On June 1, 2017, the Northern District implemented a Mandatory Initial Discovery Pilot (MIDP) Project. The MIDP is going to have a big impact on trademark, copyright and Defense of Trade Secrets Act (DTSA) cases. It will not impact patent cases because they are exempted from the MIDP because the Local Patent Rules already require upfront discovery in patent cases. Fortunately, we can extrapolate from patent cases to help understand the impact of the MIDP on other IP cases.
The cases exempted from the MIDP are:
- Cases exempted by Fed. R. Civ. P. 26(a)(1)(B), which include cases reviewing an administrative record, forfeiture cases arising from federal statutes, heavens petitions, pro se cases, certain actions brought by the United States, proceedings ancillary to another court proceeding and actions to enforce arbitration awards;
- Private Securities Litigation Reform Act cases;
- Cases governed by the Local Patent Rules; and
- Multi-District Litigation cases.
Discovery is: a) required before any other discovery may be requested in the case; b) is a continuing obligation; and c) is not limited to discovery that may be used in the party’s affirmative case or defenses, nor is it limited by the knowledge known at the outset of a case — an investigation must be undertaken to gather the information.
Additionally, the requests — seen here in the Standing Order — require written responses, as well as document production. The requests include:
- Names and contact information of those likely to have discoverable information of any party’s claims or defenses, including a “fair description” of the nature of the information the person is likely to have;
- Names and contact information of all people who a party “believes have given written or recorded statements relevant to any party’s claims or defenses.” Unless privilege is asserted, you must provide copies of the statements if you have them and if not, the names and contact information of those who you believe have custody of them;
- List the documents, things, and electronically stored information (ESI), whether or not in your possession, that may be relevant to any party’s claims or defenses. As with statements and recordings, you must produce those documents or things you have or identify who you believe may have them;
- State the facts and legal theories relevant to each of your claims or defenses;
- A computation of each categories of damages you claim, along with documents or other evidentiary proof or a description of the document and proof;
- Insurance or other agreements that may impact the case, along with the agreements or a description of them; and
- Any part receiving a list required in requests 3, 5 or 6 above, may seek further responses to them if they are believed to be deficient.
The parties must meet and confer as to how to produce documents and ESI. To the extent they disagree, they must present the issues to the Court in a single, joint motion or in a conference call, whichever the Court directs. Absent a Court order to the contrary, a party must produce ESI within forty days after serving its MIDP responses. And unless the parties agree or the Court orders otherwise, ESI should be produced as the receiving party specifies. To the extent that the receiving party does not specify, the producing party may produce in “any reasonably usable form” such that the receiving party will have the same ability to access the data as the producing party.
The MIDP’s Impact
Initial production is a double-edged sword. On the plus side, it saves a considerable amount of written discovery practice and, therefore, will save money over a case’s full life cycle. That has been my experience in the Eastern District of Texas where the Local Rules require early production of most documents without discovery requests or responses. Additionally, what we have seen from the initial production and then initial contentions requirements in the LPR is that getting detailed information on your opponent’s case and having to put your own positions in writing to your opponent sharpens the focus of both sides of a case. Seeing the relative strength and weaknesses of your opponent’s positions and your own helps to identify the real issues in a case early on. Assuming that the Northern District treats the MIDP production and responses as preliminary in the sense that a party’s understanding of facts and, in limited cases, identification of facts can change over the course of discovery, understanding the case in more detail is a significant benefit to both sides and results in quicker resolutions in many cases.
The MIDP will also reduce frustration of defendants that receive bare-bones complaints and cannot tell precisely what they are accused of doing. This is particularly true in Defense of Trade Secrets Act cases where the defendant is now guaranteed an upfront statement of the allegedly stolen trade secrets making it much easier to investigate and defend your case.
The downsides of course, include the upfront cost, both economic and in time of the corporate employees that must gather all of the documents in a rush at the outset of a case. If you view the case as a nuisance and want to drive resolution quickly with as little cost as possible, the MIDP will interfere. Although it will even out and save most parties money over a more typical case that goes to summary judgement or to trial.
The other significant downside is the defendant’s frustration in being sued and immediately being forced to dig into its files and produce business-sensitive, confidential documents to a competitor. That often feels offensive to defendants.
Finally, the MIDP puts a premium on working out discovery issues, ESI protocols and protective orders in the first weeks after a complaint is filed, often before everyone fully understands or as they are just understanding what their potential discovery sources may look like.
Overall, for more substantive cases, our patent litigation experience suggests that the MIDP will lead to faster, more rational and less expensive (at least in legal fees and costs) resolutions of many cases.