Technology Related Policies and Procedures Employee Policies Document

Technology Related Policies and Procedures: Employee Policies, Document Retention, Privacy and Intellectual Property Policies 5 th Annual Advanced In-House Counsel Course Stephanie L. Chandler, Esq. Jackson Walker L. L. P.

Stephanie L. Chandler • Business Transactions and Technology University of Nebraska B. S. B. A. in Finance University of Virginia Juris Doctorate Articles Editor, Virginia Journal of Law and Technology Community Involvement Highlights: Chair – Jackson Walker’s Technology Section, Texas State Bar Association Business Law Section Committee on e. Commerce, San Antonio Technology Accelerator Initiative Board Member

Technology Impacts All Aspects of Your Role as General Counsel • Employees -- monitoring employee activities; performance enhancement • Marketing -- SPAM, protecting your brand • Litigation Avoidance/Litigation Expense -data leaks, document retention • Intellectual Property -- controlling dissemination of trade secrets, infringement (BSA, cutting and pasting)

Employees Use of Technology • 76% of Employers monitor web activity (blogging, chat and message boards, porn/gambling sites) • 55% of Employers retain and review email messages • 36% of Employers track content/keystrokes/ time spent at keyboard Source: 2005 Electronic Monitoring & Surveillance Survey by American Management Association and The e. Policy institute

Employer-Employee Policies • Adopting a Policy is Key • Employers, especially after notice, are free to broadly monitor internet usage (Smith v. Pillsbury Co. ; Mc. Laren v. Microsoft) • Employers may monitor phones (Solely for business purpose; employee consent can be based on company policies; Watkins v. L. M. Berry & Co. ) • Employers may record calls where they are on the call (so can employees…) • Employers can implement GPS tracking Section I-A

New Development – CFAA to protect Trade Secrets • Computer Fraud and Abuse Act - law passed by the United States Congress in 1986 intended to reduce "hacking" of computer systems • Employers filing civil claims against employees in federal court; alternative to misappropriation of trade secrets • • Yonkers v. Celebrations the Party and Seasonal Superstore, 428 F. 3 d 504 (Nov 2005) – used against employees who set up a competing store, alleged that using data obtained before and after they left the company International Airport Centers v. Citrin, 440 F. 3 d 418 (March 2006) – employer used against former employee who allegedly stole trade secrets then wiped his company’s laptop clean

Marketing Through the Internet: Don’t Unintentionally Become a SPAMMER • No false or materially misleading header information. • No misleading subject headings. • Must contain a clear return address or other Internet-based mechanism that functions for opt-out • No more messages 10 business days after the recipient submitted a request to unsubscribe. • No selling mailing lists including people who have opted out • No use of automated address generation means or a third party who collected the addresses with misleading automated means, i. e. , notification that the address would not be distributed. * Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003" (the “CAN-SPAM Act").

Marketing Through the Internet: Don’t Unintentionally Become a SPAMMER • • • No registering for multiple e-mail accounts to send prohibited commercial e-mail messages. No relaying or re-transmitting prohibited commercial e-mail messages. Do not fail to take reasonable steps to prevent or report the transmission of such messages. * Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003" (the “CAN-SPAM Act"). • Marketing that Works: – clear and conspicuous identification that the message is an advertisement or solicitation (unless the recipient has given prior express consent to receive such messages) – clear and conspicuous notice of the opportunity to opt-out of receiving messages from the sender – valid physical postal address of the sender

Marketing Through the Internet “Employees Who Cut and Paste” Types of Intellectual Property • Patents -- gives the inventor the right to exclude others from making the invention • Trade Secrets/Know How -- protection by virtue of secrecy • Trademarks/Service Marks -- identifies a unique source of goods or services • Copyrights -- protects from copying of original works (music, books, software code)

Example: Ownership of Site Content

Avoiding Copyright Infringement • Myth: Pictures and text on the Internet are available for use since they have been made available on the Web • Example: Use of Source Code from Websites • Special Cases: – The content of a database is not protected by copyright (U. S. ) – Open source development: Linux, Apache, Tomcat web server, Eclipse IDE, JBoss Application Server, etc.

Acquiring Intellectual Property • Work for Hire Doctrine (Copyright) – Employee works – owned by employer – Independent Contractor work – more difficult • Recommendation: Include “Assignment Clause” and “Work for Hire Clause”

Software Usage Policies • The BSA* and SIIA** are not your friends – May 2006 – Losses from piracy - $34 B – 35% of all copies of PC software installed worldwide in 2005 pirated – They want their money!!! • Gartner: – 40 percent of all medium-to-large U. S. businesses will face an external software audit by the end of 2006 – less than 25 percent of public companies have mature software asset management processes • What to do: This is a Legal Matter, not an IT matter; Educate your C-levels *BSA: Business Software Alliance (Membership Examples: Microsoft, Cisco, Symantec) **SIIA: Software and Information Industry Association (Membership Examples: Adobe, Intuit, Mc. Afee )

Software Usage Policies • Adopt a Software Usage Policy (see Appendix I) • Periodically audit internal compliance • Develop a Records System – all receipts indicating the included software (even in hardware purchases) • In rare circumstances employee PC ownership may be an answer • Federal Rule of Evidence 408* governs the admissibility of the audit results – Have an Agreement prior to producing the audit materials • Settlement: – Enter and inspect the company’s facilities/officers certification – Release based on officer’s certifications * http: //www. law. cornell. edu/rules/fre/ACRule 408. htm

Document Retention Policies • Why? ? – Save valuable computer and physical storage space – Reduces volume of stored documents and data – Avoiding spoliation claims • In re Prudential Ins. Co. of Am. Sales Practices Litigation: Prudential had “no record of any written manual that would evidence that Prudential possesses a clear and unequivocal document preservation policy capable of retention by Prudential employees and available for easy reference. ” • Linnen v. A. H. Robins: The Defendant sent emails and voicemails to all of its employees advising them to save all relevant documents. The Defendant, however, failed to stop its back-up tapes from being recycled or taped-over. Jury instructed to assume smoking gun. • Default or dismissal possible. – Lowering Litigation Costs – be sure your policies address both Hard Copy and Electronic Files

Document Retention Policies • Why? ? – Removing “Smoking Guns” • Prior to Litigation: Arthur Anderson LLP v. U. S. , 544 U. S. 696 (2005): that “under ordinary circumstances, it is not wrongful for a manager to instruct his employees to comply with a valid document retention policy, even though the policy, in part, is created to keep certain information from others, including the govt. ” • After Litigation Filed: Zubulake v. UBS Warburg LLC: Counsel failed to warn its client to not delete or recycle back-up dates of technological data. The Court ordered the Defendant to bear the substantial cost of restoring the back -up tapes. – Fines - $2. 75 M – Philip Morris USA

Document Retention Policies • What Should be Included: – Lewy v. Remington Arms Co. • whether the policy is reasonable considering the facts and circumstances surrounding the relevant documents • whether the destroyed documents are relevant to pending or probable lawsuits; and • whether the policy was instituted in bad faith • Consistency is the Key • Company wide – this is not just an accounting or legal department issue

Document Retention Policies • Review all applicable law [See Appendix V] • Take into account statute of limitations • Clearly describe the class of documents to which the policy will apply (i. e. drafts, finals; backup tapes) • Specify the retention period for each class of documents • Create procedures detailing how the program will be implemented and enforced • Identify the staffer responsible for policing and maintaining the program; Train them

Document Retention Policies: When Litigation Arises • Allow alternatives to, or even suspension of, documentdestruction procedures when a duty to preserve arises • The “Litigation Hold” – Prevent Your System from Automatically Deleting Data – Stop the Automatic Recycling of Backup Tapes – Stop the Automatic Recycling of Personal Computers • • Reissue the “Litigation Hold” – New Employees! Identify Key Players/Employees – Special Notice Consider Forensic Images of PC’s Designate one IT person who will be your Companies Federal Rule of Civil Procedure 30(b)(6) deposition witness (document preservation, chain of custody, etc. )

Appendix IV of Article: Document Retention Policies My example ABA - form of Document Retention Policy available at http: //www. abanet. org/lpm/lpt/ articles/sampledocretentionpolicy. pdf Arthur Andersen Document Retention Policy

Privacy Policies Review Posted Privacy Policies – Are they accurate? Be aware of legal requirements (i. e. GLB, HIPAA, COPPA) Ooops …. We had a leak Ø Ø June 2006 - Veterans Administration loss of 26. 5 million personal records of veterans lawsuit - seeks $1, 000 in damages for each person, a payout that could reach $26. 5 billion Comply with state law requirements (Article – III. C. )

Privacy Policies Limit the data you retain Secure personal data (Consider: Mobile devices) Train your employees (Consider: Background checks) Train your vendors (Consider: NDA’s, policy intro) Test your systems (Consider: Social Engineering) Plan for breaches

Questions? Stephanie L. Chandler, Esq. Jackson Walker L. L. P. 210. 978. 7704 schandler@jw. com 112 E. Pecan Street, Suite 2400 San Antonio, Texas 78205 www. jw. com Sign up for e. Alerts at http: //www. jw. com/site/jsp/subscribe. jsp