October 31, 2012
Law360
By Lionel M. Lavenue; Jessica L.A. Marks
Authored by Lionel M. Lavenue and Jessica L.A. Marks
The last several years have seen courts implement welcome sanity regarding e-discovery. After hearing repeated complaints at foreign judicial conferences about "crazy American discovery," in 2010, Chief Judge Randall Rader asked the Federal Circuit Advisory Council (FCAC) to develop a model e-discovery order to address some of the abuses with overzealous patentee-plaintiffs, especially nonpracticing entities with few documents or employees, and Rambo-like defendants.
At the 2011 Eastern District of Texas Bench Bar Conference, to much acclaim, Chief Judge Rader announced a model e-discovery order that the FCAC developed, recommending strict limits on ediscovery.1 The limits excluded emails from productions unless specifically requested and required leave for production of emails from more than five custodians. Following the Federal Circuit's lead, several district courts—including the Eastern District of Texas,2 the Southern District of New York,3 the District of Delaware4, and the Western District of Pennsylvania5—adopted similar e-discovery rules and model orders.
Now, the International Trade Commission has (thankfully) joined the bandwagon, proposing new rules to limit e-discovery. In contrast to the FCAC, the ITC's proposed rules do not yet include a model e-discovery order, but they represent a first step in aligning the ITC's discovery rules with the Federal Rules of Civil Procedure (FRCP) and limiting certain discovery abuses.
The proposed rules even go further than the FRCP in some respects. For example, unlike the FRCP, the newly proposed rules limit discovery when the producing party stipulates to facts or waives legal positions underlying the requests. But even here, the proposed rules merely acknowledge relatively standard practices in the ITC. Nonetheless, although the proposed rules are not really earth-shattering, they do remedy some of more blatant gaps and are a welcome move forward.
Interestingly, Chief Judge Rader also had a hand in the proposed new rules. At the "Electronic Discovery at the ITC" forum at George Washington University, Chief Judge Rader, who was the keynote speaker, conveyed his continuing concerns with the escalating costs of discovery and questioned whether the production of large volumes of documents outweighed the potential benefits at the ITC. His sentiments were echoed by others at the forum, and a snowball began to take shape. As a result, the ITC drafted and published its Notice of Proposed Rulemaking6 on Oct. 5, 2012, which included (1) limits to the scope of discovery, (2) production of privilege logs, and (3) clawback provisions for erroneously produced documents.
First, the proposed rules address the elephant in the room regarding discovery at the ITC; namely, the fact that there is practically no limit to what is discoverable. Having been in recent investigations with nearly 100 fact depositions, almost 10,000 requests for admission, and innumerable interrogatories and document requests, it is mindboggling how extreme discovery can become.
Currently, ITC rules provide that the scope of discovery includes any nonprivileged materials relevant to any claim or defense of any party, and the present rules also state that a responding party has no grounds to object to requests seeking inadmissible evidence if the request appears reasonably calculated to lead to discovery of admissible evidence.
Although the ITC rules are similar to those in the FRCP, the FRCP contain limiting provisions that the ITC rules lack—such as FRCP 26(b)(2)(B), which states that the producing party does not need to provide discovery of electronically stored information (ESI) that is not reasonably accessible. Without such limiting provisions, document productions in the ITC generally devolve into large-scale data dumps, totaling millions of pages of ESI for even the most routine ITC investigation.
Because there are arguably no limitations on discovery at the ITC (a fact sometimes exploited by small complainants against large respondents), the ITC can start small, and the newly proposed e-discovery rules are minor, only including fairly basic limitations (initially). For example, one of the new proposals is similar to FRCP 26(b)(2)(B), so ESI would only need to be produced from reasonably accessible sources, e.g., if it is not an undue cost or burden.
The producing party first identifies sources from which ESI would be too costly or burdensome, and then the burden falls to the requesting party to demand production of such information. And, like in many of the new e-discovery restrictions in district courts, administrative law judges would be given discretion to condition discovery on payment of the reasonable costs by the requesting party.
Also, in the new proposals, if a requesting party files a motion to compel production, the producing party will have several "officially sanctioned" defenses at its disposal to oppose the motion, including: (1) the discovery sought can be obtained from a more convenient, less burdensome, or less expensive source; (2) the party seeking discovery has already had ample opportunity to obtain the information; or (3) the burden or expense of the discovery outweighs its likely benefit.
Although it is common to negotiate the scope of discovery requests—and to file motions to compel or motions for protective orders when parties cannot agree—this formalization of the scope of discovery is probably the foremost change. Instead of parties attempting to rely on procedures applicable to district courts, the ITC will set its own rules, which are consistent with the FRCP and provide grounds for parties to know the limits.
One of the most interesting defenses proposed in the new rules is the ability of the producing party to stipulate to facts or waive legal positions upon which the discovery requests rely. So, for example, if a respondent does not want to produce documents regarding testing in the United States, it can stipulate to that fact.
Second, the proposed rules also address claims of attorney-client privilege, which, while not unique to e-discovery, affect the collection and production of ESI. The proposed rules include guidelines for claiming privilege and producing a privilege log. Currently, the ITC has no general rules for privilege logs. Guidelines for privilege logs, if any, are set by individual ALJs and/or by agreement between parties.
The proposed rules for claiming privilege and logging documents are similar to FRCP 26(b)(5)(A)—the claim of privilege must be expressly made and the nature of the information must be described. The proposed new rules also describe the exact type of information that must be on the privilege log, as opposed to the FRCP's general requirement for describing the nature of the document. Given the expedited nature of ITC hearings, however, a very strict schedule is proposed. Claims for privilege must be expressly made in the responses to the requests, and a privilege log must be produced within 10 days.
Despite the best intentions, a 10-day privilege log deadline is arguably impractical. The current rules allow only 10 days to provide a written response to requests for production (absent agreement among parties), so with only 10 days to prepare the privilege log, parties would have 20 days total to send the requests to the client (many of whom are foreign), receive the documents, review them, log them, generate objections to the requests, and produce a complete privilege log with all of the details required by the new rules.
And, even though the ITC hopes to reduce the amount of ESI and documents produced, document productions will likely still be too voluminous to make this timeline reasonable. Hopefully, the deadline will be changed before the final rule. Nevertheless, even with the 10-day period, the proposed rules do have the benefits of increasing uniformity among ITC investigations, reducing disputes over privilege log requirements, and improving consistency between ITC investigations and district court litigations.
Third, and finally, as anyone involved in an ITC case can attest, the fast pace of an ITC hearing increases the need for clawback provisions for erroneously produced privileged documents. Usually a stipulation to the protective order regarding clawbacks is one of the first agreements entered into among parties. Of course, one would hope that, with better tailored e-discovery, the number of improperly produced documents will be reduced. But realistically, the risk of inadvertently disclosing such documents simply cannot be completely eliminated.
In the proposed rules, the ITC considered a categorical clawback rule that would allow any and all privileged documents to be recalled whether or not reasonable precautions were taken in producing the documents. But in the end, the ITC proposed a more traditional clawback rule that would still be subject to the possibility of waiver of privilege for inadequate production procedures.
Since the ITC is trying to reduce the amount of ESI and documents produced, this is not necessarily a mistake. One could argue that, without the threat of a waiver of privilege, unscrupulous parties could be inclined to dump data on opposing counsel without reviewing it, knowing that any inadvertently produced privileged documents could be clawed back on a whim. Indeed, the temptation to produce any and all documents without review is especially tempting in the ITC where the vast majority of documents are usually produced under a protective order.
Under the proposed rules, ALJs would apply the requirements of Federal Rule of Evidence 502 and federal case law to determining waiver. If the disclosure is not inadvertent, reasonable steps were not taken to prevent the disclosure, or reasonable steps are not promptly taken to fix the error, then privilege would be waived. So, producing parties continue to have an incentive to target collections to reduce the number of documents that need to be reviewed before production.
Overall, the proposed new e-discovery rules are promising, especially in view of the ITC's two year plan to review its significant regulations.7 Also, these rules are just part of the ITC's efforts to curb the burdens of discovery in general, and e-discovery in particular, in 337 investigations. Some other e-discovery efforts proposed include:
Certainly, these are all worthwhile proposals, and we look forward to seeing them developed.
Hopefully, the ITC will also continue its efforts beyond what has already been proposed. For example, the commission could consider model stipulations for sales, importation and use/testing of products in the United States These are common areas of discovery that lead to voluminous productions to support relatively incontestable facts. Since a single sale or use of an imported infringing product is sufficient to support a finding of a violation, requests for all sales data, importation records and information are often unnecessary.
Currently, parties often stipulate to these facts, but creating a standard template would likely expedite the process, especially with contentious litigants. Further limits on the number of interrogatories, and new limits for requests for production and requests for admission could also help focus investigations and reduce the volume of discovery, perhaps as part of an initial scheduling order (as in district courts).
More globally, the ITC could even focus on how to weed out unnecessary discovery by weeding out unnecessary investigations. For example, early hearings could be introduced regarding the economic prong of domestic industry to reduce investigations where the complainant clearly does not have a U.S. industry; currently, these are only determined late in the investigation.
Still, the proposed rules for e-discovery are a welcome breath of fresh air, but don't forget that these initial tweaks are still proposals. Indeed, the full extent of the ITC's new e-discovery reforms are yet to be determined, and the final form of the rules is (unfortunately) not yet known. The public comment period extends to Dec. 4, 2012, and the final rules are likely to be influenced by those comments. Nonetheless, given the known problems, we welcome these and the inevitable future efforts required to tame the e-discovery beast at the ITC.
1 The model order can be found at: link no longer available
2 Appendix P: Order Regarding E-Discovery in Patent Cases, Eastern District of Texas, available at: link no longer available
3 Standing Order M10-468, Southern District of New York, available at: http://www.nysd.uscourts.gov/rules/Complex_Civil_Rules_Pilot.pdf.
4 Default Standard for Discovery, Including Discovery of Electronically stored Information (ESI), District of Delaware, available at: link no longer available
5 Patent Pilot Program, Western District of Pennsylvania, available at: link no longer available
6 The Federal Register Notice can be found at: http://usitc.gov/secretary/fed_reg_notices/rules/2012-24633.pdf.
7 The ITC published the Commission's Plan for Retrospective Analysis of Existing Rules on February 1, 2012, 77 FR 8114 in response to Executive Order 13579 of July 11, 2011. The Plan states that the ITC will conduct a review of its regulations during the two years after the publication of the plan (i.e., until February 1, 2014).
8 The ITCTLA's proposed source code provisions can be found at: http://usitc.gov/press_room/documents/featured_news/Ediscovery_attachment1.pdf.
9 The ITCTLA's proposed metadata production provisions can be found at: http://www.usitc.gov/press_room/documents/featured_news/Ediscovery_attachment2.pdf.
Originally printed in Law360 (www.law360.com). Reprinted with permission. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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