By Ryan Davis
The U.S. International Trade Commission's proposed rules to limit eDiscovery in patent cases were met with wide acclaim Friday by attorneys who said the plan will make the ITC a more effective forum and go a long way to address persistent complaints that discovery costs at the ITC are out of control.
In a Federal Register notice, the ITC outlined a plan to allow administrative law judges to limit the extent of discovery requests when they determine the burden or expense of producing the information would outweigh the benefits.
That would mark a sea change from the current default mode for ITC judges, which is to allow nearly all discovery requests, creating a "Wild West, anything goes" culture where discovery costs can run into the millions of dollars, said Bert Reiser of Latham & Watkins LLP.
"If the commission is serious about this and really works to make it a tool for cutting back on costs, it will be a very welcome addition to the commission's rules," he said.
Rodney Sweetland of Duane Morris LLP called the proposed rules "just a fantastic development" and predicted that if adopted, they would make the ITC a more accessible and appealing venue for both complainants and respondents in patent cases.
"The discovery expense is one of the reasons some complainants shy away from the ITC, since it can be a multimillion-dollar proposition to fulfill discovery," he said. "At the same time, a lot of respondents settle out who might otherwise fight on, because the discovery costs basically force them to settle. These rules will make it possible to come to the ITC and get a decision on the merits."
The rules show the commission is responsive to the widespread worries about the impact of high discovery costs on ITC patent cases, said Stephen Smith of Cooley LLP.
"You really can't overstate the common concern that ITC cases are unnecessarily expensive and that the ITC's liberal discovery rules have been used more as a tactic to gain leverage over opponents than to explore the issues in the case," he said.
The ITC said in its notice that it began considering reforms to its discovery practice after a July 2011 forum at George Washington University Law School, where speakers voiced frustration about how difficult it is in ITC patent cases to recover email and other electronically stored data, much of which is never admitted into the record.
"Presenters questioned whether the potential benefit of discovered materials outweighs the costs associated with current discovery obligations," the ITC said.
In response, it proposed rules under which a party could avoid discovery of electronic data if it determined the information was not "reasonably accessible because of undue burden or cost." The party requesting discovery could then file a motion to compel, after which the other party would have to show the information was outside its reach. The judge could order discovery only if the requesting party showed good cause.
The ITC added that discovery must be limited if the judge determines its burden outweighs its likely benefit. Under its proposed rules, a judge could also rein in discovery if it were "unreasonably cumulative or duplicative" or could more easily be obtained from another source, if the requesting party had already had ample opportunity to obtain the information, or if the responding party had waived the legal position that justified the discovery in the first place.
Kimberly Parke of Dickstein Shapiro LLP, who attended the 2011 forum, said several ITC judges who spoke at the event requested guidance from the commission about their authority to restrict discovery.
"They said they wanted something like this because they felt like they were on shaky ground with regard to having the power to limit discovery," she said. "ITC proceedings are generally wide-ranging, and discovery is very broad. I think it's great to give the administrative law judges additional power to limit discovery."
While ITC judges have always had the inherent authority to limit discovery, the commission had never offered clear guidance about when that was appropriate, said Parke, who is chair of the ITC committee for the American Bar Association Section of Intellectual Property Law. So judges faced the risk the ITC would overrule their decision.
The clear guidelines in the proposed rules "will provide judges with a level of comfort that their decisions will be supported and gives them specific guidance about what the commission considers to be discovery that isn't necessary," she said.
Currently, ITC judges tend to rubber-stamp just about all discovery requests, erring on the side of getting all the information into the light and seeing how useful it is later, Reiser said.
That can sometimes result in the production of millions of emails that end up adding a net value of zero to the case. So the new rules should let the parties focus on the discovery that really matters, he said.
Still, Reiser cautioned that "the devil is in the details" and it remains to be seen how judges will interpret terms like "unreasonably duplicative" and "undue cost" in the proposed rules.
When a party argues it will be too difficult or expensive to produce some information, "I hope the judges don't make the bar too high and make people show too much," he said. "Then these rules would be nullity."
The ITC plans to accept public comments on the proposed rules for 60 days, but attorneys predict the plan will be embraced with relatively little opposition and is likely to be enacted as proposed.
"The ITC tends to promulgate rules for comment that are already accepted," Sweetland said. "I'd be surprised if there are any substantial changes before they're adopted.
While ITC judges are currently able to put limits on discovery, the rules should give them additional tools, according to Alexander Chinoy, of counsel at Covington & Burling LLP.
"I think the commission's notice is definitely a step in the right direction. Many parties that have appeared before the ITC have observed the great cost of eDiscovery, and any effort to help contain costs will certainly be appreciated," he said.
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