More than seven months after the International Trade Commission proposed changes to its procedural rules relating to e-discovery “in order to increase the efficiency of its section 337 investigations” and “to address concerns that have arisen about the scope of discovery in Commission proceedings,” on May 21, 2013 the Commission issued final rules adopting the proposed amendments with some revisions. The new rules are applicable to investigations instituted after June 20, 2013. Section 337 investigations are administrative proceedings before the ITC, authorized under 19 U.S.C § 1337, to determine whether there has been unfair competition—typically patent infringement—in the importation of articles into the U.S. The only remedy is injunctive relief, typically an order excluding the articles from entry into the U.S. The amended rules are intended “to reduce expensive, inefficient, unjustified, or unnecessary discovery practices in” Section 337 proceedings.

Scope of the Amended Rules

The amendments to Section 210.27 of the ITC rules of procedure (19 C.F.R. § 210) address three general areas:

Section 210.27(c) limits the scope of requests for electronically stored information (“ESI”) by allowing a responding party to withhold information identified as “not reasonably accessible because of undue burden or cost” and creates a mechanism for the requesting party to compel ESI withheld on these grounds (similar to Fed. R. Civ. P. 26(b)(2)(B));

Section 210.27(d) requires the administrative law judge to limit discovery (1) if the discovery sought is duplicative or can be obtained from a less burdensome source; (2) the party seeking discovery has had ample opportunity to obtain the information; or (3) the burden of the proposed discovery outweighs its likely benefit (similar to Fed. R. Civ. P. 26(b)(2)(C)); and

Section 210.27(e) establishes mechanisms for making claims regarding attorney-client privilege or attorney work product, logging documents withheld under a claim of privilege, challenging a claim of privilege, and resolving disputes over inadvertently produced privileged documents.

The ITC had proposed the amended rules in response to a July 2011 conference at the George Washington University Law School on the issue of e-discovery in Section 337 investigations, where attendees had raised concerns that the cost and burden of responding to broad ESI requests were not only largely unnecessary to resolving the underlying dispute, but also discouraged the filing of complaints and disproportionately influenced settlement negotiations.

Revisions to the Final Rulemaking

During the public comment period for the proposed amendments, the Commission received eight sets of comments which resulted, coincidentally, in eight changes to the final rules. The Commission noted that proposed paragraph (c), limiting the scope of requests for ESI, received “[o]nly positive comments,” and “therefore, the final rule is unchanged from the proposed rule.” But the other final rules contained both minor and salient departures from the proposed amendments:

• The Commission modified paragraph (d)(3) to allow the ALJ to limit discovery when the responding person has “stipulated to the particular facts pertaining to a disputed issue to which the discovery is directed” (emphasis added). Some commenters had expressed concern that the original proposed amendment (which turned on whether the responding person has “stipulated to the facts pertaining to the issue to which the discovery is directed”) could allow a party to waive a legal position on a single issue but foreclose all discovery on a topic common to multiple issues.

• As proposed, paragraph (d)(4) would have directed the ALJ to limit discovery where “the burden or expense of the proposed discovery outweighs its likely benefit, considering . . . the public interest.” Commenters were concerned that it was unclear whether the language “public interest” referred to the statutory public interest factors identified in 19 U.S.C. § 1337(d)-(g) which an ALJ must consider when determining whether to exclude articles from the U.S. (among them, public health and welfare, and competitive conditions). To avoid this confusion, the Commission changed this language in the final rule to “matters of public concern.”

• The Commission determined that the procedure set forth for the “clawback” of inadvertently produced privileged material should not apply to a deponent’s answers at an oral deposition, or to a person’s response to interrogatories or requests for admission. Therefore, the final version of paragraph (e)(2) changed all occurrences of the word “information” to “document.”

• The final version of paragraph (e)(2) also removed the requirement to provide a privilege log to identify the basis of a privilege claim for inadvertently produced documents. Recognizing the practical limitations of producing a full privilege log in the typical situations when a potentially privileged document is identified (like during or shortly after a deposition), the Commission modified the final rule to simply require that the notice “identify the information in the document subject to the claim, preferably using a privilege log” (emphasis added).

• The American Intellectual Property Law Association proposed that a party should be able to use the contents of a produced document in its possession to challenge a claim by the producing party that the document is privileged. The Commission adopted AIPLA’s suggestion in paragraph (e)(2) of the final rule, which states that “[i]n connection with the motion to compel, the party may submit the document in camera for consideration by the administrative law judge.”

• In response to comments suggesting the response times in the clawback procedures set forth in paragraph (e)(2) were too short and somewhat vague, the final rule makes clear that the deadlines are triggered by “service of the notice” of the privilege claim, and extends some of the 5-day deadlines to 7 days.

• Finally, the Commission has added language to the final version of paragraph (e)(4) permitting the parties to enter into a written agreement to set different time periods for compliance with any of the privilege procedures set forth in the rule without approval by the ALJ, unless the ALJ has ordered a different period for compliance.

Revisions Not Adopted by the Commission

The Commission generally declined to adopt suggestions from commenting parties that would tend to narrow the rules or define specific parameters for limiting the scope of discovery. For example, a group of companies, including Ford, Hewlett-Packard, Toyota, Intel, Cisco, and Dell, that submitted joint comments, proposed modifying paragraph (d) to limit the number of document custodians to five per party with narrowly-tailored search terms limitations, similar to restrictions found in the Federal Circuit Model Order for E-Discovery in Patent Cases.

These companies also proposed that the rules should define sources of ESI that are “not reasonably accessible” under paragraph (c), including:

disaster recovery media; forensic data (such as slack space, deleted files, or fragments); archival electronic media, or other electronic information created or used by electronic media no longer in use, maintained in redundant electronic storage media, or for which retrieval otherwise involves undue burden of substantial cost; voicemails; instant messages (IMs); and cell phone text messages.

The companies further proposed prohibiting discovery from personal computers, absent good cause. The Commission declined to adopt the companies’ proposed changes, preferring a more general rule that gives the ALJ and parties flexibility in implementing the discovery limitations of paragraphs (c) and (d) “in a variety of circumstances.”

The Commission also notably declined to extend protections for inadvertently produced privileged documents similar to those found in Federal Rule of Evidence 502, specifically, a categorical protection against waiver of privilege for inadvertently produced documents. Stating that “[p]aragraph (e) is not a categorical ‘claw-back’ rule, and would not supplant any applicable waiver doctrine,” the final rule leaves it to the purview of the ALJ to apply federal and common law when determining whether an inadvertent disclosure has resulted in waiver. “That law would include consideration of whether the holder of the privilege or protection took reasonable steps to prevent disclosure of the information and other considerations found in Federal Rule of Evidence 502.”

Effect of the Adopted Rules

The ITC’s revised rules largely preserve the goal of the proposed amendments—to reduce the burden and cost of producing ESI in 337 investigations—while at the same time addressing the practical limitations and burdens imposed on parties engaged in fast-paced ITC litigation. While some parties wanted to see the Commission go further in limiting burdensome e-discovery, the ITC has already announced that the new rules are just one part of a larger initiative to address discovery concerns in Section 337 cases, including a case-management pilot program for ALJs, an ITC model Protective Order that includes a source code provision, and a recommendation that ALJs incorporate standardized provisions on the production of metadata into their ground rules (ALJ-issued procedural rules governing a specific investigation).