Intellectual Property Law

Only two months and a few days until the e-discovery amendments (the "Amendments") to the Federal Rules of Civil Procedure take effect. For those not aware, on December 1, 2006 the Federal Rules will be amended to address a variety of topics related to the discovery of electronically stored information. Among other things, the amendments will provide guidance and clarification on a number of topics related to e-discovery, including the discoverability of inaccessible date such as back-up tapes, the form in which electronically stored information should be produced, and how to deal with the inadvertent production of privileged information when large amounts of electronic data are produced. Any lawyer practicing in federal court should become intimately acquainted with the Amendments, as they will implement significant changes in federal practice. Some of the key provisions are discussed below.

Preliminarily, the Amendments -- which modify Rules 16, 26, 33, 34, 37 and 45 -- make explicit what was already established by case law: that electronically stored information is discoverable. The Amendments, however, provide that electronically stored information is presumptively not discoverable if it comes from sources that the responding party identifies as "not reasonably accessible because of undue burden or cost." Inaccessible data sources would include such things as back-up tapes intended for disaster recovery, legacy data from obsolete systems, and data that was ?deleted? but remains in fragmented form requiring forensic restoration. In the event a party identifies inaccessible data sources, the requesting party can challenge that assertion, in which case -- if the parties cannot resolve the issue through the meet and confer process -- it can be raised with a court either by the requesting party (through a motion to compel) or the responding party (through a motion for protective order or, in the case of a third party subpoena, motion to quash). In either case, the responding party has the burden of showing that the information sought is not reasonably accessible. Even if the responding party makes such a showing, the trial court can still order production of the information if the requesting party shows "good cause." In the event a court finds good cause, the court may "specify conditions for the discovery," which the Committee Notes specify can include cost shifting.

With regard to the form of production, under the Amendments the requesting party may, but is not required to, specify the form in which electronically stored information is to be produced. The responding party can object to producing electronically stored information in the requested form but must state the reason for the objection. If necessary, the question of form can be raised in a motion to compel. In the event the responding party objects to the requested form of production, or if no form is specified in a request for production, the responding party must state in its written response the form it intends to use. If the form of production is not specified by party agreement or court order, the responding party must produce the information either in the form in which it is ordinarily maintained or in a form that is reasonably usable.

Because privilege review is often more time consuming and costly with electronically stored information, the Amendments create a procedure ? sometimes referred to as a ?claw back? provision ? that allows a producing party to assert privilege and work-product claims after production. The new provision provides that if information is produced in discovery that is subject to a claim of privilege or of protection as trial-preparation material (i.e., work-product), the producing party must notify any party receiving the information of the claim and the basis for it. The receiving party then must either (1) return, sequester, or destroy the protected material, or (2) present the material to the trial court under seal and ask the court to rule on the privilege claim. According to the Committee Notes, however, this provision does not address whether the privilege is waived when asserted after production. As a result, parties should not take this as an invitation to forgo or defer privilege review until after production.

The Amendments include a limited safe-harbor against sanctions to protect a party that destroys relevant documents as a result of routine data destruction procedures. The safe harbor provides that ?absent exceptional circumstances,? a court may not impose sanctions on a party ?for failing to provide electronically stored information lost as a result of routine, good-faith operation of an electronic information system.?

In addition to the changes discussed above, the Amendments require the parties to address e-discovery issues during the Rule 26 conference and in their Rule 26 discovery plan, and courts are empowered to address such issues in their scheduling orders. Initial disclosures must now identify any electronically stored information that a party intends to use to support its claims or defenses. Thus, lawyers will need to develop an understanding early in a lawsuit of the sources of their clients' electronically stored information and the form(s) in which such information is maintained.

All in all, the Amendments constitute a significant change in discovery practice in the federal courts. These changes will hopefully provide more guidance to parties and judges as they grapple with the formidable challenges posed by the immense quantities of discoverable electronic data that now exist. How will this change the way you do things? Let us know what you think.

Today's Guest Blogger: Tony Schoenberg