This cause comes before the Court on plaintiff's Renewed Motion to Compel Inspection. After reviewing the parties' motion papers, the Court conducted an evidentiary hearing concerning the various proposals for inspection of the computers located on the premises of defendant Legacy. The Court has heard argument from counsel.

THE COURT FINDS AND CONCLUDES:

A. Plaintiff VPOS and defendant Legacy both deal in used computer equipment for “POS” (point of sale) computer systems, such as cash registers and terminals linked to a central processing facility. VPOS asserts that success in that market depends on in-depth knowledge concerning both the businesses from which VPOS and Legacy acquire used equipment for resale, and the businesses to which VPOS and Legacy resell.

B. In July 2003, defendant Haas left VPOS for a job with Legacy. Months later, VPOS filed this suit, complaining of defendants' alleged taking and use of VPOS' proprietary information. Legacy does not seriously dispute that some information from VPOS' computer system was copied and installed on one or more of Legacy's computers. After an evidentiary hearing, on May 13, 2004 the Court granted VPOS a preliminary injunction, ordering Legacy to purge from its computer system all information obtained from VPOS. Legacy itself says it does not want to keep that information. But the purging has not yet been done, due largely to VPOS.' desire to keep Legacy's system intact for purposes of discovery.

C. VPOS has tendered two proposals for “inspection” (i.e., forensic discovery) of Legacy's system. Neither addresses at all implementing the preliminary injunction. In contrast, Legacy's counterproposal focuses on purging VPOS information, without really addressing the discovery issues. The cost of VPOS' proposed inspection heightens the parties' dispute. Based on the testimony that Legacy has approximately 30 computers:

D. If adopted, Legacy's counterproposal will arguably lessen the amount of data which must be examined. It will, however, entail replacing all of Legacy's computers. But Legacy's approach is aimed at purging data, not at forensic discovery. See Defts' Mem. in Opp. to Pltff's Renewed Mtn. to Compel Inspection (8/12/04) (hereafter “Legacy Mem.”), at 11. Replacing Legacy's computers does not fully address the discovery issue, and may not fully address the injunctive issue:

E. One may assume (though there is no specific evidence) that Legacy's computers could be replaced at an average cost of $1,000 each. But as Legacy concedes, VPOS' experts will need to have an oversight role in the data-transfer process. Thus, it is unclear whether Legacy's proposal will ultimately cost significantly less than the $60,000 projected for VPOS' Proposal No. 1.

F. What is the appropriate scope of electronic discovery (“e-discovery”) here? What level of verification is called for in connection with Legacy's purging its system of VPOS data? Who should pay what part of the discovery and verification costs (which may overlap)?

G. “Electronic documents are no less subject to [discovery] disclosure than paper records.” Rowe Entertainment, Inc. v. William Morris Agency, Inc., 205 F.R.D. 421,428 (S.D.N.Y. 2002), citing cases. But the analogy to paper discovery breaks down quickly. For example:

H. There are few cut-and-dried rules in this developing area. The parties have not provided much authority. The Court has found helpful Rowe, supra;THE SEDONA PRINCIPLES: BEST PRACTICES RECOMMENDATIONS & PRINCIPLES FOR ADDRESSING ELECTRONIC DOCUMENT PRODUCTION (2004) (hereafter “Sedona Principles”), a thoughtful and thorough examination; and several of Judge Sheindlin's Zubulake opinions, in particular Zubulake v. UBS Warburg LLC, 217 F.R.D. 309 (S.D.N.Y. 2003) (Zubulake I), and Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003) (Zubulake II).

I. F.R.Civ.P. 26(b)(2)'s “proportionality test,” see Zubulake I, 217 F.R.D. at 316 -- a principle similarly, if more tersely, embodied in Illinois Supreme Court Rules 201(c)(1) and 218(a)(5) -- applies to e-discovery. Just as the Internet has raised privacy concerns about government records by eliminating the physical “inconvenience factor” which served to lessen casual snooping, so electronic document storage and retrieval has expanded the volume of a business' stored documents, while reducing the extent to which time and physical inconvenience impose practical limits on discovery overreaching. But electronic information is often retained “not because it is expected to be used,” but rather because “the costs of storage are virtually nil” and thus “there is no compelling reason to discard it.” Rowe, supra, 205 F.R.D. at 429. It may make little sense to spend a lot of money uncovering data which is kept only because throwing it out is too much trouble.

J. Thus, expensive e-discovery processes should not blindly be invoked just because they are technically feasible. Here as with paper discovery, some functional level of trust is necessary to the system's efficient functioning. In paper discovery, for example, we do not routinely assume that a party's document production is incomplete; rather, we accept the party's completeness affidavit under Supreme Court Rule 214, relying on professional obligations and the requirement of supplementation (and, ultimately, the specter of sanctions) to deal with inadvertent omissions. VPOS' experts' proposed inspection protocol seems, in contrast, to assume that Legacy will attempt to conceal information, whether by deletion or by transfer to a different (perhaps offsite) repository.

K. The functional trust issue here is controverted. In addition to the disputes over Ms. Newmes' testimony, the preliminary injunction hearing record raises the possibility that both Mr. Floro and Mr. Krizka had VPOS computer information during their employment by Legacy. Though there is no actual evidence of spoliation, the unexplained circumstances surrounding Mr. Floro's testimony make it difficult to say that VPOS' concern is altogether unfounded.

L. On the other hand, Legacy will stipulate “that at least some of Vision's business information was, at some point, on Legacy's computer system.” Legacy Mem. at 11. No one has suggested that the information was obtained much before or after July 2003. Nevertheless, the parties vehemently disagree about exactly what happened. The issue has more than academic importance, given, inter alia, Legacy's claim that VPOS manufactured evidence via Ms. Newmes.

M. Like deleted documents, the availability of electronic metadata goes beyond the equivalent range of normal paper discovery. Ordinarily, neither metadata nor deleted documents should fall within the ambit of e-discovery. See Sedona Principles, supra, Principles 9, 12, at pages 34-35, 41. As suggested by Id., Comment 9.b, Illus. ii, and paragraphs K and L above, however, this case falls outside the ordinary range. In this case, both metadata and deleted documents (or the absence of deleted documents) may bear significantly on both sides' credibility.

N. Deleting a document does not necessarily make accessing it impossible, or even inconvenient. See, e.g., Zubulake II, supra (backup tapes); Rowe, supra (backup tapes and hard drives). “[M]ost computer systems will have a plethora of data that could be ‘mined.’ ” Sedona Principles, supra,Comment 9.b. The preceding discussion focused on “mining” by VPOS. Here, the focus shifts to potential future “mining” by Legacy, in a hypothetical attempt to comply with the Court's injunction Order without actually depriving itself of the deleted material.

O. It is easy enough to delete VPOS material from Legacy's computers, as the Court's injunction requires. The difficulty lies in verifying that the deletion was done, and cannot later be undone. VPOS' expert suggests that if Legacy merely purges data from its existing computers, verification is all but impossible, because of the theoretical possibility of recovering “deleted” data. Further, purging the compiled, readily accessible forms of VPOS' material may not reach stray bits of data on one or more computers. Finally, VPOS' expert suggests that Legacy might secrete VPOS information on portable media, re-installing it after any verification process has been completed.

P. These considerations favor Legacy's proposal to copy Legacy files, net of VPOS data, to new computers. That approach has the added benefit of leaving the old computers intact for forensic e-discovery. Despite the theoretical possibility of skulduggery during the transfer process, common sense and “proportionality” caution against verification overkill. Significantly, the VPOS information on Legacy's computers is now over a year old. Its usefulness degrades over time.

Q. The Court concludes that an appropriate process is as follows:

(b) One, three, and six months after the transfer, VPOS' experts will examine the new computers for any then-present or deleted assemblage (as opposed to stray remnants) of VPOS data:

R. As shown by the differing approaches of Magistrate Judge Francis in Rowe, supra, arid District Judge Sheindlin in Zubulake, supra, there is still room for debate about how to allocate the costs of e-discovery. Here again the paper discovery analogy breaks down. For example, in paper discovery the respondent typically pays the cost of seeking out the responsive information or documents. But in paper discovery that is often a “soft” labor cost; in e-discovery it is typically a cash outlay to a third-party expert. In paper discovery, the requester pays for “inspection and copying” of documents; but those costs may be hard to disaggregate in e-discovery.

S. Even though costs are not wholly one-sided in paper discovery, see paragraph R supra, “cost-shifting” in the e-discovery context usually means “forcing the requesting party, rather than the answering party, to bear the cost of discovery.” Zubulake I, supra, 217 F.R.D. at 316. In Rowe, supra,Magistrate Judge Francis articulated a “balancing approach” for determining whether, and how far, to shift costs, using an eight-factor analysis (Rowe, supra, 205 F.R.D. at 429):

T. Judge Sheindlin acknowledges that Judge Francis' eight-factor cost-shifting test in Rowe has been “[b]y far, the most influential response to the problem of cost-shifting relating to [e-] discovery,” Zubulake I, supra, 217 F.R.D. at 316 -- indeed, “the gold standard,” Id. at 320. But she suggests that “there is little doubt that the Rowe factors will generally favor cost-shifting.” Id.[3] She disagrees, because she prefers a “presumption that the responding party pays.” Id.; see generally Id. at 321 ff. This Court is not persuaded that such a presumption is necessarily appropriate. It is drawn from the realm of paper discovery, which is a doubtful and sometimes false analogy. It assumes a priori that the party who wants information should be able to make the other party pay the cost of providing it -- a view which forgets that in the interest of “full disclosure” (see SCR 201(b)(1)) we often authorize discovery of marginal relevance, if not indeed “fishing expeditions.”[4] Further, it fails to take account of the difference between paper-discovery “soft” labor costs and e-discovery “hard” dollar costs for retrieval of the more recondite forms of stored data.

U. The Sedona Principles suggest a sensible pragmatic balance between the Rowe and Zubulake approaches. See Sedona Principles, supra, Principle 13:

V. Here, that “reasonably available in the ordinary course” demarcation must be viewed in light of three further, partially conflicting considerations:

W. Balancing all of the relevant factors, including (i) VPOS's focus on metadata rather than “ordinary” data, (ii) the degree of Legacy's responsibility for that focus, (iii) the diminishing competitive utility of the “ordinary” data itself, (iv) the desirability of giving VPOS an incentive to minimize costs, and (v) the need to implement the Court's injunction, the Court concludes:

Accordingly, IT IS HEREBY ORDERED as follows:

1. The parties shall proceed forthwith to implement this Court's May 13, 2004 injunction Order as follows: Legacy shall obtain new computers of its choice, at its expense, to replace all of its 30 existing computers and 2 servers. Legacy shall determine which files (other than identifiable VPOS files) will be transferred to the new computers. Legacy shall advise VPOS' experts of how the copying and transfer will be effected. VPOS' experts will observe the copying and transfer. The copying and transfer shall be completed, at Legacy's expense (which shall include the reasonable fees of VPOS' experts for overseeing the process, as described in subparagraphs (a) and (b) infra), no later than December 1, 2004. After the transfer, and at Legacy's expense:

2. After the transfer (see (1) supra), Legacy's old computers will be stored at a place of the parties' choosing. They shall remain available for forensic discovery. The storage cost, and the other costs of VPOS' forensic discovery as to those computers, will be borne 75% by Legacy and 25% by VPOS, provided, that VPOS' expert fees to date shall be divided evenly between VPOS and Legacy, each paying 50% thereof.

3. As a condition of implementing the injunctive relief provided in (1) hereof, VPOS shall post (and present for approval on notice) an injunction bond in the sum of $50,000.

4. Notwithstanding the foregoing provisions of this Order, the Court may reallocate discovery costs (including requiring reimbursement, if necessary) depending on the ultimate outcome of this case on the merits. Further, the Court retains jurisdiction to enter such other or further orders, whether or not consistent with the foregoing, as may be warranted pursuant to SCR 219(c).

5. The Calendar 4 Court Coordinator shall notify all counsel of the entry of this Order.