Canadian Lawyer InHouse

By Renato Pontello Preparing for the litigation hold It's a scenario many in-house counsel would be advised to consider. Y ou are sitting at your desk at ACME Corporation enjoying an idyllic afternoon. Your legal department is humming along like a well-oiled machine. Suddenly the chief financial officer darkens your door, clutching a sheaf of imposing looking papers. You have been served with a patent infringement suit by your largest competitor with the potential of affecting the bulk of your business. As it turns out the CFO has been huddling with your senior sales team and you learn you were served several hours ago. You stand up and stammer: "Management needs to huddle now, follow me." You quickly think who you need in the room: VP of information systems, VP human resources, VP sales, the affected product line managers, and VP investor relations. You hope it is not too late. You try and recall ACME's document retention practices. You also wonder which external counsel should be patched in. Then there are customers to alert, a press release will have to be drafted, and a public relations firm may have to be engaged. As you head into the boardroom you hear a document shredding machine in the distance, and you wince. Now rewind the movie. The CFO knows to walk the paperwork to your office immediately after you have been served. You have played this, and other scenarios, out before. You have met with your VP IS and fully understand your document retention capabilities and where records are stored across all of your global locations, and you 38 • A u gu st 2013 have buy-in from management to push your document retention policies down the chain of command. Observance of the policies is audited annually and you have remembered to include mobile devices and personally owned devices as well. Your employees understand the repercussions of violating the policies. In fact, you recently issued an email to ACME's employees and consultants regarding the importance of following the policy, in light of the decision of the U.S. District Court in Wilmington, Del. of January of this year where Rambus Inc., a designer of high-speed memory chips, was barred from enforcing 12 of its patents against a competitor, Micron Technology Your disclosure committee has been apprised of its legal obligations regarding material disclosure and has a solid grasp of what is expected. Amongst the possibilities you have explored with the committee is being served on the eve of an annual general meeting, a critical new product launch, the release of year-end financial results, or some other important milestone and how that may impact ACME's disclosure obligations. Very significantly you have a litigationhold letter ready to be deployed on a worldwide basis to all of your employees and consultants. It advises the firm has been named as a defendant in a suit and that there is a legal obligation to preserve all documents and records relevant to the proceeding in any way. Recipients are asked to read the entire letter carefully. It mentions they can be called to give testimony about their document and data preservation efforts. No one is permitted to destroy or delete relevant evidence that could be helpful to the plaintiff or support ACME's case and/or defenses it advises. The letter carefully describes the types of data which must be retained. All standard document destruction policies should be Your employees understand the repercussions of violating the policies. Inc., because Rambus was found to have improperly destroyed documents tied to a patent infringement lawsuit. You have rehearsed being served with a patent infringement suit with your external litigation counsel and have an action plan in place. A draft generic press release has been prepared as well as an internal communication to employees and consultants and one for customers. The sales department has an up-to-date list of strategic customers to call once the messaging has been worked out. A PR firm has been consulted with and you have some basic notes ready for the CFO, who has received media training on point. INHOUSE immediately suspended. Lastly, documents should not be distributed outside the company and all ordinary steps should be taken to preserve solicitor-client privilege. As you roll up your shirt sleeves you know it is going to be a long night, however, you draw some solace from the fact that many of the basic backstops you will need have been put in place, ready to be deployed. IH Renato Pontello is legal counsel to Solantro Semiconductor Corp. He was formerly vice president legal, general counsel and corporate secretary to Zarlink Semiconductor Inc.

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