In January, U.S. District Court Judge Barbara L. Major hit Qualcomm (NSDQ: QCOM) with an $8.5 million penalty for failing to produce e-mail relevant to a patent lawsuit against Broadcom (NSDQ: BRCM). "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," Major wrote. At issue: Qualcomm failed to search the computers of key witnesses before completion of the trial, a catastrophic oversight because e-mail disputing Qualcomm's main argument was subsequently found by a Qualcomm attorney.
Then Qualcomm compounded its error by not turning the newly discovered e-mail over to Broadcom.
Maybe you're thinking, "We'd never do anything that dumb." But stupidity isn't the only gotcha here. In June 2007, the city of Dallas settled a wrongful termination suit for $1.55 million after the city failed to turn over records, including e-mail, relevant to the case. To no avail, lawyers for the city cited a complex e-mail system that made it difficult to conduct a proper search. These are just two examples of the critical role e-mail plays in legal action--and of the perils implicit in searching the millions of messages most enterprises store.
Because nothing gets a product sold like the threat of litigation, we're seeing a surge in two markets: e-mail archives, and tools to aid in legal discovery, the process by which information relevant to litigation or an investigation is found, analyzed, and turned over. Legal discovery is the new growth engine for archiving technology: Gartner estimates spending on discovery software and services will grow 35% every year for the next three years, while IDC forecasts that sales of e-mail archiving applications will jump to $1.7 billion by 2011, up from $631 million in 2007. And this spring saw significant activity in the archiving market. Dell purchased MessageOne, a software-as-a-service provider of e-mail archiving, continuity, and compliance services, for $155 million. Barracuda Networks and Trend Micro launched archiving appliances. And in April, Oracle announced a forthcoming product line, the Universal Online Archive, to store and manage unstructured data; its first module will be the Oracle E-Mail Archive Service.
It's no coincidence that growth of the e-mail archiving and legal discovery markets are intertwined. Lawyers target e-mail, and not only because it's the primary communication method for executives and employees and provides a record of an organization's business procedures. E-mail also often contains unguarded speech, which can become damning evidence during a trial.