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Carbonite sues hardware maker, reseller

Online data backup service alleges hardware manufacturer's products failed to work properly. According to one lawyer, customers whose data was lost may have few legal remedies.

Customers who lost data after it had failed to be backed up properly by service provider Carbonite in 2007 may have few legal remedies, a lawyer said on Monday. Meanwhile, Carbonite is suing the hardware manufacturer and reseller for charges including breach of warranty, breach of contract, fraud, and unfair and deceptive practices.

Carbonite filed a lawsuit last week against hardware maker Promise Technology and reseller Interactive Digital Systems, alleging it was sold $3 million worth of defective equipment, which affected backups of 7,500 customers.

In its lawsuit, filed in Massachusetts' Suffolk County Superior Court, Carbonite claims it lost business and that its reputation was damaged as a result of the problems.

Carbonite alleges that the Promise VTrak Raid equipment in several instances failed to recognize defects in the hard drives and transfer the data to another hard drive before the data was lost, said Thomas I. Elkind, attorney for Carbonite.

Most of the customers were able to recover their data but some were not, he said. In the meantime, he said, Carbonite has been replacing the defective hardware with systems that work properly so service is operating normally.

Joe Messina, a lawyer who represents Interactive Digital Systems, said he had not seen the lawsuit.

A Promise spokesman provided this comment: "We have looked into Carbonite's allegations and believe that they have no merit. Our investigation indicates that our products were neither implemented nor managed using industry best practices."

"I think this is more of a public relations campaign than an actual lawsuit," Messina said. "We'll respond if and when they decide to serve us the papers."

Several outside lawyers said the case will revolve around what the terms were of Carbonite's contract with Interactive Digital Systems and its warranty with Promise, details of which were scarce in the five-page lawsuit.

"Often the manufacturer says you put in a tray that was too hot or was situated magnetically in an inappropriate place. They could also say it was the (plaintiff's) environment that caused the problem or another piece of hardware and not our product," said David Steuer, of Wilson Sonsini Goodrich & Rosati. "Normally they settle because there are risks on both sides."

Jeff Lederman, of Winston & Strawn, took a look at the terms of use on Carbonite's Web site and said it looks like the company had attempted to shift the risk of damages from data loss to its customers, which limits the customers' ability to recover damages.

"In no event will Carbonite .... be liable ... for any lost profits, lost data, interruption of business, or other special, indirect, incidental, or consequential damages of any kind... even if Carbonite has been advised of the possibility of such loss or damages," the Web site's terms of use says.

In a statement, Carbonite Chief Executive David Friend had this to say about the lawsuit: "All of the affected customers had their backups restarted immediately and automatically. A small number of these customers had their PCs crash before their restarted backups were complete. These customers were unable to restore all of their files from Carbonite. We took full responsibility for what happened, and I did my best to apologize personally to each of these customers. We addressed the technical issues that caused the above problems, and in the nearly two years since the incident, we have not encountered further problems. That said, our lawsuit seeks a refund for the defective products we were sold."