New Federal Circuit Model Order Significantly Limits E-Discovery In Patent Cases

Wednesday, December 14, 2011 - 13:50

At a recent Eastern District of Texas Judicial Conference, Chief Judge Randall Rader of the U.S. Court of Appeals for the Federal Circuit unveiled a Model Order Regarding E-Discovery in Patent Cases (the "Model Order"). The Model Order, the culmination of efforts by a subcommittee of the Federal Circuit Advisory Council, is designed to address the increasingly onerous costs of electronic discovery in patent cases, and is poised to dramatically reduce the burden and expense of certain aspects of the discovery process. However, various provisions in the Model Order could pose challenges to litigants if adopted by default without consideration of the discovery needs of the particular case. Most recently, the Model Order was implemented by a District Court in California over the objections of a party, suggesting that its provisions may indeed be widely adopted by courts in patent matters.

Rationale

As set out in Judge Rader's conference remarks, "The goal of this Model Order is to streamline e-discovery, particularly email production, and require litigants to focus on the proper purpose of discovery – the gathering of material information – rather than on unlimited fishing expeditions." The subcommittee's Introduction to the Model Order indicates that "Most discovery in patent litigation centers on what the patent states, how the accused products work, what the prior art discloses, and the proper calculation of damages," and that email production requests are often overbroad and tangential to the litigation. "Patent cases, in particular, tend to suffer from disproportionally high discovery expenses." Judge Rader noted that one analysis concluded that less than one document in ten thousand produced in discovery actually was included in the eventual trial exhibit list, and that the courts were in danger of becoming an "intolerably expensive way to protect innovation." In light of these concerns, the Model Order is intended to be "a helpful starting point for district courts to use in requiring the responsible, targeted use of e-discovery in patent cases." The text of the Model Order itself indicates that it "[s]treamlines Electronic Stored Information ("ESI") production to promote a 'just, speedy, and inexpensive determination'" of the action "as required by Federal Rule of Civil Procedure 1."

Email Discovery Is Severely Limited And Deferred To A Later Stage

One of the most striking provisions in the Model Order is its separate, and very specific, treatment of electronic mail. The Model Order contains a presumption that general production requests shall not include email. Rather, "parties must propound specific emails production request . . . for specific issues, rather than general discovery of a product or business." Moreover, such requests "shall be phased to occur after the parties have exchanged initial disclosures and basic documentation about the patents, the prior art, the accused instrumentalities, and the relevant finances." In what would appear to reflect a judicial endorsement of the use of search terms to conduct electronic discovery, the Model Order also requires that email production requests "identify the custodian, search terms, and time frame" and requires parties to "cooperate" on those items.

The Model Order also seeks to severely limit the number of custodians whose emails are produced. "Each requesting party shall limit its email production requests to a total of five custodians per producing party for all such requests." This five-custodian limit may be jointly modified without leave of the court and, in the absence of an agreement, the court may consider additional requests "upon showing a distinct need." The Model Order also requires that email production requests be limited to a total of five search terms per custodian per party. This limitation may also be modified by the parties' agreement or by the court upon a showing of "distinct need." "Indiscriminate terms" such as the company or product name are deemed inappropriate "unless combined with narrowing search criteria that sufficiently reduce the risk of overproduction." The five-custodian and five-search-term default limitations might be viewed as arbitrary, just as the ten-deposition limitation under Rule 30(a)(2) once was, but these limitations ought to severely curtail the burden and cost of electronic document productions. Of course, in many matters, five search terms will be insufficient or even risk being counter-productive by compelling the requesting party to propose broader search terms than would otherwise be used.

These default rules relating to email production appear to reflect the point, noted in the subcommittee's Introduction, that email communications are often not the focus of patent disputes and that discovery of a large volume of email is often wasteful and unnecessary. However, written communications can be useful in discovering the chronological story surrounding products and inventions. Thus, in circumstances where a district court may limit email discovery in accordance with the Model Order, parties and their counsel should carefully consider what specific email requests may be probative, as well as the identity of the relevant custodians. If more than the default number of custodians or search terms is viewed as necessary, early discussions with the adversary would be advisable. Likewise, parties who expect to receive document requests can take some comfort in the proposed default rules which envision a very limited number of email requests, custodians and search terms.

Metadata Exempted From Production

The Model Order also exempts parties from producing metadata (other than sender/recipient information) "absent a showing of good cause." This provision appears to recognize that the primary probative value of ESI in a patent case is usually contained in a document's basic content. By proposing a default rule, the Model Order does promise to forestall disputes relating to the form of production. However, metadata is often automatically collected in the e-discovery process and its inclusion during production generally imposes minimal incremental costs. Moreover, blanket exclusion of metadata could create inefficiencies for parties whose document review platforms make sophisticated use of metadata (such as email message ID fields) to sort, organize, thread, deduplicate and otherwise analyze incoming productions. Parties should carefully consider whether this model provision places them at an advantage or disadvantage, and whether to negotiate their own metadata needs during the Rule 16 meet-and-confer process.

Cost-Shifting

The Model Order contains a general provision that "[c]osts will be shifted" for disproportionate production requests "pursuant to Federal Rule of Civil Procedure 26." Additionally, and more specifically, if a party serves an email production request for additional custodians or search terms beyond the default limit of five, or another limit that is agreed upon, or as ordered by the court, the requesting party "shall bear all reasonable costs caused by such additional discovery." The Model Order does not make clear whether such costs include attorney review time and preparation of a privilege log, which are typically the most expensive stages of the process. Nonetheless, this provision promises to incentivize a requesting party to initiate discussions about the scope of discovery, the list of custodians and the proposed search terms in order to avoid the automatic imposition of costs.

Non-Waiver

The final portion of the Model Order provides parties with protection against waiver of the attorney-client privilege when privileged documents are produced inadvertently. Invoking Federal Rule of Evidence 502, the Model Order deems inadvertent production to be a non-waiver both in the pending case and in any other federal or state proceeding and also declares that a "mass production" of documents shall not constitute a waiver for any purpose. This establishes the core non-waiver protections of the 2008 amendments to Federal Rule of Evidence 502 as a default provision in patent cases where the Model Order is implemented.

Model Order Already Implemented Over Party's Objections

In the short time since the release of the Model Order, district courts hearing patent matters have already been called upon by parties to adopt the Model Order and have done so. For example, in DCG Systems, Inc. v. Checkpoint Tech., LLC, 2011 WL 5244356 (N.D. Cal., Nov. 2, 2011), the defendant sought an order from the court based on the Model Order. The parties specifically disagreed about the Model Order's restrictions on the timing and scope of email production. In its decision granting the motion and implementing the provisions of the Model Order, the district court found the rationale behind the Model Order to be compelling, even in a case where the patent owner is a direct competitor seeking an injunction rather than a non-practicing entity. The court indicated a willingness to entertain modifications of the email discovery limits later in the case, but stressed the importance of trying a new approach to e-discovery: "[O]nly through experimentation of at least the modest sort urged by the Chief Judge will courts and parties come to better understand what steps might be taken to address what has to date been a largely unchecked problem."

Conclusion

It remains to be seen whether the Model Order signals a paradigm shift in patent litigation discovery. It is not clear, for example, whether the Model Order is intended to apply in a case where there are antitrust counterclaims or where infringement claims are coupled with other business practices claims that might require broader discovery. Regardless, the Model Order promises to lower parties' expectations as to the scope of permissible discovery in patent matters and to add teeth to the principle articulated in Rule 26 that the burdens of discovery ought to be balanced in proportion with its probative value. The Model Order itself provides that proposed modifications shall be submitted by the parties within 30 days of the Rule 16 conference. Thus, the Model Order represents yet another way in which the contours of the full e-discovery process are front-loaded into the meet-and-confer framework at the beginning stages in each case. Early consideration and strategic planning for the e-discovery needs of a case remain important methods for handling patent litigation, regardless of a district court's inclination to adopt the new Model Order.

Brendan M. Schulman is E-Discovery Counsel at Kramer Levin Naftalis & Frankel LLP. He advises clients on the preservation, collection, processing, review and production of electronic information, with an emphasis on early case assessment and other cost-effective and defensible strategies.

Please email the author at bschulman@kramerlevin.com with questions about this article.