Chief Judge Rader’s Warning Shot Against Unreasonable DiscoveryOctober 3rd, 2011
In his Sept. 27 presentation to the Eastern District of Texas Bench Bar Conference, Federal Circuit Chief Judge Randall Rader presented solutions to the spiraling costs and excessive discovery requests that plague patent litigation.
Patent litigations impose a consistent — and, in many cases, unnecessary —burden on both patent holders and accused infringers. In fact, according to a Federal Judicial Center study cited by Judge Rader, intellectual property cases typically cost almost 62% more than their non-IP counterparts. This cost is driven in large part by expansive e-discovery requests, which result in .0074% — or less than one in 10,000 — produced documents making their way onto a trial exhibit list in patent matters.
In order to effectively and efficiently address these very issues when conducting discovery in patent matters, one should consider:
- reasonably negotiating e-discovery agreements with opposing counsel
- reducing the number of custodians from whom data is collected through better identification of representative custodians
- closely examining proposed key terms and conducting statistical analysis of likely relevant data
- delaying email discovery until after claims construction or completely eliminating email review with respect to all non-inventor custodians
- establishing data repositories in which opposing parties can select “non-contention” documents for production
- negotiating effective claw-back agreements to protect against the inadvertent production of both privileged and non-privileged information and/or
- when necessary, making use of the protections afforded in the FRCP to mitigate against excessive discovery.
During his presentation, Judge Rader unveiled the Federal Circuit Advisory Panel’s “Model Order on E-Discovery in Patent Cases,” which proposes six primary discovery limitations that in many respects reflect the preferred strategies advocated by DiscoverReady. The order proposes:
- Requiring that email production requests must be for specific issues, not “general discovery of a product or business”
- Delaying email production requests until after contention discovery — specifically including disclosures about the patents, the accused uses of the invention, relevant financial information, and the identification of asserted prior art
- Providing that production of electronic information in a mass production, which may include the inadvertent release of privileged work product, does not result in permission to use the electronic information
- Prohibiting a receiving party from using e-discovery that the producing party identifies as being protected by the work product or attorney-client privileges
- Presumptively limiting email requests to five custodians per producing party, and limiting the search terms utilized to identify email data to five search terms per custodian. The Model Order goes on to allow courts to consider increasing the limits to 10 custodians per party and 10 search terms per custodian depending on the scope of the case, but requires litigants who submit requests that exceed court orders to pay for productions over and above those approved by the court.
- Excluding metadata from e-discovery production requests without a showing of good cause
There are three primary takeaways from the Model Order. First and foremost, it is unlikely that all federal jurisdictions consistently will adopt the Model Order either in whole or in part. Numerous jurisdictions have refused to adopt local patent rules, and those that have failed to enact a single set of consistent rules. Based on this track record, the chances of all federal courts acting in unison are slim to none.
Second, the Model Order should serve is a wake-up call for parties to begin cooperating to conduct reasonable discovery in patent matters. It goes without saying that current discovery practices result in an incredible amount of waste by imposing costs and effort to identify and review documents that have a mere tangential — if any — relationship to the dispute. Unless parties work together to control this excess, they likely face a future in which the parameters of patent discovery may be established by the presiding court.
Third, and most importantly, if parties prove unable to reach reasonable accommodations on discovery, the limitations imposed by the Model Order may not be so great. The proposed limitations on email productions and the ability to claw back materials have significant merit; however, the limitations on the number of custodians from which email can be collected and the number of search terms to be applied against each custodian’s documents appear to be somewhat arbitrary absent further insight into the specific nature of the matter. The Model Order does contemplate that these limitations can be modified “for good cause.” In most instances, the measures set forth in the Model Order will be less effective than reasonable agreements negotiated by counsel based on their understanding of the underlying requirements of a particular case. Similarly, the proposal to eliminate the exchange of metadata makes little sense given the relative ease with which metadata can be captured and exchanged. However, the Model Order’s position that the exchange of metadata is unnecessary likely reflects the Federal Circuit’s irritation with the time and effort parties typically waste arguing over metadata categories they never intend to utilize.
Against this backdrop, the message is clear. The time to conduct reasonable discovery in patent matters is rapidly approaching. Patent holders and accused infringers should seize the opportunity to begin negotiating effective, efficient discovery plans. If they don’t, the Federal Circuit is glad to do it for them — and the parties may not be happy with the results.