One feature is the ability to safely redact PDF documents directly in a web browser.

Redaction is increasingly important in New Zealand civil litigation, given the volume of documents and the propensity for sensitive and/or privileged information to be mixed with other discoverable information. The High Court Rules (current and new) allow redaction of certain information on the grounds of confidentiality and/or privilege. Conditions can be proposed by the disclosing party to protect confidential information – for example, the provision of certain documents (redacted or not) may be made on an “attorney’s eyes only” basis (to adopt the US parlance; in practice it often extends to experts too). Other parties can challenge the proposed restrictions, however this requires them to bring an application to do so, and in practice such issues can usually be resolved without the Court’s intervention.

The new High Court Rules will generally mean that documents must be redacted electronically, in PDF format. In practice, there are 3 key challenges to doing so:

1. Making it easy – ideally, the lawyer will be able to make their own redactions directly on each PDF while viewing it anywhere and any time, without the need to install separate standalone software and without any fuss. In particular, this avoids the  inefficient and obsolete process of printing documents, manually redacting them, and then re-scanning them.
2. Making the redactions permanent and secure – there are many real-world examples of unsafe, or non-permanent, redactions, where an apparently redacted document still allows the underlying text to be easily retrieved (read about a recent example – by a judge! – here).
3. Handling duplicates – there is no point redacting one version of a document, only to have a duplicate produced in original form.

Safe and easy PDF redaction (via the browser) is one of the features of the New Zealand developed e-discovery solution that will be announced soon. Stay tuned for more information in coming weeks.

Meanwhile, it seems that lobbying efforts to overturn the unanimously endorsed software patent exclusion have, so far, fallen on deaf ears. At the NetVision 2011 Election Debate held on 18 October, both National (via Steven Joyce) and Labour (via Clare Curran) confirmed that their parties remained committed to the software patent exclusion as recommended by the Commerce Committee. The Greens also confirmed it as their policy.

Video of the event is available here, with the discussion on software patents starting at around 28:20 of part 2.

New High Court Rules (and District Court Rules) promoting the use of electronic discovery come into force on 1 February 2012. Key features of the “default” regime under the new rules include the following:

• Discovered documents must be exchanged electronically.
• Parties must provide a standardised list of discovered documents.
• Documents must be provided in PDF format (unless not possible for particular file types), with the document number as the filename.
• Native files must be provided if requested.
• Parties must take reasonable steps to exclude duplicates.
• Emails and attachments are to be listed separately but sequentially on the document list.

These changes reflect the ever-increasing volume of data (in particular, electronic data) in modern litigation, and the need to effectively and efficiently handle the discovery process.

A New Zealand solution

This new regime requires a new solution. Stay tuned for an announcement of a new web-based electronic discovery system developed right here in New Zealand, that supports the new rules on electronic discovery as well as providing early case assessment and detailed review capabilities. This system has been locally developed over the past several years.

Key features include:

• New Zealand designed and developed system, cognisant of the new High Court Rules on electronic discovery
• Fully managed, web-based solution – no software to install or maintain, and can be accessed on any computer, notebook, or tablet
• Handle projects ranging from a few dozen, up to hundreds of thousands of documents
• Securely access, review and upload project documents anywhere, anytime
• Track discoverability, privilege, confidentiality, and other document attributes
• View common document formats in any standard web browser without the need to install Office software
• Powerful search and analysis capabilities across the document repository
• Generate discovery lists and electronic bundles of documents (native format or converted to PDF, stamped with document numbers)
• Automated handling and de-duplication of Outlook email archives and common document types
• Single-user or collaborative multi-user options (including the ability for clients to upload their own documents)
• Fully locally supported
• Customisable by a local development team
• And much more!

Check back for more information in coming months.

(features described are subject to change before the system is publicly launched)

Online Defamation

Kiwiblog noted an interesting Canadian defamation case (Baglow v Smith) involving defamation on political blog sites:

On 30 August 2011 the Ontario Superior Court of Justice handed down judgment in the case of Baglow v. Smith, 2011 ONSC 5131. The decision suggests that an allegedly defamatory statement made in a debate on a blog or internet forum may not be found to be defamatory if the plaintiff previously engaged in the debate but did not respond to the statement despite having the opportunity to do so.

Canadian law firm Heenan Blaikie has a summary of the case here:

At the risk of over-simplifying the matter, the court’s decision can be summarized as this: there is something meaningfully different about online statements, particularly those which are made on political blogs and discussion forums, which militates that they be treated differently for purposes of defamation law. Put somewhat differently (and, again, with the qualification that this over-simplifies matters): impugning someone’s name on the broadcast evening news is different from impugning their name on a blog.

New Zealand courts give weight to Canadian judgments, and it will be interesting to see whether this case is raised in a New Zealand defamation proceeding in due course.

Amazon’s “one click” patent reaffirmed in NZ

Amazon’s infamous “one click” patent has been reaffirmed in New Zealand by a decision of the Commissioner of Patents, Amazon.Com, Inc v Patrick Ryan Costigan [2011] NZIPOPAT 12 (21 July 2011). The opposition to the patent does seem to have been somewhat quixotic – the opponent was not represented at the hearing, whereas Amazon had a team headed by a QC appear to defend its patent, as well as evidence from US and Australian patent experts. The Commissioner also noted that the patent had been upheld in Australia.

Google cleared in Australian ad-word case

The Australian Competition and Consumer Commission – the equivalent of NZ’s Commerce Commission (but rather tougher, it has to be said) – has lost a case it brought against Google alleging that Google engaged in misleading and deceptive conduct by mixing ads into its search results. The Court also found Google had not breached trade practices law by using (or allowing the use of) competitors’ names and trademarks in sponsored links. The full 73 page judgment is here.

UK Govt asks for Search Engine De-optimisation

Computerworld reports:

Google and other search engines, including Microsoft Bing and Yahoo, will be asked by the UK government to push copyright-infringing websites down their search results under new plans.

Which sounds like it could open a can of worms… The article also notes:

… it is understood that there could be forthcoming legislation, within the Communications Bill, if an industry-run solution is not found.

Which will certainly be a can of worms.

Watch the UK Supreme Court live

In what is understood to be a first, the UK Supreme Court (which in 2009 replaced the House of Lords as the UK’s highest court) now transmits a live coverage of hearings. This is a good step forward for open justice, because while most court hearings are open to the public, they are usually rather inaccessible. The Supreme Court coverage is available here streamed via Sky UK.

… notification should be mandatory in cases where notification will enable people to take steps to mitigate a risk of significant harm, or where the breach is a serious one (for example, because the information is particularly sensitive).

Notification should be made to the individual whose information has been compromised, and also to the Office of the Privacy Commissioner.

This would be a major – and welcome – change from the status quo, which is that agencies (e.g. companies holding personal information) are generally under no legal obligation (unless such obligation is assumed) to report data breaches. Sir Geoffrey Palmer commented on the situation last year:

Another subject on which we are contemplating some changes is data breach notification… Currently holders of personal information, both public and private sector agencies, are under no legal obligation to notify individuals or the Privacy Commissioner when an individual’s personal information is compromised – if, for example, it is lost or obtained by computer hackers. … This means that agencies are not required to notify individuals whose personal information has been compromised, no matter how sensitive the information and no matter how serious the risk of harm that could be suffered as a result.

(The Law Commission’s issues paper discussing data loss is here). The recommendation comes at the same time as the EU is grappling with imposing a uniform notification regime across member states.

A data breach notification regime, while imposing some compliance cost on organisations, is a necessary thing in today’s world.

Recently I had my own example of when such a regime might have been useful, when my bank informed me that I had “suspicious activity” on my credit card – a large transaction from Portugal. What was curious was that I had only had that card for a few months, and had not used it much at all (and not online at all). The card could have been physically copied somehow, but if one of the few merchants who I had used it with had lost the data via hacking, there is no obligation for them to advise me of the loss – nor any other information that may have been lost with it.

The example of credit cards was specifically mentioned by Law Commissioner Professor John Burrows in announcing the recommendation:

“People have a right to know if their information has been compromised in a serious way”, said Law Commissioner Professor John Burrows. “Then they can take measures to protect themselves (such as cancelling credit cards), or can at least prepare themselves for any consequences of the breach.”

It will be interesting to see how the details of such a regime are eventually formulated.

They also appear to have sifted through several submissions from patent attorneys that sought to relitigate the Bill itself in amusingly emotive terms, rather than just comment on the guidelines as requested.

IPONZ has provided a clear, concise note. Some extracts:

31. Many of the interested parties who made submissions on the draft guidelines argued that the Commerce Select Committee intended that so-called “embedded” computer programs should remain patentable, with other “non-embedded” computer programs being excluded from patent protection. However, it is clear from the Committee’s report that the Committee rejected the idea of making a distinction between “embedded” and “non-embedded” computer programs in this way.

32. Instead, the Committee decided to recommend a simple exclusion, as this would exclude computer programs from patent protection, but would not prevent the grant of patents for inventions involving “embedded”computer programs. It seems clear from these comments that the Committee did not intend that the mere fact that an invention involves a computer program should be sufficient, in itself, to make an invention unpatentable.

That is exactly right. For whatever reason, some patent attorneys seemed to have great difficulty with that simple proposition, and much of the FUD being put out by those looking to overturn the software patent exclusion focused on the apparent “confusion” surrounding embedded software. The explanatory note succinctly summarises the Committee’s clear recommendation.

33. On this basis, computer programs are not patentable under clause 15(3A), whether or not they are “embedded” programs. However, inventions that involve a computer program (as opposed to inventions which are a computer program) are likely to fall outside the scope of clause 15(3A) and be patentable.

Which is how other patentable inventions, containing non-patentable constituent parts, are treated.

34. … The exclusion cannot be avoided by claiming the program in combination with conventional computing hardware. Such claims are effectively claims to the computer program and allowing them would circumvent the purpose of the exclusion.

35. For example, claims to the computer program when running on a suitable computer, or claims to the program recorded on a carrier such as a disk or memory card would not be allowable. On this basis claims of the form “a computer program product comprising computer program code adapted, when loaded on a computer, to do X” (so-called Beauregard claims) will be rejected.

This is good. There can be a lot of nonsense to try to avoid exclusions. By definition, all software runs on a computer, so a claim that the invention is the program “when running” should hardly be expected to avoid a computer program exclusion.

One thorny issue on the periphery of the software patent debate is business method patents. They are really a separate issue (controversy). The note makes a only few comments on them, including:

41. Where the contribution is assessed as a method or process that falls outside the computer program exclusion, claims to a computer program that would cause a suitable computer to carry out the method may be allowable.

The progress of the Bill remains understandably low priority, and its future is also somewhat uncertain given that a new Minister will take over the Bill from Simon Power. However MPs at last month’s NetHui said that Simon Power had that week advised that the software exclusion would remain (confirming earlier statements).

Background

For those who are lucky enough not to have been involved in civil litigation, discovery is a legal process that requires each side in the case to “discover” all relevant documents to the other side – the legal equivalent of laying your cards on the table. That doesn’t just mean documents that support your case – parties are also obliged to produce damaging documents. There are only limited grounds for refusing to disclose documents, such as legal privilege, and even then certain steps must be followed.

Unfortunately, discovery has become often a very difficult and time-consuming (and therefore expensive) part of modern commercial litigation. The general rules of discovery were laid down in the nineteenth century, when most documents could only be produced by hand or at significant cost. It was also a lot more obvious what a “document” was back then – usually ink on paper.

In recent years there has been an explosion in the amount, and type, of documents in business. The most obvious are computer documents (Word docs, spreadsheets, etc) and email. Most significant businesses are now heavily reliant on electronic communications. Documents still include paper files, faxes, and accounts, but also include modern documents such as databases, text messages, and even tweets, and huge amounts of documents can be created during the course of an ordinary day. As a result, parties to litigation are often required to handle huge volumes of documents. In large litigations I am involved in, it is common to have tens of thousands of emails and other electronic documents in play.

Reform

The discovery reform aims to modernise the rules to improve the discovery process for the benefit of litigants, and better reflect the modern realities of business and society. I have submitted on the first draft rules, and note a few highlights and changes in the proposed final draft:

• Parties must co-operate on discovery (oh, were it always that way!) and ensure “technology is used efficiently and effectively”. (8.2)
• Parties “must take all reasonable steps to preserve [relevant documents]”, including ensuring that “documents in electronic form which are potentially discoverable [be] preserved in readily retreivable form even if they would otherwise be deleted in the ordinary course of business” (8.3). This is a significant and powerful rule that imposes an express duty to preserve electronic records (see below for more details). When a dispute arises, it may be a prudent strategy to put the other party on express notice of this duty.
• The rules introduce two types of discovery – standard and tailored (8.6). Thankfully, the proposed threshhold of 200 documents for tailored discovery (previously called non-standard discovery) has been dropped. Even small commercial litigations tend to have far more than 200 documents these days!
• Parties must undertake a “reasonable search” for electronic documents, which includes some room for negotiation over whether it is or isn’t unduly costly to do so in certain cases (8.14).
• Original native files (that are discoverable) are to be provided on request (8.27(4)). While I had proposed clearer language here, the rule is still to that effect.
• Documents are to be exchanged by way of PDF where possible (sched 9, clause 1).
• The proposed requirement of chronological ordering is not mandatory – a different order may be applied if more convenient (sched 9, clause 2).
• Exchanged documents should be DRM free (well, it’s not quite as explicit as I had proposed but it’s a start) (sched 9, clause 6.8).

Duty to preserve documents

The most notable change for non-lawyers is the duty to preserve evidence, in particular electronic records. Unlike in the US, there is no tort of “spoilation of evidence” in New Zealand. There can still be serious consequences for destroying evidence, but the threshhold is unclear and there has not generally been a positive duty to preserve documents for the purposes of potential litigation.

The proposed rule 8.3 will change that. It requires a person who knows that a document is “reasonably likely” to be relevant to a legal dispute (whether or not any dispute has arisen) to take “all reasonable steps to preserve that document”. The term “knows” here is likely to be taken as meaning “ought reasonably to know”.

In particular, the rule will require that potentially relevant electronic documents “must be preserved in readily retrievable form even if they would otherwise be deleted in the ordinary course of business”.

The most obvious type of document here is email. Many businesses let their users fully manage their own emails. If a user deletes an email from their inbox, it may be impossible to recover. This new rule will require prudent businesses to ensure there are proper processes in place for retaining important emails. Under the new Limitation Act, it may be necessary to ensure retention of some records for up to 15 years, which is the duration of the new law’s “longstop” limitation period.

The proposed rules do not set out a penalty for failing to preserve documents, but a Court may make adverse findings, or even impose more serious sanctions such as contempt of court, against a party who fails to preserve documents.

While it is far from Sarbanes-Oxley, this change is welcome and good for the interests of justice.

The rules are expected to be implemented by early 2012.

Where possible, we have been using secure online services to perform these large transfers (security obviously being a key requirement). However transmitting batches of files of 6+ GB (not unusual for major litigations these days) to California has highlighted New Zealand’s lag in high speed internet connectivity. In particular, the “A” in ADSL comes to the fore, as it means upload speeds from our office are considerably slower than download speeds. Last week it took about 24 hours to transmit 4.2 GB of data to the US, a rate of 210 MB per hour, or about 48 K per second. Plus, it ate up our monthly usage cap.

For some data, it was simpler to have it FedEx’d across on DVD and portable hard-drive.

We have also experienced the sad state of affairs where it has literally been quicker and easier for our client (in Auckland) to jump in his car and hand-deliver DVDs of data to us (also in Auckland), than to transmit it via the internet. Admittedly we are talking about gigabytes worth of data, but that is not unusual these days.

So I will add international litigation to the growing list of “reasons why New Zealand businesses need high-speed, reliable, uncapped internet connectivity”.

Now another prominent US venture capitalist, Fred Wilson, has spoken out against software patents in unequivocal terms:

I believe that software patents should not exist. They are a tax on innovation. And software is closer to media than it is to hardware. Patenting software is like patenting music.

This aligns with the Government’s stated position (adopting the unanimous Commerce Committee recommendations) that software patents “stifle innovation and restrict competition”.

It may take a while yet for the US to overhaul its patent system and the status of software patents in it is unknown, but it appears that the New Zealand reform (if adopted) will provide a far-sighted alignment with industry and venture capitalist views.

Peer-to-peer lenders are effectively precluded from operating in New Zealand given the regulatory regime. Licensing is intended to introduce a regulatory regime proportionate to the risks that they pose. The licensing criteria will look at the character and background of the key individuals involved, and also a limited assessment of organisational processes.

This is welcome news for what could be a niche fledgling market in New Zealand. However, as tends to be the nature with securities law, the devil may lie in the yet-to-be-determined detail.