Suit Asks: Is Microsoft Hiding E-Mail?

BOSTON--Microsoft is digging deeper into its stores of electronic correspondence after a U.S. District Court judge asked for more information about a four-year-old e-mail from a company vice president telling employees to delete e-mail after 30 days.

Microsoft will comply with the new instructions, which were issued last week in a patent infringement and antitrust case brought by Burst.com. Microsoft acknowledged Monday that the 30-day limit mentioned in the e-mail message is shorter than Microsoft's official document retention policy, but denies that the order was related to legal cases, says Jim Desler, a Microsoft spokesperson.

Microsoft attorneys are still reviewing a transcript of the instructions regarding the e-mail message. The company will likely give the court more e-mail messages that put in context the message from James Allchin, group vice president of Microsoft's Platforms Group, to "destroy all business-related" e-mail, Desler says.

Documents Sought

Judge J. Frederick Motz of the U.S. District Court for the District of Maryland has asked Microsoft to review computer files from the company's legal department, and to interview the company lawyers regarding the 30-day policy, according to Spencer Hosie, an attorney with San Francisco law firm Hosie Frost Large & McArthur, which is representing Burst.com.

Burst.com filed its suit against Microsoft in June 2002, alleging Microsoft stole patented technology and trade secrets concerning Internet-based video-on-demand for its Windows Media Player. Microsoft learned all about Burst.com's technology in two years of meetings and discussions. Microsoft signed a nondisclosure agreement with Burst prior to those meetings, Burst.com says.

The Allchin e-mail surfaced after Burst.com filed repeated motions for Microsoft to release e-mail and backup tapes of e-mail. Burst.com is seeking documents from a number of employees in Microsoft's Digital Media Division who worked with Burst.com before the companies ended talks. Some have since left Microsoft, and the company destroyed their employee files after they left, Hosie says.

Microsoft acknowledges it can't find some of the documents Burst.com wants, but denies it is company policy to destroy important documents.

"(Burst) is trying to make the allegation that Microsoft was doing something in terms of document retention--this came up in a broader discussion of the existence of e-mails or notes that we have looked thoroughly for, but ... don't know if they exist," Desler says.

So far, Microsoft has turned over more than 500,000 pages from 60 employee files in the case, Desler says. But Hosie says many of those documents are bug test records and are of little use in the litigation.

30-Day Cutoff Questioned

Allchin's comments in the e-mail were part of a thread on document retention that Allchin did not start. That said, the 30-day limit on keeping old e-mail is a "stricter version" of the company's policy, Desler says.

Desler could not say how long Microsoft employees are allowed to retain e-mail, but says it is longer than 30 days.

Still, Microsoft has information to show that Allchin's comments are "consistent with (Microsoft's) policy to meet all its legal obligations and provide for efficient management of its corporate e-mail," he says.

Burst.com's allegations regarding Microsoft's e-mail retention policies are without merit and designed to distract attention from the patent infringement issues, Desler adds. Microsoft contends it used its "own work and innovation" with the Windows Media Player.

Hosie denies that, and contends Microsoft's 30-day purging policy is directly related to the company's legal woes.

Among other things, Hosie questions why a senior Microsoft executive like Allchin would devote any time to an administrative issue such as document retention. He also connects the timing of the e-mail and the U.S. government's antitrust case against Microsoft, in which Allchin's e-mail messages were used as proof that the company engaged in anticompetitive behavior.

Microsoft has also been unable to say who created the 30-day purging policy, ultimately crediting an unnamed Microsoft IT department employee, Hosie says.

Although Allchin's e-mail was sent long before Burst.com filed suit against Microsoft, it still affects the outcome of the case if Burst.com can prove that Microsoft made a practice of destroying documents in the face of litigation, Hosie says.

"If I can show that these files were deleted improperly, it will change the way the trial proceeds," he says.

Case Cited

The issue of document retention is a particularly volatile one, especially in the wake of a jury's conviction of Frank Quattrone in May.

Quattrone was head of the Technology Group at Credit Suisse First Boston. He was found guilty of obstructing a grand jury investigation into the issuance of shares in an IPO after he sent an e-mail reminding colleagues about the company's document retention policy shortly after learning of a federal probe into the IPO allocation issue.

Desler dismisses any similarities between Burst.com's allegations about Microsoft and the case against Quattrone and CSFB.

"One thing is clear: Microsoft has been completely forthcoming in providing any and all evidence requested of it," he says.

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