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How Not to Keep a Settlement Secret, Part 2

When Facebook settled ConnectU's lawsuit alleging it stole the idea for the popular social-networking site, its lawyers wanted nothing more than to keep the terms secret. As it turned out, they might as well have blasted it on a billboard in Times Square. Lesson one in how not to keep a secret came last month with the embarrassing discovery, first reported by the San Francisco legal newspaper The Recorder, that ConnectU's former law firm, Quinn Emanuel Urquhart Oliver & Hedges, had trumpeted the supposedly secret settlement figure in a marketing brochure. "WON $65 million settlement against Facebook," boasted the brochure.

Now comes lesson two, in which we learn how not to redact secret court documents. When the federal court in San Jose unsealed the transcript of its closed hearing on the Facebook/ConnectU settlement, it redacted all references to the settlement's financial terms. Or at least it thought it did. But when Associated Press reporter Michael Liedtke saw the blocked-out portions of the PDF transcript, he was able to unblock them with a few keystrokes. As he explained:

Facebook fought fiercely to keep the details of its market value and the ConnectU settlement under wraps. Before last June's hearing, Facebook lawyers persuaded Ware to remove reporters from a San Jose courtroom so the final details could be hashed out in private.

Large portions of that hearing are redacted in a transcript of the June hearing, but The Associated Press was able to read the blacked-out portions by copying from an electronic version of the document and pasting the results into another document.

For Liedtke, this was a reportorial coup, in that he not only uncovered the amount of the settlement but also discovered that Facebook had valued its own worth at far less than the $15 billion suggested in a 2007 investment in the company by Microsoft Corp. For lawyers, this was yet another reminder that just because you cannot see data in a document, that doesn't mean it's not there.

As the blog Blown to Bits explains, you can replicate Liedtke's "discovery" for yourself. Just open the PDF of the transcript, which is available from, and go to the bottom of page 22. There you see the word "REDACTED" followed by a line of whited-out text. Copy that line and paste it into a word processing program. Like magic, there appears the settlement figure of $65 million.

So how should a lawyer redact a document? Various companies offer redaction products. One, Redact-It, includes on its Web site a free white paper on how to redact documents properly. In looking for other guides to redaction, I found one that is particularly helpful in the way that it walks step-by-step through the process. Ironically, the source of this helpful guide to redaction is the federal court for the Northern District of California -- the very court from whence the botched Facebook transcript was issued.

Posted by Robert J. Ambrogi on March 5, 2009 at 11:13 AM | Permalink | Comments (0)


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