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IT storage systems – legal issues

One way for a reseller to gain an edge on competitors is to market the legal advantages associated with its products. In this post, we discuss some legal issues relevant to storage systems.

In Australia, there are significant legal requirements and obligations to store electronic records. These appear in the form of taxation laws, corporations legislation, workplace relations legislation, public-sector specific legislation and under a myriad of additional statutes and regulations. Resellers’ customers should ensure that data stored by the resellers’ storage solution is in fact retained for the stipulated time periods prescribed under the various laws.

In the United States, laws such as the Sarbanes-Oxley Act have been enacted in the wake of several major U.S corporate and accounting scandals such as Enron and Worldcom. Australian companies may be subject to Sarbanes-Oxley, for example, where the Australian company is a subsidiary of a U.S company or where the Australian company is itself listed on the U.S Securities and Exchange Commission (the “SEC”).

A properly drafted organisation-wide data retention policy should cover all forms of business records. And with increasingly more business-specific information being proliferated in digital form such as e-mail and instant messaging records, the importance of implementing a storage solution reflective of a robust data retention policy cannot be underestimated. Companies are fined millions of dollars every year for their failures to do so. But apart from assisting a company avoid fines, a data storage facility can also be an excellent resource in assisting the efficient searching of and access to evidence where critical, such as in times of litigation, where without the proper tools, searching for a particular e-mail can be like searching for a needle in a haystack.

In this regard, organisations should ensure that they not only have a disaster recovery system, which can be important for recovery from system failure and natural disasters; organisations also need an efficient and responsive system that can be indexed for rapid search and data retrieval. The software should not allow the deletion or overwriting of data by company employees lest the directors could be viewed as proliferating a policy which promotes the digital shredding of evidence.

Disclaimer: This column is for general informational purposes only. It is not legal advice nor is it a substitute for legal advice. Readers should seek legal advice on their own particular circumstances. Alan Arnott is a technology & telecommunications lawyer with qualifications in computer science and law with Arnotts Lawyers Jones Bay Wharf in Sydney. For more information, please visit