CONSTRUING RECENT AMENDMENT TO THE FEDERAL RULES

OVERVIEW e-discovery DECISIONS CONSTRUING RECENT AMENDMENT TO THE FEDERAL RULES Phyllis Glden Mrey Natinal Bar Assciatin IP Panel Presentatin August 1, 2007 1 Review f significant changes in Federal Rules Review f states that have passed r are cnsidering amendments t Rules f Prcedure fr electrnic evidence Litigatin hlds / legal hlds E-mails: failure t preserve Access t Cmputer Hard Drives 2 OVERVIEW (cnt d) December 2006: Significant Changes t Federal Rules Pre-December 2006 e-discvery e rulings Pst-December 2006 e-discvery e rulings Admnitins abut discvery sanctins Review f cases granting sanctins where electrnic data was at issue Intellectual Prperty Rulings Pertinent t ESI Intellectual Prperty Cnsideratins Rule 26(f) Cnferences Rule 26(f) Checklist Q & A Rule 16F Pretrial Cnference: Discuss/Agree upn methdlgy fr prductin f e-datae Disclsure f Electrnically Stred Infrmatin (ESI) and agreements ents regarding assertin f privilege Rule 26(b)(2)(B) Disclsure f ESI that is inaccessible Rule 26(b)(5)(A) Prductin f ESI withut waiving privilege Claw back prvisins Rule 26(f) Discuss all issues pertaining t preservatin f ESI Rule 34 Dcuments clearly include ESI Rule 37 Sanctins fr failure t prduce relevant ESI unless there is a gd faith exemptin 3 4 1

State Rule Amendments that Address ESI The fllwing states have addressed electrnic evidence thrugh amended rules, guidelines r prtcls r are in the prcess f cnsidering amendments t their prcedural rules: Califrnia Delaware Illinis Kansas Maryland New Hampshire New Jersey Texas (adpted e-discvery e Rules in 1999) Many federal curts have adpted lcal rules that fcus specifically n Fed.R.Civ.P. 26 I. LITIGATION HOLDS Issues Pertaining T Litigatin Hlds/Failure T Prduce Cmplete E-DataE Trademark infringement case where plaintiff sught sanctins fr defendant s s failure t : (a) issue a litigatin hld; (b) preserve chatrm m discussins n its website; and (c) t cnduct cmprehensive searches fr electrnic recrds. RESULT: : Curt denied mtin fr spliatin sanctins cncluding failure t instruct all emplyees t preserve dcuments did nt result in relevant dcuments being destryed and the chatrm/instant message-type discussins were nt synnymus t e-mails e where mre stringent discvery rules applied. Malletier v. Dney & Burke, Inc., 2006 WL 3851151 (S.D.N.Y. Dec. 22, 2006) 5 6 I. LITIGATION HOLDS (cnt d) Trademark infringement case where Plaintiff filed mtin fr sanctins as a result f Defendants rutine destructin f e-mails e and verriding f back-up tapes fr tw years while the parties exchanged letters regarding the pssibility f litigatin. Curt denied mtin and fund n spliatin fr electrnic infrmatin destryed prir t the filing f the Cmplaint because: Letter exchanges did nt include a request t preserve evidence, and Letters referenced pssible expsure but did nt threaten litigatin. Hwever, the Curt awarded mnetary sanctins fr Defendants failure t adequately preserve relevant electrnic recrds when cmputer hard drives were wiped clean, even thugh a litigatin hld was in place. Cache Le Pudre Feeds v. Land O Lakes Inc.,, 2007 WL 684001 (D. Cl. March 2, 2007) II. ISSUES PERTAINING TO E-MAILSE Plaintiffs in emplyment terminatin case sught prductin f native n file e-mails e after defendants prduced such e-mails e in paper. e-mail attachments were prduced in an electrnic frmat e-mails were prduced in a paper frmat curt held that the parties negtiated during pre-trial cnferences that electrnic discvery wuld be prduced as TIFF file images and nt in a native file frmat plaintiff s s prductin f e-mails e in hard cpy was cnsistent with the Rule 16 agreement therefre mtins t prduce native frms f e-mails were denied William v. Sprint/Management C.. 2006 WL 3691604 (D. Kan. Dec. 12, 2006) 7 8 2

II. ISSUES PERTAINING TO E-MAILS E (cnt d) Wrngful terminatin case - plaintiffs mved fr sanctins fr defendant s s failure t prduce and preserve relevant electrnic recrds e-mails, invices, and payrll recrds. Defendant claimed n duty t supplement discvery respnsive and initially claimed that it did nt have the requested infrmatin. After the mtin fr sanctins was filed, defendant prduced sme f the requested recrds. RESULT: : Curt granted sanctins - defendant s s prductin f sme dcuments after mtin filing was evidence f bad faith. Further, defendant had the burden t prve that dcuments had nt been destryed since it was in cntrl f the dcuments. May v. Pilt Travel Centers LLC,, 206 WL 3827511 (S.D. Ohi Dec. 28, 2006) II. ISSUES PERTAINING TO E-MAILS E (cnt d) Patent infringement case where defendant filed mtin t cmpel plaintiff t prduce electrnic dcuments because n agreement reached regarding e-discvery e scpe at attrney meeting befre Rule 26 cnference Plaintiff nly prduced e-data e fr ne emplyee Defendant sught all e-dcuments e created by every emplyee at plaintiff s s cmpany Plaintiff respnse: All relevant dcuments prduced, cmpany- wide search unreasnable and expensive RESULT: Curt issued cmprmise rder electrnic recrds/e-mails f 10 emplyees must be prduced Flexsys America LP v. Kuhm Tire USA, 2006 WL 3526794 (N.D. Ohi 12/6/06) 9 10 II. ISSUES PERTAINING TO E-MAILS E (cnt d) Plaintiff s s sught the prductin f e-mail e frm seven f Defendant s emplyees as the e-mails e were sent varius times during the pendency f the lawsuit. Plaintiff argued that the defendant implemented a new e-mail e deletin plicy in 2003, whereby, emails were deleted within 90 days f creatin,, unless designated fr retentin. Plaintiff sught permissin t depse defendant s s emplyees t determine whether the defendant wuld be able t retrieve any f the deleted ed emails. The curt examined FRCP 34 and determined that [electrnic data, such as e-mails, are discverable [and] that deleted emails are in mst cases, nt irretrievably lst. Therefre, the curt allwed plaintiff permissin t depse IT persnal p t determine whether any f the deleted emails culd be retrieved. Wells v. Xpedx,, 2007 U.S. Dist. LEXIS 29610 (M.D. Fla. April 23, 2007) II. ISSUES PERTAINING TO E-MAILS E (cnt d) In a suit alleging vilatins f the Americans with Disabilities Act, the plaintiffs sught the prductin f backup tapes f certain electrnic dcuments written and received after the lawsuit was filed. Defendant s s email system autmatically deleted all e-mails e after 60 days and, during discvery, defendant acknwledged it did nthing ng t stp the autmatic deletin feature. Defendant argued that such an rder t prduct backup tapes wuld create undue burden and expense and that there was little reasn t believe that the backup tapes wuld prduce anything f relevance. e. The curt examined the FRCP advisry cmmittee ntes and cnsidered the fllwing factrs in determining whether t rder prductin f the backup tapes. In particular, the curt stated that the cmmittee suggests a curt take int cnsideratin the fllwing factrs: 11 12 3

II. ISSUES PERTAINING TO E-MAILS E (cnt d) the specificity f the discvery request, the quantity f infrmatin available frm ther and mre easily accessed surces, the failure t prduce relevant infrmatin that seems likely t have existed but is n lnger available n mre easily accessed surces, the likelihd f finding relevant, respnsive infrmatin that cannt be btained frm ther, mre easily accessed surces, predictins as t the imprtance and usefulness f the further infrmatin, 6) the imprtance f the issues at stake in the litigatin, igatin, and the parties resurces. The curt fund that using these factrs verwhelmingly demnstrated that the prductin f backup tapes was warranted. Disability Rights Cuncil f Greater Washingtn v. Washingtn Metrplitan Transit Auth.,, 2007 U.S. Dist LEXIS 39605 (D.D.C. June 1, 2007) Befre the December 2006 Fed. Rule Amendments, several curts allwed digital imaging f hard drive when ppsing party s s frensic expert was present t bserve III. ACCESS TO COMPUTER HARD DRIVES U.S.Dist. Kansas Balba Threadwrks Inc. v. Stucky,, 2006 U.S. Dist. LEXIS 29265, 2006 WL 763668 at 4 (D. Kan. Mar. 2006) E.D.N.Y. Fx Indus. V. Gurvich,, 2004 U.S. Dist. LEXIS 26778, 2004 WL 2348365 at 3 (E.D.N.Y. Aug. 2004) E.D.Va. Physicians Interactive v. Lathian Sys,, 2003 U.S. Dist. LEXIS 22868, 2003 WL 23018270 at 10 (E.D. Va. Dec. 2003) D. Minn. Antich C. v. Scrapbk Brders, Inc.. 210 F.R.D. 645, 652 (D. Minn. 2002) S.D. Ind. Simn Prp.Grup L.P. v. MySimn, Inc., 294 F.R.D. 639, 641 (S.D. Ind. 2000) 13 14 Pre-December 2006 e-discvery e Overview Of Curt s Ratinale Fr Rule 34(a) Access t Electrnic Databases The pre-december 2006 curts cnsidered the fllwing circumstances as giving rise t a need t allw a party r a party s s expert t examine the ppsing party s s hard drive: 1. When a party has discrepancies r incnsistencies in discvery respnses; 2. When the defendant allegedly used a cmputer t cmmit an imprper act that is the subject f the lawsuit; Pre-December 2006 e-discvery e Overview Of Curt s Ratinale Fr Rule 34(a) Access T Electrnic Databases 3. When trade secrets were allegedly taken and dwnladed nt a cmputer; 4. When cmputers were allegedly used t disseminate plaintiff s cnfidential and prprietary infrmatin; and 5. When there was a NEXIS between the allegatins in the cmplaint and cmputers within the pssessin f the ppsing party. 15 16 4

Trade Secret Misapprpriatin, Cmputer Fraud and Abuse, Breach f Fiduciary Duty case where Plaintiffs sught image f cmputer hard drives f hme and ffice cmputers f defendants wh are frmer emplyees f plaintiffs. Plaintiff s s discvery requests sught e-mails e cntaining specific cmmunicatins relating t the claims Plaintiff filed mtin t cmpel prductin f cmputer hard drives fr imaging f ffice and hme cmputers f emplyees Curt allwed independent expert t btain and search mirrr image f defendant s s cmputer equipment Amendment t 34(a) allws inspectin r sampling r cpying f ESI E but rule des nt give unfettered right f direct access t party s s ESI 17 Because a relevant e-mail e had nt been prduced during discvery, an independent expert prepared mirrr image f hard drive RESULT: Curt rdered defendants t prduce their hard drives fr imaging because the cmplaint cntained allegatins relating t this discvery request (alleged dwnlading f trade secrets nt cmputer) with cmputer frensics expert t be chsen by plaintiff t cnduct Imaging Ameriwd Industries,, 2006 U.S. Dist. LEXIS 93380, 2006 WL 3825291 (E.D. M. 12/27/06) citing Balba Threadwrks v. Stucky,, 2006 WL 763668 at p. 3 (D. Kan. 3/24/06) and Physicians Interactive v. Lathian Sys. Inc.,, 2003 WL 2301827 at p. 100 (E.D. Va. 12/5/03) 18 Trade secret misapprpriate claim - Plaintiff seeks digital image f hard drive in presence f ppsing party s s frensic expert Curt adpted the analysis f Ameriwd Indus. Inc. v. Liberman - allwed plaintiff t select a cmputer frensic expert wh wuld versee and cmplete the imaging f all f the defendants cmputer equipment. The expert ert fllws a three-step plan brrwed frm the Ameriwd case. The three-step plan included: Imaging The plaintiff selects cmputer frensics expert wh will prduce e a mirrr image f all the defendants cmputers and prtable hard drives. Recvery the expert will recver every cmputer dcument frm the defendant ant s imaged cmputers and prtable hard drives. The expert will prvide recvered files t the defendant and ntify the plaintiff that the recvery prcedure is cmpleted. Disclsure The defendant will then review the recvered data fr privileged infrmatin and send plaintiff s s cunsel all nn-privileged respnsive dcuments, as well as, a lg f all privileged data nt sent t the plaintiff. Cenve Crp. v. Slater,, 2007 U.S. Dist. LEXIS 8281 (D. Pa. Jan. 31, 2007) citing Ameriwd Indus., Inc. v. Liberman,, 2006 U.S. Dist. LEXIS 93380 (D. M. 2006). 19 Case invlving theft f cmputer equipment and unfair cmpetitin - in respnse t requests t prduce ppsing cunsel hard drives fr cmputers used by the individual defendants (frmer emplyees f the plaintiffs) fr either their previus r new business ventures. RESULT: : The Curt denied the request. Because the plaintiffs did nt make a specific reference t infrmatin sught by inspecting the hard drives, nr did they claim that defendants s failed t prduce the requested infrmatin and that such infrmatin was cntained n the hard drives. FRCP 34 allws a party t request a search f the ppsing party s s cmputers. Hwever, mst curts have fund that a party is entitled t direct access t anther party s s databases nly when there has been a failure t cmply with the discvery rules r with specific discvery requests. Balfur Beatty Rail Inc. v. Vaccarell & Byers,, 2007 U.S. Dist. LEXIS 3581 (M.D. Fla. Jan. 18, 2007) Similar hldings in Fleter v. City f Orland,, 2006 U.S. Dist. LEXIS 19577 (M.D. Fla. 2006) and In re Frd Mtr C.,, 345 F.3d 1315, 1317 (11 th Cir. 2003) 20 5

Cmputer Fraud and Abuse Act claim where Plaintiff sught prductin f laptp and persnal cmputer hard drive fr inspectin. The Curt nted d that mst Rule 34 requests fr electrnic data r hard drive imaging will require a balancing f the csts incurred t d the digital image against the need fr the requested party t btain this infrmatin. The Curt allwed an image f the hard h drive t be cnducted using the fllwing prcess: Cmputer frensic expert t make images f hard drive Hard drive cpies t be prvided t the Curt and requesting parties ties expert Image prvided t the Curt and t the ppsing party t assert privilege f wrk prduct fr apprpriate dcuments Oppsing party bjects t the prductin f any ther requested files Frensic expert authrized t search fr indicatin that infrmatin was prvided frm a different cmputer t the subject cmputer and t determine what types f memry devices were used t share the digital infrmatin. Civil claim fr Cmputer Fraud and Abuse Act vilatins and breach f fiduciary duty, plaintiffs sught t inspect and btain mirrr images f the hard drives f defendants,, frmer plaintiff emplyees, cmputers used at their new cmpany. The parties agreed that the hard drives f the individuals defendants shuld be preserved, but b they wanted t have their frensic expert cnduct a search f the hard drives needed t satisfy plaintiff s s requests. The Curt denied a grant f access t the hard drives cncluding that plaintiff had nt shwn that defendants had failed t prduce all respnsive dcuments requested, that there had been any incnsistencies r discrepancies in the respnses prvided t discvery, that relevant dcuments had been lst, thereby requiring a mre exhaustive electrnic search t find lst infrmatin. Calyn v. Mizuh Securities USA Inc.,, 2007 U.S. Dist. LEXIS 36961 at 18 (S.D.N.Y. May 18, 2007) Frees, Inc. v. McMillian,, 2007 U.S. Dist. LEXIS 4343 (W.D. La. Jan. 22, 2007) 21 22 III. ACCESS TO COMPUTER HARD DRIVES - CONCLUSION Strategies T Be Successful In Seeking Access T Oppsing Party s s Cmputer Hard Drive There is greater likelihd f getting access t ppsing party s s hard drives if the request t image/inspect an ppsing party s s cmputer hard drive is narrwed r limited in sme way t the specific allegatins f the Cmplaint r t narrwly drafted dcument requests, and the access sught is less than full and unfettered searching f files Curts balance a request t inspect cmputer hard drives against claims f privilege, privacy, and cnfidentiality with respect t electrnically stred infrmatin that is nt relevant t the litigatin at hand. In additin, the curts are balancing the cst and expense f imaging hard drives when claims are made that the infrmatin is inaccessible. 23 IV. INTELLECTUAL PROPERTY RULINGS PERTINENT TO ESI Cpyright infringement lawsuit where Plaintiffs claimed Defendants received prfits frm nline piracy f plaintiffs cpyrighted wrks - dwnladable mvies thrugh the peratin f Defendant s s internet website. Plaintiffs sught curt rder fr the preservatin and retentin f IP addresses f individual users, the requests made t dwnlad the files and the dates and times such requests were made. Key factrs: The requested infrmatin ( server( lg data ) ) was nly temprarily stred n the website Defendant s s remte access memry (RAM). Plaintiffs argued that the prductin f the server lg data was relevant t determine whether Defendant s s website users have directly infringed Plaintiffs cpyrighted wrks and whether Defendants website facilitate r cntribute t the infringement. Defendants argued that the preservatin and prductin requested wuld cnstitute a vilatin f several federal statutes, privacy rights and free speech rights f the IP users and wuld adversely impact their gd g will thereby causing them t lse business if they are required t prduce the server lg data. 24 6

IV. INTELLECTUAL PROPERTY RULINGS PERTINENT TO ESI (cnt d) The Magistrate Judge cnducted an evidentiary hearing and made the t fllwing cnclusins: The Server Lg Data cnstituted Electrnically Stred Infrmatin n (ESI) because it was data stred in any medium frm which infrmatin culd be btained and because Rule 34(a) applies t infrmatin that is fixed in a tangible frm and... is stred in a medium frm which it can be retrieved and examined. Requiring the prductin f the server lg data was nt tantamunt t the creatin f new data because the data was generated by the website users, it was received by the web server and it was utilized t respnd t the users requests. The preservatin f the server lg data nly wuld nt be unduly burdensme fr Defendants since the lg data was a small subset f the ttal l vlume f data transmitted. N privacy cncerns, free speech cncerns r statutry vilatins s (e.g., Stred Cmmunicatins Act, Wiretap Act, r Pen Register Act) were implicated icated because the IP addresses f the users wuld be masked and ther exceptins under the statutes apply t the factual circumstances here. 25 IV. INTELLECTUAL PROPERTY RULINGS PERTINENT TO ESI (cnt d) The curt analyzed the factrs listed under FRCP 26(b)(2)(C) : Whether the discvery sught is cumulative r duplicative Whether the discvery sught can be btained frm a mre cnvenient ent and less burdensme surce Whether the party seeking the discvery had ample pprtunity t btain the infrmatin during discvery Whether the burden r expense f the requested discvery utweighs its likely benefit, taking int accunt the needs f the case, the amunt in cntrversy, the resurces f the parties and the imprtance f the issues at state te in the litigatin. Upn granting the rder t preserve and prduce the server lg data d that was temprarily stred in RAM, the curt denied the request fr sanctins cncluding that the Defendant s s failure t retain the Server Lg Data in RAM was based n a gd faith belief that preservatin f data temprarily stred nly in RAM was nt legally required. The curt rdered the defendants t cmmence a retentin plicy within seven days f the hearing. Clumbia Pictures Industries v. Justin Bunnell,, Case N. CV 06-1093, U.S. Magis. Judge ( C.D.Cal. May 29, 2007) (unpublished) (n appeal). 26 V. INTELLECTUAL PROPERTY CONSIDERATIONS DURING RULE 26(f) CONFERENCES Patent, Trademark and Cpyright Infringement claims Rule 26(f) cnferences Cnsider strategies t ensure preservatin f electrnically stred infrmatin (ESI) at the Rule 26(f) cnference t reduce the ptential fr spliatin claim t be asserted Anticipate yur client s s claims/defenses/evidentiary needs and review checklist f items t discuss with ppsing cunsel that includes: Recrd retentin plicies Autmatic destructin f e-mails/electrnic e files/etc. Overwriting f back-up tapes Timing fr rutine recrds clean-up and destructin Implementatin f Litigatin Hlds 27 V. INTELLECTUAL PROPERTY CONSIDERATIONS DURING RULE 26(f) CONFERENCES (cnt d) In patent infringement cases invlving cmputer sftware, discuss lcatin/retentin f riginal surce cde and executable cde, archived cdes/sftware revisins frm the riginal cde t the current cde Cnsider ESI that will impact prir art, the date f cnceptin f inventin, prir inventrship issues, etc. and discuss All pssible lcatins f ESI that describe the earliest cnceptin f the inventin, when the inventin was reduced t practice, the success/failure f the alleged prir inventin, metadata fr the abve-described infrmatin, and all cllectins f prir art in the ppsing party s s pssessin r abut which the ppsing party is aware 28 7

V. INTELLECTUAL PROPERTY CONSIDERATIONS DURING RULE 26(f) CONFERENCES (cnt d) Whether such ESI currently exists, has been destryed, is it n servers, desktps, laptps, hme cmputers, back-up tapes, archives, etc. In cpyright infringement cases, explre ESI that impacts the earliest date n which the ppsing party sught permissin, requested permissin and received ntificatin that permissin was denied by a registrant Since the ptential fr Rule 34(a) inspectins f cmputer hard drives r mirrr images will likely be premised upn sme missin r incnsistency in yur ppnent s discvery requests, carefully drafted discvery that explres the lcatin, retentin, and destructin f ESI shuld incrprate the abve-described inquiries, at a minimum VI. RULE 26(f) CHECKLIST Generally when preparing fr the 26(b) discvery cnference, the parties shuld cnsider the fllwing cmprehensive checklist f e- Discvery items t be discussed: The anticipated scpe f requests fr, and bjectins t, prductin f ESI, as well as the frm f prductin f ESI Whether Meta-Data is requested fr sme r all ESI and, if s, the vlume and csts f prducing and reviewing said ESI. Preservatin f ESI during the pendency f the lawsuit Pst-prductin assertin, and preservatin r waiver f, the attrney-client privilege, wrk prduct dctrine, and/r ther privileges Identificatin f ESI that is r is nt reasnably accessible withut undue burden r cst. 29 30 VI. RULE 26(f) CHECKLIST (cnt d) Methds f identifying segments f ESI prduced in discvery shuld be discussed. Methd and manner f redacting infrmatin frm ESI if nly part f the ESI is discverable. Specific facts related t the csts and burdens f preservatin, retrieval, and use f ESI. Cst sharing fr the preservatin, retrieval and/r prductin f ESI. Search methdlgies fr retrieving r reviewing ESI. Preliminary depsitins f infrmatin systems persnnel, and limits n the scpe f such depsitins. The need fr tw-tier tier r staged discvery f ESI. The need fr any prtective rders r cnfidentiality rders. Request fr sampling r testing f ESI. Any agreement cncerning retentin f an agreed-upn Curt expert. Q & A 31 32 8