A federal judge in Maryland ruled late last month that a company being sued for copyright infringement waived attorney-client privilege for 165 documents accidentally disclosed to opposing counsel during the e-discovery process.
In a 43-page opinion, issued in federal court in Baltimore late last month, Judge Paul Grimm said that Creative Pipe Inc. failed to exercise “reasonable precautions” to ensure that sensitive information in business documents and e-mail communications was protected before it was made accessible to plaintiff Victor Stanley Inc. during electronic evidence gathering procedures last year.
Victor Stanley, in Dunkirk, Maryland, charged Creative Pipe with intellectual property infringement and unfair competition in October 2006. The company claimed that it lost educational and government contracts because Creative Pipe inappropriately accessed images from its Web site.
During the e-discovery process between the two parties in Sept. 2007, Creative Pipe allowed an untested keyword search tool to be used by Victor Stanley’s lawyers to comb through its electronically stored information, noted Grimm in his opinion. The search uncovered 165 documents of privileged data, including e-mail communications between Creative Pipe and its legal team.
A computer forensics expert hired by Creative Pipe had built a list of 70 different keyword terms to find and retrieve privileged and protected information from documents which were set to be delivered to Victor Stanley for e-discovery.
Although all non-text searchable documents were supposed to be examined individually by Creative Pipe’s former legal team of Meyer, Klipper & Mohr PLLC, the lawyers were only able to look at document titles that raised red flags due to time constraints, according to court documents.
Court documents show that Creative Pipe had voluntarily abandoned an earlier request for a so-called “clawback agreement,” which would have enabled the outdoor patio furniture company to retain its privilege rights for any accidentally disclosed data. Instead, the company gained four extra months to prepare documents for discovery.
In the decision, Grimm criticized Creative Pipe for failing to take the necessary steps to ensure the privacy of its data, and for underestimating the complexity of using keyword search techniques in a legal dispute.
“The Defendants are regrettably vague in their description of the seventy keywords used for the text-searchable ESI privilege review, how they were developed, how the search was conducted, and what quality controls were employed to assess their reliability and accuracy,” wrote Grimm in his opinion.
Grimm said Victor Stanley can use information which was mistakenly disclosed by Creative Pipe as evidence in its lawsuit. “Defendants’ protests that they did their best and that their conduct was reasonable rings particularly hollow,” he noted.
