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Storage firm hopes to cut IP litigation costs with escrow discovery

Laptop-in-locked-room idea to solve legal conundrum

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A legal document storage company has launched a service that will allow teams of lawyers to examine disputed intellectual property assets in a monitored, secure room. Software would be examinable on a laptop with printing and networking disabled, it said.

Legal archiving company Iron Mountain said that it is launching the service to meet the demands of the soaring numbers of intellectual property (IP) litigation cases.

"The decision to provide this service now has been driven by … the rise in patent litigation cases in the UK," said an Iron Mountain statement. "Between 2006 and 2007 the UK witnessed an increase of 83% in the number of intellectual property claims and proceedings issued by the Chancery Division [of the High Court in] London."

The company's IP Litigation Discovery Escrow Service will hold IP assets as a trusted third party, allowing both sides in a case to examine the disputed IP without the risk of its modification or theft.

Escrow is the keeping of material with a trusted third party, along with agreements on when that material can be released. Software supply contracts can contain escrow clauses to ensure that if the supplier goes bust or stops supporting the software the buyer is able to gain access to the source code, which has been kept in escrow, so that it can continue to use the software it has paid for.

Iron Mountain said that it is "a neutral, secure facility where a claimant can access and examine intellectual property that a defendant has been accused of infringing, while eliminating the potential exposure and risk associated with defendants delivering that proprietary information directly to claimants".

"During the discovery phase of litigation there is an inherent conflict of interest between the defendant and claimant parties,” says Ian Brookes of Iron Mountain. “Defendants must satisfy the discovery requirements of the court while simultaneously protecting their intellectual property.”

The company said that if the disputed IP asset was software, the source code would be made available for inspection in a dedicated room and on a laptop computer with its printing and networking facilities disabled.

It said that the inspections would happen in secure rooms which have been built to prevent communication with the outside world.

Brookes said that it was the company's hope that better analysis of material in the early stages of litigation would stop cases going all the way to court and help to keep costs down.

“Most of the expenses in an intellectual property court case tend to be incurred during the pre-trial phase,” said Brookes. “Where the Discovery Escrow service has been used, it has helped streamline processes and reduce the time and cost involved in pre-trial preparation in IP litigation. By reviewing the IP in dispute in the pre-trial phase, litigants are able to decide whether there is a case or not to pursue in a full blown trial.”

OUT-LAW's guide to Escrow.

Copyright © 2009, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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