New e-discovery rules change realities of patent litigation

Nearly six years have passed since the last major amendments to the Federal Rules of Civil Procedure took effect in 2000.

In the interim, discovery in large civil cases has undergone a near complete transformation from primarily paper-based to entirely electronic. Patent litigation has been especially affected due to its document-intensive nature.

Electronic data can be important evidence on such issues as inventorship, infringement, inequitable conduct, and willfulness. Where parties previously produced hundreds of thousands of pages of printouts of electronically stored information (ESI), it is now common in litigation to hand over a CD containing requested data in native format.

The rapid evolution of electronic discovery has given rise to numerous disputes, particularly in the areas of spoliation and attorney-client privilege. Another significant area of concern relates to the form and manner of production, including the key issue of “metadata.”

Over the past two years, the Advisory Committee on Civil Rules promulgated amendments to the federal discovery rules to provide a framework for electronic discovery. Barring any unexpected action by Congress, the new rules will take effect on Dec. 1.

Since documents are now being created that will be at issue in future litigation under the new rules, it is imperative that companies with significant investment in intellectual property and their law firms familiarize themselves with the issues surrounding the amendments and adopt best practices now to avoid being put at a disadvantage in future litigation.

The new rules and technology present opportunities for parties to litigate more effectively and efficiently. This article covers some of the key issues in patent litigation implicated by the amendments.

Metadata

Practicing under the new rules will require a detailed understanding of the significance of metadata. Metadata is, simply, data that describes other data, and is usually embedded in electronic documents in their originally stored format.

Commonly stored metadata includes information such as when and by whom a document was last modified. Metadata can also include information about prior drafts of a document. Documents that have been redacted, for example, can contain easily discoverable content containing the redacted text in the metadata.

Although the new rules do not specifically use the term “metadata,” modifications to Rule 34 implicitly require the parties to consider metadata in their discovery strategy. The amendments add a new category of discoverable information to the text of Rule 34(a), namely “electronically stored information.”

Of particular importance is the amendment to Rule 34(b), which specifies the procedure for requesting documents in litigation. The amended rule states “the request may specify the form or forms in which electronically stored information is to be produced.”

The new rule also specifies that if no particular form is requested, the responding party may produce the information in “a form or forms in which it is ordinarily maintained or in a form or forms that are reasonably usable.”

Similarly, new Rule 26(f) states parties should confer before the initial scheduling conference on “any issues relating to disclosure or discovery of electronically stored information, including the form or forms in which it should be produced.”

Rule 16(b) states the scheduling order may include “provisions for disclosure or discovery of electronically stored information.”

The new rules thus provide parties with the right to request documents in their “native” format, with all metadata preserved. The rules formalize a trend in the case law requiring parties to provide information with metadata preserved where that metadata may contain relevant information.

This is particularly common in patent infringement cases. For example, a federal district court in Illinois recently ordered a patent infringement defendant to produce documents in native format that it had already produced once in Tagged Image File Format (TIFF), which is essentially an electronic equivalent of a paper printout of data.

Consideration of metadata must accordingly begin long before litigation is contemplated. It is especially important for attorneys to consider metadata when creating and exchanging documents.

Some attorneys may have been trained to trust PDF files as a “safe” format for metadata. Unfortunately, this is not always true. Some metadata is maintained by the computer operating system and thus will apply to all files, regardless of application.

PDF files can also contain custom metadata similar to the metadata contained in Microsoft Office documents. Perhaps most importantly, edits and redactions made to PDF files are often easily reversed by subsequent users.

PDF is increasingly the lingua franca for legal document exchange. Many federal judicial districts now require electronic filing of PDF files. The amendment to Rule 5 formalizes this development.

The USPTO is gradually phasing in electronic filing as well, and it is common to exchange discovery and other case documents with opposing counsel as PDF files. Attorneys must exercise caution in avoiding inadvertent disclosure, even for PDFs.

Attorney-client privilege and waiver

One of the principal concerns raised by electronic discovery and the new Federal Rules relates to the attorney-client privilege. Inadvertent waiver of the privilege may occur in at least two separate ways with electronic documents.

First, metadata may unintentionally disclose attorney-client communications (such as edits made by an attorney). Second, the vast scale of electronic document production may make a document-by-document privilege review impractical, and thus some privileged materials may be accidentally produced.

The new Federal Rules set out a framework for addressing the issues raised by inadvertent production of privileged information. First, Rules 16(b) and 26(f) require parties to discuss early on “any issues relating to claims of privilege or of protection as trial-preparation material, including – if the parties agree on a procedure to assert such claims after production – whether to ask the court to include their agreement in an order.”

The parties could agree, for example, that neither will argue that the privilege has been waived due to an accidental disclosure. It is important to note, however, that such a provision will only bind the parties to the agreement, and a third party may still be free to argue that waiver has occurred.

The new Rules also set out a default procedure in Rule 26 for resolving conflicts over inadvertent production. According to the new Rule 26, any party receiving privileged materials must notify the producing party and return, sequester, or destroy the information until the claim is resolved.

This amendment should have no effect on the substantive law of attorney-client privilege and waiver. Rather, it simply specifies a default procedure and prevents the receiving party from making its own determination that the privilege has been waived.

In addition to these procedural options, a number of technological tools can be used to scrub metadata before a document is exchanged. Before destroying metadata, however, parties should consider whether the metadata could potentially be helpful in future litigation, and also take care to observe the duty to preserve documents triggered by anticipation of litigation.

Retention and spoliation

Some of the most highly contested discovery battles in recent years have related to claims of spoliation. With the profusion of electronic data and the often dynamic nature of electronically stored information, it is possible to lose relevant data through the routine operation of computer systems or to fail to search every location where data is stored.

These issues arise frequently in patent infringement cases. First, parties in high-stakes cases are more likely to aggressively pursue discovery in order to find key evidence.

Second, documents relating to the invention, the patenting process, and the prior art are usually several years old by the time the patent is litigated. Unless steps have been taken to preserve all electronic data, some information may be gone before litigation commences.

The duty to preserve evidence exists outside of the new rules. However, three amendments provide additional guidance in this area.

First, the new Rule 26(a) requires parties to include electronically stored information in their initial disclosures. Second, Rule 26(b) states parties “need not provide discovery of electronically stored information from sources that the party identifies as not reasonable accessible because of undue burden or cost.” The key phrase here is “that the party identifies.” In order to be relieved of the burden of producing difficult-to-locate data, a litigant must identify the existence of that data to the opposing party.

Under new Rules 26(a) and (b), it will be essential for in-house counsel, outside litigation counsel, and an in-house technical expert to meet early on in the case to develop a comprehensive inventory of electronic storage media to identify where relevant data is likely to reside and areas for which it would be unduly burdensome to search.

Aside from the obvious storage media of servers and desktop computers, parties should consider whether relevant information resides on backup media, PDAs, and other portable devices. In addition to e-mail, parties must consider faxes, voicemails, and instant message conversations.

Rule 37(f) sets up a safe harbor to protect parties from sanctions for “failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system.”

Although this rule appears, on the surface, to protect parties against spoliation findings for automatic document destruction by a storage system, the rule is limited by the requirement that the routine operation be in “good faith.”

Thus, when a party anticipates litigation, it is imperative to halt any automatic document destruction of expiration systems in order to be protected by the safe harbor. It is unlikely that a court will construe good faith to include inaction when a party knows relevant information may be destroyed automatically.

Adam Kessel is a litigator at Wolf, Greenfield, & Sacks, P.C. in Boston. He handles patent, trademark, and copyright infringement cases as well as domain name disputes and Internet-related cases He has also drafted and prosecuted software, chemical, and biotech patent applications. Prior to becoming an attorney, he worked as a computer programmer for over 15 years. You can contact Adam at [email protected] or (617) 646-8360.