2008-01-07 Qualcomm v Broadcom Sanctions Order - 6 Attorneys Referred to California State Bar

In a harshly worded 48 page opinion issued today by United States Magistrate Judge Barbara Major in the Qualcomm v Broadcom patent matter Case 3:05-cv-01958-B-BLM ( (SD CA), 6 Qualcomm attorneys/outside counsel were sanctioned for discovery abuses and referred to to the California State Bar for possible disciplinary action.

The Court summarized the issue as follows:

"In a nutshell, the issue of whether Qualcomm participated in the JVT in 2002 and early 2003 became crucial to the instant litigation."

As I read the opinion (and blog) here are the salient facts:

1. Qualcomm 30(b)6 deponent Viji Raveendran testified that Q had not been involved in the development of the MPEG-4 video standard, even though Broadcom had obtained "reflector email" showing participation in the standards workgroup by one viji@qualcomm.com." That deponent's computer was not searched for discoverable material prior to her deposition.

2. Qualcomm's attorneys filed a motion for summary adjudication on the issue of it's participation in the MPEG-4 standards group, dismissing the presence of the 30(b)6 deponent's Qualcomm email in the reflector list of the ad-hoc working group for the MPEG-4 standard, and stating again that Qualcomm did not participate in the standards development process. The Motion and memorandum in support of that motion was signed by both in-house Qualcomm attorneys and it's outside counsel.

3. [Excerpt from Opinion] " While preparing Qualcomm witness Viji Raveendran to testify at trial, attorney Adam Bier discovered an August 6, 2002 email to viji@qualcomm.com welcoming her to the avc_ce mailing list. Decl. of Adam Bier at 4, Ex. A. Several days later, on January 14, 2007, Bier and Raveendran searched her laptop computer using the search term “avc_ce” and discovered 21 separate emails, none of which Qualcomm had produced in discovery. Id. at 7. The email chains bore several dates in November 2002 and the authors discussed various issues relating to the H.264 standard. (Blognote --- not good).

4. [Order Excerpt] "The Qualcomm trial team decided not to produce these newly discovered emails to Broadcom, claiming they were not responsive to Broadcom’s discovery requests."
(Blognote --- looking worse...)

5. [Order Excerpt] "Four days later, during a sidebar discussion, Stanley Young argued against the admission of the December 2002 avc_ce email reflector list, declaring: “Actually, there are no emails -- there are no emails ... there’s no evidence that any email was actually sent to this list. This is just a list of email ... addresses. There’s no evidence of anything being sent.” Trial Tr. vol. VII at 91-92; Young Decl. at 25-29. None of the Qualcomm attorneys who were present during the sidebar mentioned the 21 avc_ce emails found on Raveendran’s computer a few days earlier."

So, what was the denouement? Well, the Magistrate Judge Major recounts what trial Judge Brewster had to say:

"Judge Brewster further found that Qualcomm’s “counsel participated in an organized program of litigation misconduct and concealment throughout discovery, trial, and post-trial before new counsel took over lead role in the case on April 27, 2007.” Id. at 32. Based on “the totality of the evidence produced both before and after the jury verdict,” and in light of these findings, Judge Brewster concluded that “Qualcomm has waived its rights to enforce the ‘104 and ‘767 patents and their continuations, continuations-in-part, divisions, reissues, or any other derivatives of either patent.” Id. at 53." (Blognote --- this is very bad patent juju --- for Qualcomm). Judge Brewster eventually awarded $9,259,985.09 in attorneys fees and related costs as sanctions.

But, we're not done, not by a long shot. Here's a recounting of post-trial misconduct by Qualcomm.


1. [Order Excerpt] By letter dated February 16, 2007, (Qualcomm counsel) Bier told Broadcom “[w]e continue to believe that Qualcomm performed a reasonable search of Qualcomm’s documents in response to Broadcom’s Requests for Production and that the twenty-one unsolicited emails received by Ms. Raveendran from individuals on the avc_ce reflector are not responsive to any valid discovery obligation or commitment...” Despite repeated requests, the Order continues "[T]hroughout the remainder of March 2007, Bier repeatedly declined to update Broadcom on Qualcomm’s document search." (Blognote: Umm. Sounds like a story line stolen from the "Wizard of Oz")

2. The Money Shot: [Order Excerpt] "But, on April 9, 2007, James Batchelder and Louis Lupin, Qualcomm’s General Counsel, submitted correspondence to Judge Brewster in which they admitted Qualcomm had thousands of relevant unproduced documents and that their review of these documents “revealed facts that appear to be inconsistent with certain arguments that [counsel] made on Qualcomm’s behalf at trial and in the equitable hearing following trial.” Saxton Decl., Exs. H & I. Batchelder further apologized “for not having discovered these documents sooner and for asserting positions that [they] would not have taken had [they] known of the existence of these documents.” Id., Ex. H. As of June 29, 2007, Qualcomm had searched the email archives of twenty-one employees and located more than forty-six thousand documents (totaling more than three hundred thousand pages), which had been requested but not produced in discovery. Broadcom’s Reply Supp. Mot. for Sanctions at 1 n.2. Qualcomm continued to produce additional responsive documents throughout the summer. Doc. No. 597 (Qualcomm’s August 7, 2007 submission of three additional avc_ce emails it had not produced to Broadcom).

What Judge Major found:

1. "[C]lear and convincing evidence that Qualcomm intentionally engaged in conduct designed to prevent Broadcom from learning that Qualcomm had participated in the JVT during the time period when the H.264 standard was being developed.

2. "To this end, Qualcomm withheld tens of thousands of emails showing that it actively participated in the JVT in 2002 and 2003 and then utilized Broadcom’s lack of access to the suppressed evidence to repeatedly and falsely aver that there was “no evidence” that it had participated in the JVT prior to September 2003.

3. Qualcomm’s misconduct in hiding the emails and electronic documents prevented Broadcom from correcting the false statements and countering the misleading arguments.

Here's where the first interesting argument comes in. Broadcom never filed a motion to compel against Qualcomm, apparently lulled into non-action by Qualcomm's false interrogatory responses and by what documents it did receive. The Court notes that Broadcom's remedies were restricted because it had not filed a motion to compel:

"If Broadcom had filed a motion to compel, it could have obtained sanctions against Qualcomm and its attorneys. Fed. R. Civ. P. 37(a) & (b). Because Broadcom did not file a motion to compel, it may only seek Rule 37 sanctions against Qualcomm. Fed. R. Civ. P. 37(c). Thus, Qualcomm’s
suppression of documents placed its retained attorneys in a better legal position than they would have been in if Qualcomm had refused to produce the documents and Broadcom had filed a motion to compel."

(Blognote) --- This exposes the nasty underside of eDiscovery. It is extremely easy to "bury" digital evidence. Even if Broadcom *had* filed a motion to compel, the denial by Qualcomm that it had any additional evidence would in all likelihood have been taken as a truthful representation by the Court. The game? Destroy/alter evidence, then aver that either nothing exists, that you haven't altered it, or that you've produced whatever does exist. Most courts will then deny a motion to compel on the basis that one "cannot produce what does not exist."

In a brilliantly insightful piece of wordsmithing, the Court picks up on the idea of "gaming" the system ---

[Court Excerpt] "This dilemma highlights another problem with Qualcomm’s conduct in this case. The Federal Rules of Civil Procedure require parties to respond to discovery in good faith; the rules do not require or anticipate judicial involvement unless or until an actual dispute is discovered. As the Advisory Committee explained, “[i]f primary responsibility for conducting discovery is to continue to rest with the litigants, they must be obliged to act responsibly and avoid abuse.” Fed. R. Civ. P. 26(g) Advisory Committee Notes (1983 Amendment).

The Committee’s concerns are heightened in this age of electronic discovery when attorneys may not physically touch and read every document within the client’s custody and control. For the current “good faith” discovery system to function in the electronic age, attorneys and" clients must work together to ensure that both understand how and where electronic documents, records and emails are maintained and to determine how best to locate, review, and produce responsive documents. Attorneys must take responsibility for ensuring that their clients conduct a comprehensive and appropriate document search. Producing 1.2 million pages of marginally relevant documents while hiding 46,000 critically important ones does not constitute good faith and does not satisfy either the client’s or attorney’s discovery obligations. Similarly, agreeing to produce certain categories of documents and then not producing all of the documents that fit within such a category is unacceptable. Qualcomm’s conduct warrants sanctions. [Emphasis Added] (We had a name for this game when I was growing up. Not bloggable)

Judge Major then reveals the potentials (and imposes consequences for) imposing sanctions in what I may become "the famous" Footnote 4:

"Qualcomm attempts to capitalize on this failure, arguing “Broadcom never raised any concern regarding the scope of documents Qualcomm agreed to produce in response to Request No. 50, and never filed a motion to compel concerning this request. Accordingly, there is no order compelling Qualcomm to respond more fully to it.” Mammen Decl. at 9. Qualcomm made the same argument with regard to its other discovery responses. Id. at 9-11; see also Bier Decl., Ex. C. This argument is indicative of the gamesmanship Qualcomm engaged in throughout this litigation. Why should Broadcom file a motion to compel when Qualcomm agreed to produce the documents? What would the court have compelled: Qualcomm to do what it already said it would do? Should all parties file motions to compel to preserve their rights in case the other side hides documents?" [Emphasis added].

The Ruling:

[Court Excerpt] "The Court’s review of Qualcomm’s declarations, the attorneys’ declarations, and Judge Brewster’s orders leads this Court to the inevitable conclusion that Qualcomm intentionally withheld tens of thousands of decisive documents from its opponent in an effort to win this case and gain a strategic business advantage over Broadcom. Qualcomm could not have achieved this goal without some type of assistance or deliberate ignorance from its retained attorneys. Accordingly, the Court concludes it must sanction both Qualcomm and some of its retained attorneys."

In Footnote 5 (also noteworthy) the Court depiction of this litigation is nothing short of, well, an unmitigated disaster: "The Court is limited in its review and analysis of the debacle that occurred in this litigation because Judge Brewster only referred the discovery violation to this court." (Blognote --- the failure to produce more than 46,000 emails, and repeatedly averring that none exist, *is* gaming the system)

So. What *didn't Qualcomm do? Here's what the Court says:

"Qualcomm has not established “substantial justification” for its failure to produce the documents. In fact, Qualcomm has not presented any evidence attempting to explain or justify its failure to produce the documents. Despite the fact that it maintains detailed records showing whose computers were searched and which search terms were used (Glathe Decl. at 3 (identifying the individuals whose computers were not searched for specific types of documents)), Qualcomm has not presented any evidence establishing that it searched for pre-September 2003 JVT, avc_ce, or H.264 records or emails on its computer system or email databases. Qualcomm also has not established that it searched the computers or email databases of the individuals who testified on Qualcomm’s behalf at trial or in depositions as Qualcomm’s most knowledgeable corporate witnesses; in fact, it indicates that it did not conduct any such search. Id.; Irvine Decl. at 2; Ludwin Decl. at 3; Decl. of Viji Raveendran at 1, 4. The fact that Qualcomm did notperform these basic searches at any time before the completion of trial indicates that Qualcomm intentionally withheld the documents. " (Emphasis in original -- Blognote: Note the Court's use of bolding *and* italics to make a point).

Thinking about designating a person with less-than-adequate knowledge as a Fed.R.Civ.P. 30(b)6 witness? Think again. Qualcomm tried this and, in retrospect, will no doubt regret it's decision, a point this Court makes abundantly clear:

[Order Excerpt] "If a witness is testifying as an organization’s most knowledgeable person on a specific subject, the organization has an obligation to conduct a reasonable investigation and review to ensure that the witness does possess the organization’s knowledge. 6 Fed. R. Civ. P. 30(b)(6); In re JDS Uniphase Corp. Sec. Litig., 2007 WL 219857, *1 (N.D. Cal. 2007)."

Okay, another notable footnote, for those mindful of ethics obligations on the part of both in-house as well as outside counsel:

[Order Excerpt] " Qualcomm’s self-serving statements that “outside counsel selects ... the custodians whose documents should be searched” and the paralegal does not decide “what witnesses to designate to testify on behalf of the company” (Glathe Decl. at 1) does not relieve Qualcomm of its obligations. Qualcomm has not presented any evidence establishing what actions, if any, it took to ensure it designated the correct employee, performed the correct computer searches, and presented the designated employee with sufficient information to testify as the corporation’s most knowledgeable person. Qualcomm also has not presented any evidence that outside counsel knew enough about Qualcomm’s organization and operation to identify all of the individuals whose computers should be searched and determine the most knowledgeable witness. And, more importantly, Qualcomm is a large corporation with an extensive legal staff; it clearly had the ability to identify the correct witnesses and determine the correct computers to search and search terms to use. Qualcomm just lacked the desire to do so."

The Role of Qualcomm's Outside Counsel -- The Options Game

Judge Major sets out four possible "options" scenarios involving potential attorney misconduct by Qualcomm's retained counsel:

[Order Excerpt] "
The next question is what, if any, role did Qualcomm’s retained lawyers play in withholding the documents? The Court envisions four scenarios.

First, Qualcomm intentionally hid the documents from its retained lawyers and did so so effectively that the lawyers did not know or suspect that the suppressed documents existed.

Second, the retained lawyers failed to discover the intentionally hidden documents or suspect
their existence due to their complete ineptitude and disorganization.

Third, Qualcomm shared the damaging documents with its retained lawyers (or at least some of them) and the knowledgeable lawyers worked with Qualcomm to hide the documents and all evidence of Qualcomm’s early involvement in the JVT."

...[F]ourth, while Qualcomm did not tell the retained lawyers about the damaging documents and evidence, the lawyers suspected there was additional evidence or information but chose to
ignore the evidence and warning signs and accept Qualcomm’s incredible assertions regarding the adequacy of the document search and witness investigation."

On with the analysis:

Was is option Number One or Two? No:

[Court Excerpt] "Given the impressive education and extensive experience of Qualcomm’s retained lawyers (see exhibit A7), the Court rejects the first and second possibilities. It is inconceivable that these talented, well-educated, and experienced lawyers failed to discover
through their interactions with Qualcomm any facts or issues that caused (or should have caused) them to question the sufficiency of Qualcomm’s document search and production. Qualcomm did not fail to produce a document or two; it withheld over 46,000 critical documents that extinguished Qualcomm’s primary argument of non-participation in theJVT. In addition, the suppressed documents did not belong to one employee, or a couple of employees who had since left the company; they belonged to (or were shared with) numerous, current Qualcomm employees, several of whom testified (falsely) at trial and in depositions. Given the volume and importance of the withheld documents, the number of involved Qualcomm employees, and the numerous warning flags, the Court finds it unbelievable that the retained attorneys did not know or suspect that Qualcomm had not conducted an adequate search for documents." (Blognote --- unbelievable is an even better term than the more commonly used "strains credulity")

Was it Option Three? No.

[Court Excerpt] "The Court finds no direct evidence establishing option three. Neither party nor the attorneys have presented evidence that Qualcomm told one or more of its retained attorneys about the damaging emails or that an attorney learned about the emails and that the knowledgeable attorney(s) then helped Qualcomm hide the emails. While knowledge may be inferred from the attorneys’ conduct, evidence on this issue is limited due to Qualcomm’s assertion of the attorney-client privilege."

Option Four --- "Chose Not to Look" --- Intent Rules.

[Court Excerpt] "Thus, the Court finds it likely that some variation of option four occurred; that is, one or more of the retained lawyers chose not to look in the correct locations for the correct documents, to accept the unsubstantiated assurances of an important client that its search was
sufficient, to ignore the warning signs that the document search and production were inadequate, not to press Qualcomm employees for the truth, and/or to encourage employees to provide the information (or lack of information) that Qualcomm needed to assert its non-participation argument and to succeed in this lawsuit. These choices enabled Qualcomm to withhold hundreds of thousands of pages of relevant discovery and to assert numerous false and misleading arguments to the court and jury.

The Court's six word conclusion:

"This conduct warrants the imposition of sanctions."

The Court's reasoning for its ability to sanction 19 attorneys: Inherent Power. And another memorable footnote (5)

[Order Excerpt] "The applicable discovery rules do not adequately address the attorneys’
misconduct in this case. Rule 26(g) only imposes liability upon the attorney who signed the discovery request or response. Fed. R. Civ. P. 26(g). Similarly, Rule 37(a) authorizes sanctions against a party or attorney only if a motion to compel is filed; Rule 37(b) authorizes sanctions against a party or an attorney if the party fails to comply with a discovery order; and, Rule 37(c) only imposes liability upon a party for the party’s failure to comply with various discovery obligations. Fed. R. Civ. P. 37. Under a strict interpretation of these rules, the only attorney who would be responsible for the discovery failure is Kevin Leung because he signed the false discovery responses. Doc. No. 543-3, Exs. W, X & Y; Robertson Decl., Ex. 2. However, the Court believes the federal rules impose a duty of good faith and reasonable inquiry on all attorneys involved in litigation who rely on discovery responses executed by another attorney. See Fed. R. Civ. P. 26 Advisory Committee Notes (1983 Amendment) (Rule 26(g) imposes an affirmative duty to engage in pretrial discovery in a responsible manner that is consistent with the spirit and purposes of Rules 26 through 37); Fed. R. Civ. P. 11 (by signing, filing, submitting or advocating a pleading, an attorney is certifying that the allegations have factual, evidentiary support). Attorneys may not utilize inadequate or misleading discovery responses to present false and unsupported legal arguments and sanctions are warranted for those who do so. Id. The facts of this case also justify the imposition of sanctions against these attorneys pursuant to the Court’s inherent power. See, Fink, 239 F.3d at 993-94 (“an attorney’s reckless misstatements of law and fact, when coupled with an
improper purpose ... are sanctionable under a court’s inherent power”). "

One last notable footnote (13): the failure to have documents reviewed by a senior attorney does not excuse discovery misconduct; it amplifies it.

[Order Excerpt] " Several declarations state or imply that senior lawyers failed to review or comment on pleadings prepared by junior lawyers and sent to them prior to filing. If this is true, it constitutes additional evidence that the senior lawyers turned a blind eye to Qualcomm’s discovery failures."

The Court's conclusion:

"For the reasons set forth above, the Court GRANTS IN PART and DENIES IN PART Broadcom’s sanction motion and ORDERS Qualcomm to pay Broadcom $8,568,633.24. Qualcomm will receive credit toward this sanction for any amount it pays to Broadcom to satisfy the Exceptional Case sanction. The Court also REFERS to The State Bar of California for an investigation of possible ethical violations attorneys James R. Batchelder, Adam A. Bier, Kevin K. Leung, Christian E. Mammen, Lee Patch and Stanley Young. The Court ORDERS these six attorneys and Qualcomm in-house attorneys Alex Rogers, Roger Martin, William Sailer, Byron Yafuso, and Michael Hartogs to appear 9:00 a.m. on Tuesday, January 29, 2008, in the chambers of the Honorable Barbara L. Major, United States Magistrate Judge, 940 Front Street, Suite 5140, San Diego, California, 92101 to develop the comprehensive Case Review and Enforcement of DIscovery Obligations protocol in accordance with this Order."

What this case underscores is the electronic discovery/digital evidence gamesmanship (nay, brinksmanship) currently ongoing. The script: hide/alter/delete/ and then claim that evidence does not exist. A Court will in all likelihood look askance at a motion to compel, and hold that it cannot compel what a party says it does not have. The trouble is, what a party does not have can be easily created after the fact, and creates a veil most courts are loathe to pierce. This one did, but only with the help of a single "email reflector" that gave rise to the misconduct.

2008-01-05 Massachusetts Law Does Not Recognize Tort of Conversion of Computer Data

In a December 2007 decision, In re TJX Companies Retail Sec. Breach Litigation --- F.Supp.2d ----, 2007 WL 4404166 (D.Mass. 2007) the Court ruled that a claim for conversion based on intangible computerized credit cardholder and account data was not cognizable in Massachusetts.

The TJX Court did note the contrast with the New York Court of Appeals decision in Thyroff v. Nationwide Mutual Insurance Co., 8 N.Y.3d 283, 832 N.Y.S.2d 873, 864 N.E.2d 1272 (N.Y.2007) (Blogged here on October 6, 2007):

The question certified to the New York Court of Appeals: "Is a claim for the conversion of electronic data cognizable under New York law?" Thyroff, 460 F.3d at 408.

The answer: On March 22, 2007, the New York Court of Appeals answered the certified question in the affirmative. See Thyroff, 8 N.Y.3d at 293, 832 N.Y.S.2d 873, 864 N.E.2d 1272.

Straining credulity (imo) the TJX Court declined to follow Thyroff, holding that Massachussetts law does not recognize the tort of conversion of computer data. TJX, 2007 WL 4404166 at *2. Further amplifying the strain is the Court's stretch in finding that the New York Court of Appeals landmark decision does not apply to "any" digital data, but only where the digital data was "indistinguishable" from printed documents. Id. That was not the precise ruling in Thyroff; it appears that the TJX court incorporated what appears to be at best dicta from Thyroff into the New York Court of Appelas holding.

The Court's use of the word "indistinguishable" is also both intriguing and troubling. First, a contextually complete reading of the Thyroff does not necessarily lead one read in such a limitation to the tort of digital data conversion. Second, does the TJX Court provide a carve-out or not?

One might imagine the evidentiary issues arising in Massachusetts from parties offering arguments either supporting or challenging computer generated evidence as "indistinguishable" from printed documents.

Er, um, well, we may have some problems down the line in Massachussetts. For example, how does the "indistinguishable from printed documents" test apply to metadata associated with the data formatted for printing?

2008-01-04 Paucity Plus Hunch Insufficient Basis to Grant Additional eDiscovery

U.S. Magistrate Judge John Facciola's eDiscovery decisions are typically cutting edge. Today's decision in Hubbard v Potter, Civil Action No. 03-1062 (D.C.D.C. 2007) is true to form, and exposes challenges faced by a party to whom (apparently) the importance of properly staged electronic discovery came too late.

In denying a round of what Judge Facciola describes (imo, aptly) as "meta-discovery" or discovery about discovery, and invoking Zubulake, he reminds the parties that "[I]nstead of chasing the theoretical possibility that additional documents exist, courts have insisted that the documents that have been produced permit a reasonable deduction that other documents may exist or did exist and have been destroyed." Moreover, the existence of a mere "paucity" of discovery documents does not warrant the granting of additional discovery, where such "paucity" is accompanied only by a "hunch" that there has been a failure to produce.

The Court paid greater attention to plaintiffs’ argument that additional discovery was warranted "because on several occasions defendant produced responsive documents yet maintained that they were non-responsive," and found that argument "far more compelling."
The defendant in this case first failed to produce documents, then labeled these documents "Non-responsive" with which characterization the Court roundly and emphatically disagreed.

Nevertheless, Judge Facciola denied plaintiffs' request for additional electronic discovery, again basing that denial on the inadequacy of a hunch-based-on-paucity argument.

The Court first notes that a great number of electronic documents had been printed out and disclosed by the defendant in hard copy:

"For example, although plaintiffs complain that many facilities provided very little by way of electronic documentation, plaintiffs concede that '[s]ome of the 25 covered facilities produced a significant volume of hard copies of electronic correspondence.'''


The Court then states that "[P]laintiffs have no evidence that there exist additional responsive electronic documents. Rather, as with plaintiffs’ general argument regarding the paucity of documents, plaintiffs can point to nothing more than their own speculation that other electronic documents exist."

It would have been interesting to sit in on that Fed. R. Civ. P. 16(b)5 meeting. One might wonder just how badly worded was Plaintiffs' document production request(s), whether the plaintiffs reserved the right to conduct adequate electronic discovery, and whether documents were sought after in their origination format, i.e., in native electronic format.

I suspect not, and am reminded of Judge Grimm's Lorraine v Markel American dicta in whcih he urges attorneys involved in eLitigation to "get it right the first time."

2007-12-23 Digital Darwinism

The New York Times article linked below discusses the problems and costs of maintaining digital works of art (cinema) over a long period of time. What this article helps expose is the fundamental problem facing all digital information generating entities: long term preservation and accessibility. What is subsumed within this question is how to ensure long term data provenance, or provably persistent data integrity.

This article actually sounds a clarion call for those who choose to archive anything digital. It also exposes issues not typically addressed by those selling recordable media or long-term storage or archive solutions.

First, "life-long storage" does not mean "long-life storage" --- the difference is crucial, and I believe generally ignored. Life-long storage of degrading media is really storage of media only, and not of the information contained therein. The "lifetime" of most media is described in terms providing no meaningful guidance (such as "mean time between failure" for hard drives). CD, DVD's do not typically advertise or disclose their stated "shelf-life." I remember purchasing some "gold" CD's that were hawked as "long life" only to see the glitter of gold dust exfoliated by these CD's with 5 years of their purchase. Others appeared intact, but became latter-day coasters. Newer storage media: I understand that "flash drives" just wear out over time. What that portends for the SD, Memory Sticks, thumb drives, and pc-memory storage components containing important information (oops, you store your key recovery data on that USB drive...") is not good. Nano-technology? No word yet as to longevity.

Ok, so that means that the 2007 Quadrennial 5-DVD Digitally Re-mastered Dolby 11.1 Enhanced Autographed, Numbered and Limited Edition Blue Ray/HDNA Directors' (and all other) Cut of "Blade Runner" for which I shell out 100 bucks may, or may not be playable five years after I take the DVD's out of the climate controlled, UV free dark room. I'll take my chances, but if they "decompose" I'll be sad. My sadness will be limited, however, only to the extent of my loss of a favorite flick (plus 100 bucks). Not so with enterprise or government information intended to last anywhere between a long time and in perpetuity.

What this means is that entities facing lengthy retention periods had better start considering developing and deploying methods for periodic and orderly migration to "fresher" media, or risk losing data. Including those redundant backups. This brings up the question of whether such entities are required to acknowledge and take steps now, or if these entities will be given a "pass" because they merely did what at the time appeared to provide compliance.

So, it appears that we may be leaving the survival of our most important information (digitally sourced) to "Digital Darwinism," in which information contained in only the "strongest" or most robustly maintained (and migrated) media, survive.

The other issue, in which I profess a biased interest, is how to ascertain and prove, through time, the integrity of such digital data that survives.

Maybe we should worry about that issue in 10 years. It looks as if we'll have a hard enough time proving provenance even for relatively short-lived data.

The link to the New York Time article entitled "The Afterlife Is Expensive for Digital Movies":
http://www.nytimes.com/2007/12/23/business/media/23steal.html?ref=business

2007-12-18 Ohio Electronic Voting Machine Test Results - Not Good

The Register.com (why do we hear this type of information first from the UK?) reports that the Ohio Secretary of State has just released a federally funded report on electronic voting machines used in Ohio, and has found that they contain critical failures that could affect the integrity of state elections.

Excerpted from the Ohio Secretary of State's report (link below):

The voting systems uniformly “failed to adequately address important threats against election data and processes,” including a“failure to adequately defend an election from insiders, to prevent virally infected software . . . and to ensure cast votes are appropriately protected and accurately counted. (Id.)"

"• Security Technology: The voting systems allow the “pervasive mis-application of security technology,” including failure to follow “standard and well-known practices for the use of cryptography, key and password management, and security hardware.” (Id.)
• Auditing: The voting systems exhibit “a visible lack of trustworthy auditing capability,” resulting in difficulty discovering when a security attack occurs or how to isolate or recover from an attack when detected. (Id.)
• Software Maintenance: The voting systems’ software maintenance practices are 'deeply flawed,' leading to 'fragile software in which exploitable crashes,lockups, and failures are common in normal use. (Id.)'"

Register.com also reports an executive for eVoting solution vendor Premier Election Solutions as cautioning people not to read too much into the report. That executive was quoted in the article as stating:

"'It is important to note that there has not been a single documented case of a successful attack against an electronic voting system, in Ohio or anywhere in the United States," an executive for Premier said in response to the report. "Even as we continue to strengthen the security features of our voting systems, that reality should not be lost in the discussion." He went on to say the report failed to take into account security improvements made since the study began.'"


Here's the man behind the curtain (sections of the report) we're asked to ignore:

"Specific Results: Source Code Analysis and Red Team (Penetration) Testing
ES&S
Failure to Protect Election Data and Software Failure to Effectively Control Access to Election Operations
Failure to Correctly Implement Security Mechanisms
Failure to Follow Standard Software and Security Engineering Practices

Premier
Failure To Effectively Protect Vote Integrity and Privacy
Failure to Protect Elections From Malicious Insiders
Failure to Validate and Protect Software
Failure to Follow Standard Software and Security Engineering Practices
Failure to Provide Trustworthy Auditing

Hart
Failure To Effectively Protect Election Data Integrity
Failure To Eliminate Or Document Unsafe Functionality
Failure To Protect Election From “Malicious Insiders”
Failure To Provide Trustworthy Auditing

Lessee: Failure to protect against insiders. Failure to follow "standard and well known practices" for crypto, key management and security hardware. Failure to provide a trustworthy auditing capability, making it "difficult" to discover when an attack occurs. Deeply flawed software maintenance practices resulting in "fragile software."

Hmm. Let's build a house with twelve doors and eleven locks. Certify it as safe because there has been no 'documented" case of a successful attack?

Article link:

http://www.theregister.co.uk/2007/12/17/ohio_voting_machines_study/

Report Link:

http://www.sos.state.oh.us/sos/info/EVEREST/00-SecretarysEVERESTExecutiveReport.pdf

2007-12-08 Metadata Revisited - What's In That JPG? --- Relevant Evidence.

For those in the "most metadata is irrelevant" camp, I offer this argument in support of my position that metadata is critical to electronic evidence authentication: The metadata contained in most digital photographs can reveal camera ID, camera type, shutter speed, or aperture setting together with the more visible time and date notations. If someone accuses someone as having taken a certain photograph, it might be helpful to ascertain this information *(through discovery, of course) and then argue that the accused:

1. Owned or did not own the type of camera used to take the photo
2. The camera had or lacked the capability to take photos at the listed aperture, shutter or ISO setting
3. The camera had or lacked the capability to take photos at the claimed resolution.

The underlying metadata reliability argument quite readily exposes the gaping holes in the "most metadata is irrelevant" argument, as one might argue that the metadata showing these attributes (including the time and date source, and time and date notation) was unprotected, and subject to the same type of manipulation as is all other unprotected digital data, and is therefore unreliable. One might also present (and this is really the more difficult argument) that the metadata was generated and maintained in such a fashion as to be authentic and reliable. In other words, the metadata, like the photo itself, is what it purports to be at the time relevance attached to it.

2007-12-08 eDiscovery Question - Do You Know the Way to ADS (Alternate Data Streams)?

Engineered into Windows since NT 3.1 (circa 1993) Alternate Data Streams was developed by Microsoft to allow for better compatibility with HFS (Mac) file systems. When creating any NTFS file or folder, a separate data stream (sometimes known as a "fork") can be also created for that file or folder. Data stored in an NTFS stream becomes invisible to Windows Explorer, text searches, and most other Windows' routine file apps. One may then store a 5Gb .zip file inside the streamed 20k text file. Windows Explorer and most other apps will then only detect the 20k text file, and not the 5GB streamed .zip file. So, one can use ADS to hide data within other data or folders.

Interestingly enough, ADS will be stripped from a file if the file is emailed as an attachment, or if it is copied to a FAT 32 drive (such as a thumb or flash drive), a CD/RW or other non-NTFS file, the ADS will be stripped from the copy.

There are numerous detection, and some removal tools available. ADS Spy is an exampled of a freeware detection and removal tool: http://www.bleepingcomputer.com/files/adsspy.php Good forensics tools such as enCase, SleuthKit, SMART, and others provide capability to detect ADS where a the forensically extracted copy is also an NTFS based filed.

Keep in mind:

1. Search for ADS.
2. ADS may contain discoverable information.
3. ADS may bear obscure non-relevant seeming names.
4. ADS may be encrypted.
5. ADS will be stripped when file is converted/copied to non-NTFS.
6. Ask for presence of and/or have examiner search for common ADS removal tools
7. Vista has a native ADS detection tool. From command prompt, type "dir /r"

2007-12-07 Printout of Metadata Held Sufficient for Discovery Purposes

The Sedona Principles' blanket approach to most metadata as "irrelevant" was adopted in Williams v. Sprint/United Management Co., 230 F.R.D. 640, 646 (D.Kan.2005). The Sprint court embraced the Sedona argument that "[I]n most cases and for most documents, metadata does not provide relevant information." Williams v. Sprint, 230 F.R.D. at 651. The Sprint court also noted that "[e]merging standards of electronic discovery appear to articulate a general presumption against the production of metadata[.]"

The recent decision in Michigan First Credit Union v. Cumis Ins. Society, Inc., Slip Copy, 2007 WL 4098213 (E.D.Mich. 2007) follows the Sprint approach and represents yet another example of how the Sedona Conference's blanket pronouncement is susceptible to misinterpretation. Here, the Court found that a printout of email metadata was sufficient and denied a motion to compel production of native, or source data. Curiously, even though the data and time information contained in the metadata was considered relevant, the "unique identifier" data was not, and since all was "printed out" in a pdf, the Court ruled that no further relevant information could be gleaned from the native, or source data:

"This includes the date and time of the creation of the message file, as well as a long string of characters that serves as a unique identifier for each message." She further states that she has reviewed the screen-shots of the email message produced for Plaintiff, and that "[a]ll metadata pertaining to the individual messages, except for the unique identifier referred to in the above paragraph is visible on these printouts." Hence, except for an "identifier" that would have no evidentiary value, the relevant metadata (such as date and time of creation) appears in the PDF copy. Were this not the case, there would be value in producing the metadata. However, since the PDF copies contain all the relevant information that Plaintiff would otherwise glean from the metadata, I agree with Defendant that producing the metadata for the emails would be unduly burdensome." Ibid, at *2.

Of course, no challenge to the metadata itself was apparently made. Imo, this is a clarion call not only to have the Sedona Principles properly reflect digital litigation reality, but also for counsel to bring themselves up to speed, and understand what it is they must challenge, or defend. Knowing what to ask for, and why, is a good start. The flip side is that being uninformed or misinformed as to the importance of metadata will at this time be more likely to result in this type of "gotcha."

2007-12-07 Options Backdating Update - Former United Health CEO Returns 418 Million

The New York Time and the Wall Street Journal report today that William W. McGuire has settled with the SEC and agreed to return an estimated 400 million dollars in connection with the options backdating civil action pending against him. According to one account, the total returned by McGuire will exceed 600 million dollars. Options backdating involves altering the date of an option grant, typically to increase it's value at the date of granting. The option grant's strike price is typically (and some argue should only) be the date on which the grant is made. This grant date also typically coincides with the commencement of a new position, or a bonus.

The grant date maneuverability necessarily involves some time based computer data manipulation, as I highly doubt that any of these time-shifted options grants were accomplished by the efforts Aunt Tillie typing on her Selectric, bottle of White-Out by her side, in the typing pool.

The malleability of computer data (and the difficulties involved in challenging and detecting same) are well set forth in In re Texlon Corporation Securities Litigation 2004 WL 3192729 (WD Ohio 2004). The Texlon court roundly excoriated the defendant's auditor PriceWaterhouseCoopers for violating its duty of preservation. The court noted that auditing documents were altered "well after the close of the [relevant auditing period] and that [PWC should have been on notice to preserve these documents..." The Texlon court further noted that expert testimony discovered that the metadata of certain documents had been altered or deleted, specifically that data had been time-and-date shifted.

What is perhaps most important is that the Texlon court also implicitly recognizes the issue of time based data manipulation, as it also took notice of expert testimony that "it is possible to alter any document in the database, and if the date on the computer used to alter the document is reset, the incorrect date will be incorporated in the metadata fields as the date of modification." Texlon, 2004 WL 319729 at *19. It should be noted that the matter ended prior to the judge's action on the reports and recommendations of the magistrate.

Perhaps in the future the time and date malleability of computer generated information will become the focus of more intense scrutiny by counsel as well as the Courts.

2007-11-22 ES&S Voting Machine Fracas: Exactly the Same (but with minor differences)

Calif. claims that "certification" sticker were repeatedly placed on appliances that had not been certified in violation of California law.

In keeping with the nature of this dispute, someone might also be comfortable in stating the two positions stated below are identical, and with only minor differences.

ES&S: The updated machines contain the "exact same hardware configuration and firmware version
Calif: The A200 uses version 1.1.2258 of the system firmware, while the earlier machine uses version 1.0.

I find the "exactly the same, but with minor differences" argument intriguing.

The link to the Register.com article:

http://www.theregister.co.uk/2007/11/21/e_voting_vendor_sued/print.html

2007-11-21 New Discovery Venue: Apple Reported to Track iPhone Online Usage

Two things to keep in mind, depending upon circumstances. First, this capability, if true, could provide a rich discovery source, but although one might "request" the information generated by an iPhone, one might be well advised to incorporate specific language directed toward this captured information. Second, be aware of the type of information divulged-by-agreement when you, or your client sign up for the pretty bauble.

The link:

http://www.pocket-lint.co.uk/news/news.phtml/11368/12392/apple-tracking-iphone-usage-reports.phtml

2007-11-14 Data in Transit --- Just Not in the Enterprise Document Policy; Defecting Employees Steal Reported 1.8 Billion Worth of Data from Company.

Darkreading.com (link below) reports that two top officials (including an incumbent president and an executive director) of a "major Korean electric power business" stole, er, liberated, more than 1.8 billion in trade secrets when they teamed up with a rival earlier in the year.

The escaped data made its way out of the enterprise, apparently through a USB port and into some storage device connected thereto.


http://www.darkreading.com/document.asp?doc_id=139010&print=true

2007-11-08 eDiscovery: Hand me the Keys: The Downside to Hosted Encryption Services

Wired.com reports today that Hushmail, which, ahem, "dominate[s] a unique market niche fo highly secure webmail with its innovative, client side encryption engine" bows to court order to provide client's email encryption keys. Link below.

How, you might inquire, do they obtain access to a *client* private key? In an effort to make the email process seamless, Hushmail offers a thin client, and runs the encryption engine on their side. As succinctly put in the Wired Article: "...this means that an attacker with access to Hushmail's servers can get at the passphrase and thus all of the messages."

Let's do this in a step-by-step analysis.

1. Hushmail has control over its environmental variables.

2. Hushmail has control over its servers providing encryption services.

3. Hushmail encryption processes occur at Hushmail servers, not at the client.

4. Information (including key information) is transmitted between Hushmail server and client by SSL connection.

5. Key information is provided to Hushmail encryption engine in cleartext at Hushmail server.

6. Hushmail has access to the private key for some period of time.

7. Hushmail's keys can be compelled to be disclosed in court.

Client email not so Hush.

Third party custody of your encryption key, while a nifty idea for redundancy and data loss (meaning risk of non-decryption) might place that third party in a rather difficult position. Perhaps creating and enforcing a policy where private keys used for certain information are never sent in cleartext to a third party might be a good idea. Ya think?

In any event, creation of and adherence of a document retention policy to apply to 3rd party key custodian activities (and the keys held by them) in an auditable fashion, may be worth a thought.

The link from Wired:


http://blog.wired.com/27bstroke6/2007/11/encrypted-e-mai.html

2007-10-26 Another Discovery Category - Greynets

The Register.com posted an article today on the existence of illicit "conduits for malware" or
greynets" that proliferate through most enterprises today. These are technically (and typically) described as peer-to-peer applications, downloaded apps that connect direct to other users to exchange messages and/or data, (aka Instant Messaging, VoIP and filesharing applications) but greynet appears to be the emerging term de jure, and provides another wide-ranging category request type to be used in discovery.

2007-10-13 CFAA and Employment Agreements

In light of recent divergent decisional authority interpreting jurisdictional thresholds for Computer Fraud and Abuse Act ("CFAA" actions), it may be a good idea to add language to new and existing contracts of employment (and employee handbooks, where employment is "at will") to expressly articulate that any appropriation, access or use of employer information *during employment* is unauthorized and further that any such appropriation, access or use shall be deemed to cause damage in excess of $5000 (the CFAA jurisdictional amount). Upon-termination authority revocation and damages provisions should always be part and parcel of any such agreement. For existing employees, it's also a good idea to have executed a similar agreement supplement or handbook update.

2007-10-07 New Addresses on eDiscovery Avenue

In an article entitled "Securing Very Important Data - Your Own" appearing in the October 7, 2007 online edition of New York Times, the author gushes that users are "loving" to send out (the term "relinguishing" used in the article is telling) their personal, financial, credit card, telephone, social security, and other identity-specific data to service providers in exchange for financial management services. Notably, an offering called "Basecamp," described as a "powerful project management and collaboration tool" to store including "performance targets, to-do lists, files, collaborative documents, and messages" is alleged to claim more than one million users. Mint.com is another offering, described as having a "Swiss Army knife approach to personal financial management." In exchange for offering what appears to be every last drop of user information it can extract, Mint will offer users "specialized services" --- that will, on a nightly basis, connect to and update bank accounts, balance checkbooks, and even "shop" for better offering terms and rates on credit cards and other financial accounts.

Maybe these services are good, maybe not. Perhaps they are secure. Perhaps not. What they represent is a treasure trove of discoverable information.

Securing your very own data? Perhaps not.

2007-10-06 Conversion of Software is Actionable Under NY Law --- The tort of conversion of electronic information is actionable in New York.

"The Hand of History Lies Heavy Upon the Tort of Conversion"

In Thyroff v Nationwide Mutual Insurance Co., 493 F. 3d 109 (2d Cir. 2007) the U.S. Court of Appeals for the Second Circuit reversed its earlier decision affirming a dismissal (and also certifying a question to the New York Court of Appeals. Excerpt from the opinion (including the certified question, which the Court of Appeals Answers in the affirmative:

"Is a claim for the conversion of electronic data cognizable under New York law?" Thyroff, 460 F.3d at 408. On March 22, 2007, the New York Court of Appeals answered the certified question in the affirmative. See Thyroff, 8 N.Y.3d at 293, 832 N.Y.S.2d 873, 864 N.E.2d 1272. As we explained in our prior decision, "if a conversion claim may extend to electronic data, Thyroff has stated a claim sufficient to survive Nationwide's motion to dismiss for both his personal and business data." Thyroff, 460 F.3d at 405. Accordingly, based on the response from the New York Court of Appeals that electronic data may be the subject of a conversion claim under New York law, we vacate the district court's dismissal of Thyroff's conversion claim and remand for further proceedings." Thryroff, supra at 493 F. 3d at p. 109.

In New York, at least for the moment, a civil action for conversion of electronic data may be commenced. Under New York law, and unlike the CFAA, there is no jurisdictional damage minimum, and punitive damages may be sought by the aggrieved party. What remains unclear is whether, using the same analysis as in Thyroff, a criminal action for conversion may now be brought

The response by the New York State Court of Appeals to the question certified to it by the Second Circuit contains a short analysis of the history and evolution of conversion, trover and trespass to chattel, together with some impressive prose. Here, an extended excerpt:

"“The hand of history lies heavy upon the tort of conversion” (Prosser, The Nature of Conversion, 42 Cornell LQ 168, 169 [1957] ). The “ancient doctrine” has gone **1274 ***875 through a great deal of evolution over time (Franks, Analyzing the Urge to Merge: Conversion of Intangible Property and the Merger Doctrine in the Wake of Kremen v. Cohen, 42 Hous. L. Rev. 489, 495 and n. 32 [Summer 2005] ), dating back to the Norman Conquest of England in 1066 ( see Ames, The History of Trover, 11 Harv. L. Rev. 277, 278 [1897] [hereinafter Ames] ).Before the English royal government undertook the prosecution of crime, redress for the tortious or criminal misappropriation of chattels was limited to private actions, such as “the recuperatory appeals of robbery or larceny” available to persons whose property had been stolen ( id. at 278).FN3 In general, these appeals took two forms. If a thief was immediately apprehended while in possession of the stolen goods, the wrongdoer “was straightaway put to death [by the court], without a hearing, and the [victim] recovered his goods” ( id.). In other cases, rightful ownership of the property was usually determined by a “wager of battle”-a physical altercation or duel between the victim and the thief ( see Black's Law Dictionary 1544 [8th ed. 2004] ), with the victor taking title to the goods ( see Ames, 11 Harv. L. Rev. at 279). Because this “remedy” could lead to a thief killing or maiming the chattel's owner and taking legal ownership of the stolen property, it was “widely detested” by the populace (Black's Law Dictionary 1544).
FN3. There were also “punitory appeals,” which, as the name connotes, were utilized solely for punishing thieves in situations where property stolen was of a certain value and could not be recovered (Ames, 11 Harv. L. Rev. at 278).Over time, the practice of trial by jury was instituted and wager of battle steadily lost favor ( see Ames, *287 11 Harv. L. Rev. at 279-280). FN4 Contributing to its demise at the end of the 12th century was the advent of criminal prosecutions by the Crown. But successful prosecution by the government could result in forfeiture of the stolen chattels to the King rather than the return of property to its rightful owner-an unwelcome prospect for the victim of a theft.
FN4. Wager of battle was not formally abolished in England until 1818 ( see Black's Law Dictionary 1544).The appeals of robbery and larceny also failed to provide an adequate remedy because a victim could not seek monetary damages from the thief-the only remedy was return of the stolen property. By 1252, a new cause of action- trespass de bonis asportatis FN5-was introduced. It allowed a plaintiff to obtain pecuniary damages for certain misappropriations of property and, following a favorable jury verdict, the sale of the defendant's property to pay a plaintiff the value of the stolen goods.FN6 If, however, the defendant offered to return the property to its rightful owner, the owner had to accept it and “recovery was limited to the damages he had sustained through his loss of possession, or through harm to the chattel, which were usually considerably less than its value” (Prosser, The Nature of Conversion, 42 Cornell LQ at 170).
FN5. A Latin phrase meaning “trespass for carrying goods away” (Black's Law Dictionary 1542).
FN6. “Detinue,” a related cause of action, provided a similar remedy for the improper detention (as opposed to taking) of property ( see Ames, 11 Harv. L. Rev. at 375).In the late 15th century, the common law was extended to “fill the gap left by the action of trespass” (Prosser and Keeton, Torts § 15, at 89 [5th ed.] ) by providing a more comprehensive remedy in cases where a defendant's interference with property rights was so serious that it went **1275 ***876 beyond mere trespass to a conversion of the property ( see Prosser, 42 Cornell LQ at 169). Known as “trover,” this cause of action was aimed at a person who had found goods and refused to return them to the title owner, and was premised on the theory that:“the defendant, by ‘converting’ the chattel to his own use, had appropriated the plaintiff's rights, for which he was required to make compensation. The plaintiff was therefore not required to accept the chattel when it was tendered back to him; and he recovered as his damages the full value of the chattel at the time and place of the conversion.... The *288 effect was that the defendant was compelled, because of his wrongful appropriation, to buy the chattel at a forced sale, of which the action of trover was the judicial instrument” ( id. at 170).An action for trover originally could not be invoked by a person who did not lose personal property or have a right to immediate possession of the property ( see Restatement [Second] of Torts § 222A, Comments a, b; Ames, 11 Harv. L. Rev. at 277). Because of the advantages that trover afforded over older forms of relief, its use was stretched to cover additional misappropriations, including thefts ( see Prosser, 42 Cornell LQ at 169; Restatement [Second] of Torts § 222A, Comment a ).Trover gave way slowly to the tort of conversion, which was created to address “some interferences with chattels for which the action of trover would not lie,” such as a claim dealing with a right of future possession (Restatement [Second] of Torts § 222A, Comment b ). The technical differences between trover and conversion eventually disappeared. The Restatement (Second) of Torts now defines conversion as an intentional act of “dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel” ( id. § 222A [1] ).
IIIAs history reveals, the common law has evolved to broaden the remedies available for the misappropriation of personal property. As the concept of summary execution and wager of battle became incompatible with emerging societal values, the law changed. Similarly, the courts became willing to consider new species of personal property eligible for conversion actions.Conversion and its common-law antecedents were directed against interferences with or misappropriation of “goods” that were tangible, personal property. This was consistent with the original notions associated with the appeals of robbery and larceny, trespass and trover because tangible property could be lost or stolen ( see Prosser and Keeton, Torts § 15, at 90). By contrast, real property and all manner of intangible rights could not be “lost or found” in the eyes of the law and were not therefore subject to an action for trover or conversion ( see id. at 91).Under this traditional construct, conversion was viewed as “the ‘unauthorized assumption and exercise of the right of *289 ownership over goods belonging to another to the exclusion of the owner's rights' ” ( State of New York v. Seventh Regiment Fund, 98 N.Y.2d 249, 259, 746 N.Y.S.2d 637, 774 N.E.2d 702 [2002], quoting Vigilant Ins. Co. of Am. v. Housing Auth. of City of El Paso, Tex., 87 N.Y.2d 36, 44, 637 N.Y.S.2d 342, 660 N.E.2d 1121 [1995]; see e.g. Colavito v. New York Organ Donor Network, Inc., 8 N.Y.3d 43, 49-50, 827 N.Y.S.2d 96, 860 N.E.2d 713 [2006]; Industrial & Gen. Trust, Ltd. v. Tod, 170 N.Y. 233, 245, 63 N.E. 285 [1902] ). Thus, the general rule was that “an action for conversion will not normally lie, when it **1276 ***877 involves intangible property” because there is no physical item that can be misappropriated ( Sporn v. MCA Records, 58 N.Y.2d 482, 489, 462 N.Y.S.2d 413, 448 N.E.2d 1324 [1983] ).Despite this long-standing reluctance to expand conversion beyond the realm of tangible property, some courts determined that there was “no good reason for keeping up a distinction that arose wholly from that original peculiarity of the action” of trover (that an item had to be capable of being lost and found) and substituted a theory of conversion that covered “things represented by valuable papers, such as certificates of stock, promissory notes, and other papers of value” ( Ayres v. French, 41 Conn. 142, 150, 151 [1874] ). This, in turn, led to the recognition that an intangible property right can be united with a tangible object for conversion purposes ( see Agar v. Orda, 264 N.Y. 248, 251, 190 N.E. 479 [1934]; Iglesias v. United States, 848 F.2d 362, 364 [2d Cir.1988] ).In Agar, which involved the conversion of intangible shares of stock, this Court applied the so-called “merger” doctrine because:“for practical purposes [the shares] are merged in stock certificates which are instrumentalities of trade and commerce.... Such certificates ‘are treated by business men as property for all practical purposes.’ ... Indeed, this court has held that the shares of stock are so completely merged in the certificate that conversion of the certificate may be treated as a conversion of the shares of stock represented by the certificate” (264 N.Y. at 251, 190 N.E. 479; see also Pierpoint v. Hoyt, 260 N.Y. 26, 28-29, 182 N.E. 235 [1932] ).More recently, we concluded that a plaintiff could maintain a cause of action for conversion where the defendant infringed on the plaintiff's intangible property right to a musical performance by misappropriating a master recording-a tangible item *290 of property capable of being physically taken ( see Sporn v. MCA Records, 58 N.Y.2d at 489, 462 N.Y.S.2d 413, 448 N.E.2d 1324).FN7
FN7. The Restatement (Second) of Torts reflects the “merger” theory as follows:“(1) Where there is conversion of a document in which intangible rights are merged, the damages include the value of such rights.“(2) One who effectively prevents the exercise of intangible rights of the kind customarily merged in a document is subject to a liability similar to that for conversion, even though the document is not itself converted” (Restatement [Second] of Torts § 242).
IVWe have not previously had occasion to consider whether the common law should permit conversion for intangible property interests that do not strictly satisfy the merger test. Although some courts have adhered to the traditional rules of conversion ( see e.g. Allied Inv. Corp. v. Jasen, 354 Md. 547, 562, 731 A.2d 957, 965 [1999] [interests in partnership and corporation]; Northeast Coating Tech., Inc. v. Vacuum Metallurgical Co., Ltd., 684 A.2d 1322, 1324 [Me.1996] [interest in information contained in prospectus]; Montecalvo v. Mandarelli, 682 A.2d 918, 929 [R.I.1996] [partnership interest] ), others have taken a more flexible view of conversion and held that the cause of action can embrace intangible property ( see e.g. Kremen v. Cohen, 337 F.3d 1024, 1033-1034 [9th Cir.2003] [Internet domain name; applying California law]; Shmueli v. Corcoran Group, 9 Misc.3d 589, 594, 802 N.Y.S.2d 871 [Sup.Ct., N.Y. County 2005] [computerized client/investor list]; see generally **1277 ***878 Town & Country Props., Inc. v. Riggins, 249 Va. 387, 396-397, 457 S.E.2d 356, 363-364 [1995] [person's name] ).FN8
FN8. At least one court has approved of the use of conversion by referencing the merger doctrine ( see e.g. Astroworks, Inc. v. Astroexhibit, Inc., 257 F.Supp.2d 609, 618 [S.D.N.Y.2003] [conversion of idea that was represented by an Internet Web site] ). Conversion claims have also been approved without consideration of the historical limits of the cause of action ( see e.g. Cole v. Control Data Corp., 947 F.2d 313, 318 [8th Cir.1991] [computer software program]; Quincy Cablesystems, Inc. v. Sully's Bar, Inc., 650 F.Supp. 838, 848 [D.Mass.1986] [satellite cable signals]; Charter Hosp. of Mobile, Inc. v. Weinberg, 558 So.2d 909, 912 [Ala.1990] [addiction treatment program]; National Sur. Corp. v. Applied Sys., Inc., 418 So.2d 847, 850 [Ala.1982] [computer program]; Mundy v. Decker, 1999 WL 14479, *4, 1999 Neb App LEXIS 3, *10-12 [Ct.App.1999] [WordPerfect documents] ).A variety of arguments have been made in support of expanding the scope of conversion. Some courts have decided that a theft of intangible property is a violation of the criminal law and should be civilly remediable ( see *291 National Sur. Corp. v. Applied Sys., Inc., 418 So.2d at 850); that virtual documents can be made tangible “by the mere expedient of a printing key function” ( Shmueli v. Corcoran Group, 9 Misc.3d at 592, 802 N.Y.S.2d 871); that a writing is a document whether it is read on the computer or printed on paper ( see Kremen v. Cohen, 325 F.3d 1035, 1048 [9th Cir.2003, Kozinski, J., dissenting from certification] ); and that the expense of creating intangible, computerized information should be counterbalanced by the protection of an effective civil action ( see National Sur. Corp. v. Applied Sys., Inc., 418 So.2d at 850).On the other hand, the primary argument for retaining the traditional boundaries of the tort is that it “seem[s] preferable to fashion other remedies, such as unfair competition, to protect people from having intangible values used and appropriated in unfair ways” (Prosser and Keeton, Torts § 15, at 92). Nonetheless, advocates of this view readily concede that “[t]here is perhaps no very valid and essential reason why there might not be conversion of” intangible property ( id. at 92) and that there is “very little practical importance whether the tort is called conversion, or a similar tort with another name” because “[i]n either case the recovery is for the full value of the intangible right so appropriated” (Restatement [Second] of Torts § 242, Comment e ). The lack of a compelling reason to prohibit conversion for redress of a misappropriation of intangible property underscores the need for reevaluating the appropriate application of conversion.

'V“[I]t is the strength of the common law to respond, albeit cautiously and intelligently, to the demands of commonsense justice in an evolving society” ( Madden v. Creative Servs., 84 N.Y.2d 738, 744, 622 N.Y.S.2d 478, 646 N.E.2d 780 [1995]; see Hymowitz v. Eli Lilly & Co., 73 N.Y.2d 487, 507, 541 N.Y.S.2d 941, 539 N.E.2d 1069 [1989], cert. denied 493 U.S. 944, 110 S.Ct. 350, 107 L.Ed.2d 338 [1989] ). That time has arrived. The reasons for creating the merger doctrine and departing from the strict common-law limitation of conversion inform our analysis. The expansion of conversion to encompass a different class of property, such as shares of stock, was motivated by “society's growing dependence on intangibles” (Franks, Analyzing the Urge to Merge: Conversion of Intangible Property and the Merger Doctrine in the Wake of Kremen v. Cohen, 42 Hous. L. Rev. at 498). It cannot be seriously disputed that society's reliance on computers and electronic data is substantial, if not essential. Computers and digital information are *292 ubiquitous and pervade**1278 ***879 all aspects of business, financial and personal communication activities. Indeed, this opinion was drafted in electronic form, stored in a computer's memory and disseminated to the Judges of this Court via e-mail. We cannot conceive of any reason in law or logic why this process of virtual creation should be treated any differently from production by pen on paper or quill on parchment. A document stored on a computer hard drive has the same value as a paper document kept in a file cabinet.The merger rule reflected the concept that intangible property interests could be converted only by exercising dominion over the paper document that represented that interest ( see Pierpoint v. Hoyt, 260 N.Y. at 29, 182 N.E. 235). Now, however, it is customary that stock ownership exclusively exists in electronic format. Because shares of stock can be transferred by mere computer entries, a thief can use a computer to access a person's financial accounts and transfer the shares to an account controlled by the thief. Similarly, electronic documents and records stored on a computer can also be converted by simply pressing the delete button ( cf. Kremen v. Cohen, 337 F.3d at 1034 [“It would be a curious jurisprudence that turned on the existence of a paper document rather than an electronic one. Torching a company's file room would then be conversion while hacking into its mainframe and deleting its data would not” (emphasis omitted) ] ).Furthermore, it generally is not the physical nature of a document that determines its worth, it is the information memorialized in the document that has intrinsic value. A manuscript of a novel has the same value whether it is saved in a computer's memory or printed on paper. So too, the information that Thyroff allegedly stored on his leased computers in the form of electronic records of customer contacts and related data has value to him regardless of whether the format in which the information was stored was tangible or intangible. In the absence of a significant difference in the value of the information, the protections of the law should apply equally to both forms-physical and virtual.In light of these considerations, we believe that the tort of conversion must keep pace with the contemporary realities of widespread computer use. We therefore answer the certified question in the affirmative and hold that the type of data that Nationwide allegedly took possession of-electronic records that were stored on a computer and were indistinguishable from *293 printed documents-is subject to a claim of conversion in New York. Because this is the only type of intangible property at issue in this case, we do not consider whether any of the myriad other forms of virtual information should be protected by the tort.Accordingly, the certified question should be answered in the affirmative." Thyroff v Nationwide Mutual Ins. Co., 8 N.Y.3d 283, 864 N.E.2d 1272 (N.Y. 2007).


A good analysis of this decision (and a comparison with CFAA) appears in the October 1, 2007 edition of the National Law Journal.