This month’s featured expert:
Geoff Howard
Partner | Bingham McCutchen LLP
Background:
Geoff Howard is a partner in Bingham McCutchen’s Intellectual Property and Technology Litigation and Antitrust and Trade Regulation groups. He has particular experience in technology and regulated industries, including the software technology, telecommunications and alcohol-distribution industries. Howard provides creative, pragmatic and aggressive problem-solving services through negotiation, alternative dispute resolution, litigation, legislation and trial. He also is a recognized authority on electronic information management and discovery. His comments on that subject have been published by leading newspapers and periodicals, including the National Law Journal, the Legal Times and the San Francisco Daily Journal. His representation of Oracle in key electronic discovery issues during Oracle’s hostile tender offer litigation with PeopleSoft was noted in Reuters, CBS MarketWatch and CNN Money, among others. In 2006, the San Francisco Daily Journal named him to its “Top 20 California Lawyers Under 40″ list, and in 2004, Law & Politics and SF Magazine named him a Northern California “Super Lawyer.”
Howard has represented large and small clients in a wide variety of high-stakes cases. He has prosecuted and defended cases involving claims for unfair competition, antitrust, misappropriation of trade secrets, patent and trademark infringement, regulatory issues, alleged business torts and putative class actions. His regular clients represent a diverse array of communications, technology and distribution companies, and trade associations in regulated industries. He has authored several pieces of legislation and successfully tried several cases to jury verdict. From 1999 to 2005, Mr. Howard chaired or co-chaired the firm’s Committee on Associates, with primary responsibility for associate issues, including performance evaluations, compensation, personnel management, retention, workflow and needs assessment. He currently serves on the firm’s Diversity Joint Working Group. Before joining the firm in 1992, Howard clerked for the Honorable Samuel Conti, United States District Court Judge for the Northern District of California. Howard earned his J.D. from Harvard Law School (cum laude) and his B.A. in Political Science from the University of California, Los Angeles (magna cum laude, Phi Beta Kappa).
Interview Focus:
Intellectual Property and E-Discovery
Featured Interview:
What are some of the specific issues companies face when it comes to managing discovery requests related to IP litigation or investigation?
Two of the biggest concerns we deal with regularly are (1) managing the cost and effectiveness of electronic discovery (which is not limited, of course, to IP litigation); and (2) preserving trade secrets while still executing an aggressive IP litigation strategy.
What steps should a company take to ensure they are complying with discovery requests without divulging trade secret or privileged information?
First, a company needs only to comply with the appropriate rules regarding discovery requests, not necessarily the requests themselves. The rules (focusing on federal court litigation) contain various tools and mechanisms to protect a company’s trade secrets and IP during the litigation process. It is standard operating procedure to negotiate an acceptable protective order with the other side that contains limitations, in varying degrees, on the disclosure and use of produced information. These protective orders, particularly between competitors, increasingly prohibit the disclosure of information to the business-side of a company when one side or the other professes a concern regarding misuse of that information for competitive purposes. Parties frequently dispute whether these restrictions should or should not allow an opposing party’s in-house counsel to see the restricted information, and parties may even negotiate access rights based on specific factual representations about a particular in-house counsel’s role at the company. If a litigation adversary refuses to agree to reasonable and satisfactory restrictions, then courts get involved to resolve the rules set forth in the protective order that will govern the dissemination and use of information in discovery and at trial. Many times, however, a company will want to resist producing particular proprietary or trade secret information, even if its subject to the protective order restrictions, because it is considered insufficiently related to the real issues in the litigation. Then the party may simply object to producing the information or move for a protective order preventing the disclosure.
Second, since discovery is mostly electronic, we increasingly use the technological tools available to screen for particular types of information, including trade secret and privileged information, to help prevent its inadvertent disclosure as part of a massive document production.
Will the new amendments to the Federal Rules of Civil Procedure help protect companies in protecting their privileged information (specifically with regards to Rule 26 (b) & clawback agreements)?
The new rules acknowledge the widespread concern that exists about the cost of reviewing large volumes of electronically stored information solely, or primarily, to screen for privileged material. Because the rules are procedural, not substantive, the drafters attempted to address these concerns through procedural mechanisms. Rule 26(f), for example, requires that counsel meet and confer to develop a discovery plan. This conference now will have to address, as one of its agenda items, the sources and scope of discoverable electronic information, as well as the form and format of produced documents. As part of this production plan, parties may adopt a “clawback” or a “quick peek” arrangement as a way to minimize the privilege review-related cost of document review and production.
Under a clawback approach, each party could recall a document under agreed parameters without losing the privilege (in that case, a major issue remains regarding the effect of such disclosure in other venues and/or as against other parties). Under a quick peek, the parties might provide access to a defined portion of electronically stored information to allow the other side to select or refine that information it wants produced. In theory this would reduce the quantity of information the producing party would review for privilege and other issues. In either case, parties are encouraged to establish an up-front policy to guide them through discovery and to help resolve disputes. Rule 16(b) allows the court to codify and enforce these arrangements.
Additionally, Rule 26(b)(5) sets out a procedure for parties to follow in the event privileged documents are produced. First, the party claiming inadvertent production of privileged material must provide the opposing side with notice and the basis for the claim. Next, the adverse party must return or destroy the documents to which the privilege is claimed, or sequester them and go to the court for resolution. This position must be maintained until the court resolves the claim of privilege, and may be enforced by the court’s power to issue sanctions.
In the end, although the rules will force companies to discuss these issues at an early stage in litigation as part of the 16(b) scheduling order process, it remains unlikely in most high stakes cases that parties will agree to either a “quick peek” or a “clawback” arrangement. This stems from concerns about revealing confidential or privileged information to the other side, even with assurances about limiting its use. Fears of waiver in other jurisdictions and in other litigation may also hinder the process, despite an agreement in a particular case that inadvertent disclosure under the new procedures does not waive the privilege. As a result, although the rules offer some encouragement by acknowledging the difficult realities of information management, the solution they provide remains imperfect.
Are there specific types of companies or industries that are most impacted by IP litigation?
Any company that derives shareholder value from its own or others’ IP potentially will be impacted by IP litigation. Of course, the potential exposure will vary greatly. Where there is great competition to develop and control standardized technology, a company can expect regular assaults on its IP portfolio because the reward for a successful challenge is higher than in a less active field.
At what point in the IP application or management process should companies anticipate the need to prepare for litigation?
There is no one size fits all answer to this question. The answer for each company will depend on its particular circumstances, including, for example, (1) the nature of its technology; (2) the extent to which other companies own IP relating to that technology that may provide some basis for a challenge; (3) the commercial viability or appeal of the technology, which might encourage an attack in an effort to win a royalty or license settlement; (4) the way the company has structured its licensing program, (5) the soundness of its patent applications or other IP; and (6) the nature of the competitive landscape for a particular technology application.
For example, electronically-generated and stored documents are a particularly useful tool to patent litigators, who can use such information to corroborate invention dates, verify due diligence efforts, and defeat allegations of abandonment. Such information can also help resolve issues of inequitable conduct, inventorship, obviousness, and anticipation. Metadata, in particular, can provide insight into how key documents were generated, modified, and manipulated. As a result, litigants in patent cases should plan ahead for the storage of pertinent electronic information, which may become a crucial tool in resulting litigation.
E-Discovery impacts IP cases in much the same way as other cases. Accessibility, cost-shifting, failure to implement or follow document retention policies, form of data production and other electronic-specific issues can dramatically skew the value of a case or the prism through which the Court or a jury sees the merits. In IP cases, however, electronic information takes center stage more often simply because so many of those cases involve technology companies operate on an almost completely electronic basis. As a result, the stakes and risks of sanctions for improper handling of electronically stored information increase in these cases. An IP litigation plan should take this into account at the earliest stage possible, both to preserve important information for the litigant’s use, and to avoid costly or destructive sanctions.
Are there any recent rulings or precedent-setting cases that are setting the standards for IP litigation defense?
One of the most interesting and relevant areas of IP litigation continues to be the intersection of IP law and antitrust law. For example, on March 1, 2006, in Illinois Tool Works, Inc. v. Independent Ink, Inc., the Supreme Court overturned long-standing precedent and held that a patent owner does not presumptively violate the antitrust laws by tying a non-patented product to a patented product. Until this decision, under the antitrust laws, a patent owner presumptively had market power in the market for the patented product, and therefore presumptively acted anti-competitively when it conditioned the sale of that product on the purchase of a non-patented product. Although this presumption had been rejected in patent law, which gave rise to the presumption in the first place, it remained a question in the antitrust realm. The Court took note that its own precedents in antitrust law conflicted with those in patent law and also with scholarly criticism of the market power doctrine. Recognizing the modern trend that patents do not necessarily confer market power in and of themselves, the Court declared the antitrust law presumption to the contrary archaic and unsupported by the facts. Instead, the Court noted that “[m]any tying arrangements, even those involving patents and requirements ties, are fully consistent with a free, competitive market.”
As a result, patent and antitrust litigators hoping to prove that a patent owner enjoys market power for purposes of an antitrust claim must now marshal evidence to prove market power as a matter of fact – they can no longer rely on the per se presumption previously available wherever they found a patent. They will look for this evidence in many places, of course, including in the emails, market strategy documents, market analyses, business plans and projections, and other electronically stored information in the patent owner’s files.
What are your top recommendations for companies that must deal with electronic discovery in IP litigation/defense issues on a daily or regular basis?
Here’s a very broad top five list:
- Institute and enforce a practical electronic information retention policy.
- Include IP portfolio managers, IT, risk management, and legal as stakeholders in the development and enforcement of this policy.
- Include a litigation hold protocol as part of the retention policy that is flexible enough to accommodate an aggressively litigation strategy to defend and enforce the IP portfolio.
- Educate and consistently maintain one employee who understands the basics of the IP portfolio as a 30(b)(6) witness for issues relating to preservation, collection and production of electronically stored information.
- In response to the likely new federal rules, develop a consistent approach to the rule 26(f) conference and initial disclosures regarding company hardware, software, backup and disaster recovery systems.
Filed under From the Experts.