IP litigation is among the most significant, and costly, litigation a company can face, regardless whether on the plaintiff or defense side. Of import to those “engaged in the game” is that significant changes to the rules by which the game is usually played—otherwise known as the Federal Rules of Civil Procedure—are coming later this year. Recently, the Supreme Court approved and sent to Congress a package of important amendments to 11 of the Rules. Unless Congress intercedes (unlikely), the amended Rules take effect on December 1, 2015.
There is insufficient space here to review all the changes and their potential implications to the procedural conduct of litigation. Here is a summary of two amendments of particular interest to IP litigation.
Of direct relevance to patent litigation is the elimination of Rule 84 and the form complaints enabled by that Rule, including the Form 18 complaint for patent infringement. Patent litigants who followed the form approved by Rule 84 effectively were relieved from compliance with the heightened pleading standards dictated by the Supreme Court rulings in Twombly and Iqbal, which require a pleading with facts sufficient to make relief plausible, and beyond mere conclusions. With the abrogation of Rule 84 and its Form 18 pleading, patent infringement claims now will be subject to these pleading standards, just as all other federal cases.
Another amendment—redefining the permissible scope of discovery—is also of particular potential import to IP litigation, although it remains to be seen how much “change” it will bring. Rule 26 (b)(1) is being amended with the intended objective to reduce the costs of discovery. The principal change toward that objective is the introduction of “proportionality” to the defined scope of discovery. As amended, parties may, as before, “obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and,” in new language, “proportional to the needs of the case.” The “proportional need” is considered with reference to six recited factors: (1) the importance of the issues at stake; (2) the amount in controversy; (3) the parties’ relative access to relevant information; (4) the parties’ resources; (5) the importance of the discovery in resolving the issues; and (6) whether the burden or expense of the discovery outweighs its likely benefit. Five of these six factors are not actually new; previously they were to be considered in weighing motions to limit discovery under Rule 26(b)(2)(C).
By moving these five factors, plus a new factor, into the definition of the permissible scope of discovery, at first glance it appears to favor parties—more often defendants—who oppose broad discovery. Time will tell. At minimum, the intended goal is to make the proportional analysis of what should and should not be discoverable a discussion from the outset of litigation, and hopefully shifting it away from motions for protective orders or motions to compel.
The “new factor” in the equation of proportional need is introduction of “the parties’ relative access to relevant information.” This factor could loom particularly large in IP litigation. The stated purpose for this factor is to recognize that some cases involve an imbalance of known information, where a party seeking discovery knows relatively little compared to the responding party. The imbalance can run in different directions depending on the issue; for example, such disparate knowledge is often inherently with an accused infringer. (It also often arises in the context of foreign litigants.) In general application, the factor appears more often to favor smaller companies and individuals versus large companies, where the burden of discovery can be allocated in accord with a disparity in resources and access to information.
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