, many businesses which collect personal information have opted to provide a privacy policy on their website although they are not being required to do so. Almost all of the top 100 commercial sites now post privacy policies. Furthermore, members of the Direct Marketing Association (the "DMA"), a private trade organization, are already required to comply with the substance of these laws under the DMA's membership rules. As a result, the addition of AB 68 and SB 27 may require little to no action on the part of these companies. Nonetheless, companies planning to do business in California should be afforded the benefit of a knowledgeable attorney who can guide them through the pitfalls and hurdles of California's pioneering online marketing and privacy legislation.

(Prior version published by Latham & Watkins, LLP. Reprinted with permission.)

Mr. Delaney is a partner and Mr. Smith is an associate at Brinks, Hofer in Chicago, IL.

1. Introduction

The Age of The Computer has changed the way businesses around the world conduct their daily transactions. Almost everything businesses do will find its way to the computer, from a sales transaction to the purchase of paper clips. Nothing misses the opportunity to be logged into the digital world of ones and zeroes. Almost all of the documents that a business creates begin life in a computer. Many of these electronic creations never make it to paper. They stay in an electronic form and some, if not all, of their data is eventually archived.

But what does this mean to an attorney whose client needs that information for a successful outcome in litigation? It means a round of discovery that is nightmarish for one who is unprepared and, for sure, expensive and time-consuming not only for the attorney but especially for the client and experts who will be hired to sift and sort out the data. It is this digital material that will likely determine the outcome, and very often will allow the matter to settle before the dispute arrives in the courtroom.

This is not the only aspect of the digital age that has affected litigation. Presently, some courtrooms are wired to present evidence to the jury on monitors via a computer. Witnesses can point and color the objects of interest on the display, and jurors are comfortable receiving the information in this manner. After all, most jurors have been tutored in receiving colorful visual displays of information through USA Today and CNN and even the use of a computer for accessing the Internet is well known to most of them. The Federal Rules of Evidence allow for the court to have information presented in this manner if it is authenticated properly. In order for attorneys to appear credible to juries, it is very important for them to become accustomed to the tools of technology and use them effectively when presenting their case.

Attorneys who ignore the digital age do so only at their own and their clients' peril. In order to remain competitive, clients took the leap into the digital age, so they certainly expect their attorneys to take that leap with them. We can be sure opposing counsel will have taken that leap. For those of us who have not fully made that transition, this paper is intended to provide assistance.

The first goal of this article is to provide some tools to gather digital evidence about the opposing party and their attorneys through public electronic means. The second goal is to help one interpret and understand how electronic data may be gathered and stored so that it can be readily available for trial. In doing so, it is hoped that a third goal will be achieved, that of winning the client's case and preserving the client's resources while doing so.

This paper is divided into four sections. The first section discusses resources for investigating your opponent; the second section discusses what electronic databases to pursue during discovery; the third section discusses technology and depositions; and the fourth covers the advantages of scanning and digitizing documents.

2. Investigating Your Opponent

Who is your opponent and what has he or she done? You know what your client has said; it is now advisable to investigate your opponent's background as part of the research phase of your case. Also, if you know who represents the opposition, you might be halfway to understanding the tactics of the attorney. If you do not know the attorney, there are many tools you may use to get the necessary background information.

The Internet is a wonderful tool for digging into someone's background. It is also an exasperating tool because the information in some sources is lacking. Regardless, it is still a good tool to begin a search, and there are many sites that will provide the accuracy that an attorney requires. Of course, there are sites that require a subscription to access information, and these sites usually provide the most accurate information. But there are many free sites that an attorney may use, thus saving the client money.

1. PACER and RACER

In recent years, the federal courts instituted a system whereby court information is available to the public electronically. Each district court having the capability provides a link on its webpage which is called Public Access to Court Electronic Documents or PACER. This link will access the court's docket. In order to download pages from this site, an account must be established, but the good news is that a download costs only $0.07 per page.

Within PACER is the Real-time Access to Court Electronic Records ("RACER"). RACER further provides access to the pleadings, motions or other memoranda that the parties may file with the court. These may also be downloaded at $0.07 per page once your account is established. A search on the PACER system can be tailored by party name, case name, attorneys or by U.S. party information. This site can be very effective for finding out about the tactics of opposing counsel. It is also informative for finding out how the presiding judge will rule when faced with given situations.

There are two disadvantages to using the PACER system. The first is that not all of the district courts are using the system yet. It is anticipated that the district courts that have not implemented the system will participate by 2005. The second disadvantage of the system is that they are not in real-time. It can take 24-to-48 hours or more for the documents to be scanned into the system once they are filed. This should not be a concern if the need is for background information. However, as the federal district courts move to electronic filing, the documents should be available sooner.

2. Lexis and Westlaw

Well-known to all of us in the legal profession are the two largest sources for doing legal online research, Lexis and Westlaw. Both Lexis and Westlaw have features, such that researchers develop preferences for one or the other. Although some will find it easier to use one over the other, both services provide thorough coverage, and the use of both will complement and complete one's research. Whichever one is used, both continue to expand their coverage and content in order to provide a more complete search. Both give vast coverage to the news and provide links to the major newspapers and newswire services. As their capabilities for conducting a more complete search expand, so does the expense.

For those without the resources and large budgets, both operate free access services with a limited database of information as abbreviated versions of the full-blown service. These services are especially important for the small office and for the client that does not have a budget for large-scale searches. LexisONE, provided by LexisNexis, and Findlaw, a service of the West/Thompson Group, are very good resources for finding basic legal information quickly. The available case law generally extends back to 1998. Cite checks of the available case law and statutes can be accomplished through these resources for a nominal fee once an account is established. These sources are limited, but provide links to the more powerful research tools when these are required.

Another tool, Courtlink, a service provided by Lexis, is another way to check the court databases. It pulls information from the PACER and RACER links on the federal district court databases and searches can be conducted across all the court dockets by keying to parties and attorneys. Further, it also links to cases or to other documents that are cited within the document. The price for downloading is $0.25 per page and there is an upfront fee for the search. Although more expensive than the PACER and RACER websites, the higher price covers the linking capability not provided by the court website and it is certainly worth the cost when searching through the dockets of several district courts.

Profiler, a service of Westlaw, allows for searches of attorneys, judges and even expert witnesses and provides information about their cases. It also provides a listing of any articles that they have authored. The major disadvantage of this service is that you do pay an upfront charge for the search, even if the search comes back with no information about the targeted individual. However, the cost of a successful search may more than offset the time a paralegal or attorney spends searching the individual databases.

3. Government Websites

Once a connection to the Internet is made through an Internet Service Provider, one can gain access to state and federal government websites. Government websites provide links to agencies where information is made available to the public. For example, public information about people who register with the government may be accessed. This includes attorneys, whose status may be found through these websites.

Although manually accessing each of the agencies is time-consuming, there are alternative methods for accessing the needed information. As mentioned earlier, both Lexis and Westlaw provide an efficient search through all of the databases at once and can be a good starting point for any such search. The user pays a fee for these powerful search tools; however, the costs are offset by time savings.

If an extensive search is not necessary, free Internet search portals such as Yahoo! and Google provide links to the government sites when the uniform resource locator ("URL") identifier is not known. For instance, to find out whether a business is registered or to find the agent of the business who will accept service of process, one may access the Secretary of State's website through the state government's website. Often the search engines provide a direct link to the Secretary of State. By browsing through the Secretary of State's site, one will find the business registration site and will be able to access the available business information. The disadvantage of proceeding through the state's website is that not all states provide this information through their website, in which case you will have to call for the information. States have priorities, and many do not have the resources to provide this information electronically to the public at large. Also, the laws vary from state to state pertaining to the information provided on the website. In order to comply with privacy acts, it is unlikely some of the information will ever make its way into public view.

4. Business Websites

These days almost all companies from big to small maintain a website. Corporate websites provide varying types of information about the company. Such websites typically provide commercial information about the company and the products it sells, even including products sold by small divisions. The website may tie the structure of the company together so that the decision-making level of the company may be determined. Also, pertinent information about an infringing product may be found. Since the website is a sales tool, the salient features of the product might be discussed, and this could be especially important if those features are denied at a later time.

Many corporate websites include news releases that the company uses to disclose product introductions or realignment of the company managerial structure, investor links that provide investors with important information about the finances of the company, and contact information about receiving specific information required by the Securities and Exchange Commission. Some companies provide links to their research and development departments. Even information about materials that the research scientists have published can be available. The larger the company, the more information there is likely to be on its website.

5. Other Public Electronic Resources

A variety of financial sites provide free information that has been released by a company. Yahoo! provides this information in the finance page of their website. Not only does it contain the current market data, but it combines a lot of the news stories and information about the company. For example, just like many other sites such as CNNMoney.com and MSNMoney.com, and some newspapers' websites, Yahoo! will provide the news along with the current stock price for each company requested. These sites also list links to the latest stock prices, charts and trends of where the company's stock is heading along with analysts' ratings of the stock. In a few cases, even the names of the individuals and the institutions holding the largest portions of the company's stock are disclosed.

Sometimes an important source for company information can be found in chatrooms belonging to these financial news sites, where people can discuss their impressions of the company. Usually access to the chatroom is on the page displaying the stock price and investors enter their comments about the company. Often it is just the public or investors who participate, but employees often join in and sometimes discuss company business. They use aliases rather than their real names; however, when they register with the portal site to create their aliases, often they have to register using their real names. Many of these individuals believe that they can remain anonymous and so give out information freely, not realizing that their true identity can be discovered. It is important to realize that some information on the message board may be very important to your client's case and it should not be overlooked in the discovery phase. When necessary, the real identity of the aliases can be obtained.

Newsgroups, also referred to as web logs or Blogs, can also be a valuable source of information. Newsgroups are postings of messages from a variety of people. Questions are posed and comments are provided. Newsgroups may be found on Yahoo! or America Online (AOL), and some may be found on private websites. One that relates to an opponent should be reviewed and monitored for possible useful leads.

Finally, search engines such as Google and Yahoo! should never be overlooked when conducting a search for a corporation or an individual. All types of news will come flooding in and the requestor may spend hours sorting through much of it, but these search engines can provide a very good start to any search.

3. Pursuing Electronic Databases

Although reviewing thousands of paper documents is a difficult task in the discovery process, the real challenges occur when trying to figure out what electronic databases are needed and where they are located. Reviewing the electronic files can also be complicated as it is difficult sometimes to know what software was used to create them. How one goes about determining the authenticity of those files and whether they have been altered can also be a daunting task for the uninitiated. Other problems surface when we know what documents we need, but find that they no longer exist because they were deleted or destroyed, sometimes as part of a retention program that was implemented but not followed until the litigation began.
1. Notification

One of the first things an attorney should do when approaching discovery is notify opposing counsel of the intent to request electronic data files and to remind counsel that the following should be preserved: e-mail and the information about e-mail; files created by word processing programs; spreadsheet data and the software that created that data; network activity logs as well as the audit logs; electronic calendars; and telephone logs. The notice should make clear that all potentially discoverable material, which should be specifically described, should not be deleted or modified; that no new software should be implemented on the PCs; that de-fragmentation programs should not be run; and that back-ups should be maintained. Even if a computer or an electronic storage medium device should break, it should not be discarded. In today's world of telecommuting, one cannot forget about the key employee's home computer either. It is a very important tool for both the employer and the employee, and it may be critically important to your case as well.

Once the letter is sent, you should expect a letter from opposing counsel requesting the same of you as well as a listing of the types of documents that should be saved. You should prepare your client in advance, informing them of their responsibilities. The list from above provides a good checklist. However, if the case is small or the burden would fall unequally upon your client, you may choose not to pursue an aggressive strategy on electronic discovery.

You should also brief your client on proper retention program procedures that should be in place well in advance of any specific litigation. Litigation is the wrong time to start formulating a global plan. A properly executed retention program will provide for the automatic removal of old files in a timely and regular fashion to reduce costs by removing materials that no longer serve a valid business purpose. The program must provide for the orderly suspension of regular document destruction policies to the extent necessary to preserve relevant information when litigation occurs.

Non-compliance with your opponent's requests for preservation has its pitfalls. A lack of cooperation or compliance, even when the task seems unduly burdensome, may decide the outcome of the case. Many cases have been won or lost because of the continuing destruction of documents. Therefore, being proactive in dealing with electronic documentation is the best approach, especially prior to litigation, but also during the discovery phase of litigation. When you and your client can show the court that you have been proactive in managing the electronic data, it will be easier for the court to grant your request for protective orders when the opposition is unduly burdening your client with demands or is requesting privileged information. The court looks more favorably upon your motions if it is evident that your client has taken the time to be organized and straightforward with their data and the court.

It is important for you to understand your client's computer systems. It is equally important that you understand your opponent's as well. Unless you possess the expertise, it is advisable to hire an expert who understands these systems. The expert will be able to identify the search techniques that will efficiently comb through the data files and quickly find the information that is key to your case. In addition, the expert will be able to help you formulate questions for the oral or written depositions of your opponent's system manager.

2. Electronic Mail

As the discovery process progresses, there will likely be many e-mail messages that are at issue in the case. E-mail is discoverable, but it can be afforded the protection of attorney-client privilege when the e-mail message is a communication between a client and a lawyer with the purpose of communicating legal advice. Waiver of the privilege is applicable in the same situations where a verbal or written (not e-mail) communication would no longer be afforded privilege, such as the disclosure to a third person. The retransmission of the e-mail communication between the attorney and the client to other employees will not jeopardize the privilege if the communication was for legal advice and the advice is passed to other employees who are directly concerned with the legal matter (i.e., they have a need to know).

The greatest worry about e-mail generally is that it is a spur-of-the moment communication with little thought and often includes a smart remark or other off-hand comment. If someone was writing a formal letter, that same comment would never appear. Since the "send" button is so easy to hit, comments that might be made in a conversation are now put into writing. These comments might have tremendous evidentiary value, but they are very difficult to find. Such comments occur in a reply to a message or are contained in a string of messages with an entirely different subject heading. A search for a comment like this is time-consuming, but cannot be overlooked because of its importance to your case.

E-mail searches, in general, are time-consuming and expensive and parties often try to pass the cost of production to the other side. It is generally understood that the producing party bears the cost. However, where the cost is unduly burdensome, it might be shifted when the outcome of the production is very uncertain and is so costly that the producing party would be extremely disadvantaged. If cost shifting does occur, it is only because the producing party was able to meet a very high burden of proof that the shift should occur in the interest of justice.

3. Word Processing

Another very important area of "e-discovery" involves the production of electronic documents that are created with word processing software. The origin of these documents may sometimes be disavowed or the documents may be different because they have been altered. Most word processing documents have a "properties" button that will disclose the author or who the software was registered to when the document was first authored. The properties button will also disclose, generally, when the document was edited as well as the time taken to do the editing and the date the alteration was made. Even if the author cannot be identified, at least the purchaser who registered the software with the manufacturer can be determined. This is often referred to as "metadata."

Another way to determine if a document was altered is by comparison to a back-up file. Sometimes the back-up file may be found on the hard drive as the computer often backs-up documents so that they may be retrieved in the event of a system failure or power failure. The computer will recover the portions of the document that were saved upon restart.

4. Market Data

Information of this type is electronically stored and analyzed in order for a business to evaluate the sales of their goods in differentiated markets throughout the world. The data may consist of bar code data purchased from ACNielsen or Information Resources, Inc. (IRI), two market research companies. The data can be massaged and analyzed to find out what the impact of a new product has on their existing sales of products, or how an improvement in the product affected current sales, and in what regions or territories those effects took place.

For the patent attorney, this information can be useful in determining damages for an infringing product that has been introduced to the marketplace. The reduction in sales or even an increase in sales because of the entry of another's product can be determined. Often experts are available to help sort through the data to understand what the impacts are to a company's bottom line.

Lost profits can be established from these records. As you lose market share the analysis will show you how much you lost in product sales. In the unlikely event that sales were increased, a reasonable royalty rate might be established. Obtaining such material in discovery may be critical to the determination of damages.

5. Financial Information

Electronic data available from the accounting department that may also be critical evidence includes expenditures involving the payment of money for the obtaining a patent, the research that was performed in reducing the subject matter to practice, and the expenditures for further implementing the production of the invention. All are considered damages in a patent infringement case. These records are discoverable by the other side as well. As you establish your damages or as your opposition establishes damages, these records become important to verify the exact amount of damages for the patent infringement. Again, you will need an expert to examine the records and provide an analysis of the data.
6. Chain of Custody

Once the e-documents are received, make sure there is a solid chain of custody. This is equally important for not just the documents received but also for the documents within your client's control. There must be someone accountable for the custody of the documents at all times so that there is no unauthorized handling of the files. The documents need to be authenticated for trial and to avoid claims that the data has been altered or subjected to spoliation. Therefore, a chain of custody for the electronic files must be established.

Copying the files in a mirror image of the original files before sifting through the data is highly recommended. There is always the possibility that the software or the hardware you use might corrupt the data files being examined. Always remember that a proactive approach to the electronic documents gives you a much better chance for success than a passive approach.

4. Using Technology For Depositions

Depositions are a very important part of the discovery process and there are very few attorneys who do not at least videotape their depositions. In the past, court reporters used court stenographic equipment to take down the witness' testimony and then at a later time translated it into plain English. With today's advancements, the court reporter's notes can be translated by LiveNote software so that the attorney can have real-time translation of the transcript running right on his or her computer. LiveNote also permits remote users to receive the transcript simultaneously. The remote user can communicate with the attorney taking the deposition through instant messaging (i.e., text messages that will pop up on the computer screen).

The video can also be digitized and is readily viewed on a computer. In the case of web-casting, that testimony can be made available to other attorneys on the trial team who did not make the trip to the deposition location.

The advantage of digitizing the video of the deposition is that the transcript and the video can be matched and played together at trial utilizing software, such as Trial-Max, a product of FTI Consulting. The impact of doing this cannot be minimized. It is one thing for the lawyer or even the witness to read back the portions of the deposition that is in contention. You can be sure that neither will be able to reproduce the inflection of the words when they were first said at the deposition. With the playback of an impeaching deposition, the jury will see the attitude of the witness at the deposition and will be able to judge for themselves whether the witness is lying now or in the deposition. This is a much more effective way at arriving at the truth. Also videos of other witnesses may be used with a witness, such as testimony from a subordinate that contradicts the testifying witness.

5. Digitizing Documents

Attorneys who have access to laptop computers should think very hard about the ways these digital marvels can be utilized to make for a much more efficient process of trial preparation and at trial. Of course, the attorney should always back up their data files on a regular basis to another computer or to a server to minimize the catastrophe resulting from loss or damage. An attorney will never be able to reproduce that volume of work in a short time as the trial quickly approaches should that computer disappear.

The laptop computer is a superior tool for litigation. There are different kinds of litigation management software such as Concordance, CaseMap, and Trial-Max. Further, the attorney can put all his notes and examinations on the computer. Many attorneys in the past have kept files for the witnesses that would take the stand with all the documents regarding that witness in a file. Sometimes the documents failed to make it to the appropriate file and the lawyer would be at a loss during the examination of the particular witness.

Now, with the use of TrialMax, those documents can be kept in a witness file on the laptop and if a document is missing, by using an Optical Character Recognition ("OCR") software program such as Concordance, the drive can be quickly searched for the key terms and the needed document can be produced in very little time allowing for a more complete and efficient trial. These files are generally scanned into the laptop computer and set up in Portable Document Format (PDF). All correspondence and pleadings may similarly be scanned and placed on the computer. By having them available on the laptop computer during trial, it alleviates the necessity of carrying multiple copies of the paper documents to the courtroom.

6. Conclusion

The digital age has arrived, and courts are making conversions to accommodate it. In many federal courts, parties are required to file papers with the court system electronically and in particular instances provide service of process to an opposing party through e-mail. The courts have slowly made accommodations toward implementation of electronics. The public, however, and our clients have been much quicker in adapting to and accepting the digital age. They have embraced e-mail and word processors, database software to examine data that they have created for so many reasons, leaving a trail of ones and zeroes over millions of miles of wire and fiber and on into storage facilities so vast when the amount of data that is stored in them is considered. It gives almost new meaning to the term "discovery." "A needle in a haystack" was so much easier to spot.

As litigation becomes "paperless," attorneys need to adapt and become masters of gathering and using digital evidence.