Preserving the Evidentiary Strength of Your High-Value Electronic R&D Data—Part II

The following is Part II of a three-part series based on a one-hour webinar, which can be accessed in its entirety at: Webinar panelists are: Michael H. Elliott, president of Atrium Research; Randy Whitmeyer, Partner at Hutchison Law Group; and Tom Klaff, CEO of Surety. 

Part II – Minimizing Legal Risk in Today's eR&D World
By Randall M. Whitmeyer, Partner, Hutchison Law Group 

The growing use of electronic records and electronic lab notebooks by R&D organizations provides the potential for tremendous rewards in the form of improved workflows and collaboration, ease of access and searching, and greater integrity. However, any transition to an electronic R&D environment must be done carefully to minimize associated legal risks.  In this short article, I will provide some general pointers on avoiding legal problems that are often associated with today’s electronic workplace:

  • Everything is discoverable. Unfortunately, some employees tend to view e-mail and other electronic records (e.g., collaboration or chat tools) cavalierly, and record items that would not have been recorded in a more formal lab notebook or letter. In any transition to an integrated electronic system, organizations must educate their employees that electronic records are typically maintained (for good reasons) for a long period of time and are discoverable in any dispute that may arise regarding dates of invention or other matters. As can be seen from a casual review of headlines in the paper, much critical evidence in courtrooms today is electronic in nature, and can seriously damage a case. Training on new electronic systems and processes should include reminders on the permanence and future discovery of communications and items that may seem, to some, more “fleeting.”
    IT and legal personnel should also be involved in designing systems and procedures (including backup systems, record retention policies, and the like) to deal with inevitable litigation matters and document discovery requests. An ounce of planning can prevent a pound of frustration and wasted time in locating and providing documents in a future litigation.
  • Corroboration is necessary for patent ownership claims. In the traditional hard-copy world, scientists maintain hard-bound lab notebooks that are routinely “witnessed” and signed by other individuals. There is no rule or law specifically requiring use of such hard-copy notebooks in support of invention priority, reduction to practice and ownership claims. However, there is a general legal principle that a scientist or inventor can’t just claim a specific date of an invention without some “corroboration” in the form of other testimony or supporting records. In order to comply with this principle, companies must look to replace the traditional forms of corroboration (which of course were subject to challenge based on tampering, untimely “witnessing,” etc.) with new “corroboration” evidence when moving to an electronic laboratory notebook environment. The new systems must provide appropriate workflows, electronic-based witnessing, document integrity controls, and time-stamping to verify the substance and date of key innovations.
  • Keep those trade secrets safe as well! In most organizations, key intellectual property is embodied not only in patents but also in a whole host of information, techniques, and processes that are maintained as trade secrets and know-how. A company will lose its trade secrets if it does not take reasonable measures to protect them from disclosure to third parties. So a lax information security regime that does not include proper security hardware and software (such as firewalls and auditing tools), training, and procedures (such as the use of strong passwords and removal of “default” passwords when implementing systems) will lead to the loss of valuable trade secrets.
    In addition, in today’s business environment where outsourcing and other business collaborations are the rule and not the exception, failure to safeguard information received from third parties under confidentiality restrictions can also lead to severe legal problems with business partners. 
  • Develop a comprehensive information security policy. As some of the points above have shown, organizations moving critical R&D data to electronic form should develop a comprehensive information security policy to address and minimize legal risks. This policy should be created with input from accounting/audit control, general management, R&D, IT, and legal staff. Failure of a company’s officers and directors to recognize and address these risks is arguably a breach of these individuals’ fiduciary obligation to manage the organization in a reasonably prudent manner.
    Finally, if personal information is being managed by an organization, particular care must be taken to comply with a growing list of laws and regulations regarding the privacy of this personal information. These laws include not only HIPAA but also a number of recent laws requiring notification in the event of breach of information security involving personal information.     

With these guidelines in mind, an organization adopting electronic laboratory notebooks and other electronic records in the R&D space should be able to maintain its intellectual property and at the same time limit its other legal risks, while obtaining the benefits that newer technologies can provide.

Read Part I of this series.

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