The Federal Circuit’s New Model Order on E-Discovery

On September 27, 2011, Chief Judge Randall Rader of the Federal Circuit announced that the Advisory Council of the Federal Circuit unanimously adopted a Model Order regarding e-discovery in patent cases. Its purpose is to serve as a “starting point” for district courts to streamline and reduce e-discovery costs, emphasizing email production limits.

E-mail discovery must be phased in after initial disclosures and production of basic documentation about patents, prior art, accused devices and financials have progressed. E-mail document requests must be propounded on specific issues; global requests will not cut it. Most importantly, e-mail discovery requests are required to be specifically limited as to custodians, search terms and timeframes, with only five custodians and five search terms per custodian per party permitted, absent a showing of distinct need. The Model Order mandates cost shifting for disproportionate electronic production requests, and also that inadvertent production of privileged documents does not constitute waiver.

The Model Order was motivated by cost concerns in patent litigations, based upon the finding that these types of cases “stood out for their high discovery expenses.” Thomas E. Willging et al., Discovery and Disclosure Practice, Problems, and Proposals for Change: A Case Based National Survey of Counsel in Closed Federal Civil Cases 38-39 (Fed. Judicial Ctr. 1997). Chief Judge Rader more expansively remarked that “the greatest weakness of the US court system is its expense,” and that the burden of extensive e-requests generally outweighs any benefit, noting that e-discovered documents rarely appear on trial exhibit lists and even more rarely are seen in appeals. All this is true.

The motivation to engage in scorched earth e-discovery is often directed towards inflicting as much financial pain as possible on the other party, with masses of production never used and probably never reviewed by the requestor. This can happen particularly when there is an inherent imbalance in the amount of discovery required from the respective parties. For example, in Hatch-Waxman pharmaceutical patent litigations, development of a drug product may have taken years, and involved hundreds of people scattered over several continents. The discovery, (and especially e-discovery), that is arguably relevant can take years to collect and produce, with costs easily running well into millions of dollars. On the other hand, the challenging generic may only have a few redwelds of relevant information to produce.

The same dynamic holds true for patent troll cases. Trolls, non-practicing entities that hold and assert patents against businesses, carry a limited discovery burden. However, they can exert significant financial stress on alleged infringing companies because of extensive communications exchanged through years of product development and extensive manufacturing, marketing and financial documentation and communications.

Will district courts adopt the Model E-Discovery Order? Likely they will. District courts judges welcome any guidance offered, particularly in the area of e-discovery, and especially anything that can assist in the management of difficult and complex patent cases. The Model Order also affords the courts flexibility; it can always be modified by individual judges upon a showing of good cause.

Another question that is probably more difficult to answer is whether the patent Model Order will be adopted in other types of large, complex civil litigations. That answer may be: it depends. The focus of the Model is on e-mail and that type of document, in and of itself, is generally not that important to patent litigation claims such as infringement or invalidity. However, in non-patent cases, where claims often turn on a “smoking gun” e-mails, the madness may continue.