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FRCP Amendments: Implications for IP and Patent Troll Litigation
The amendments to the Federal Rules of Civil Procedure (FRCP) that took effect on Dec. 1, 2015, are already having an impact on IP litigation, especially patent troll lawsuits. To start, the changes to Rule 26 underscore the importance of proportionality in discovery, a notion that is also central to revised Rule 37, which makes it more difficult to obtain sanctions for an opposing party's failure to preserve electronically stored information (ESI). These changes are helping parties control the costs of discovery, and therefore the costs of litigation, particularly in low-stakes cases brought by non-practicing entities. Further, the abrogation of Rule 84 and Form 18 has heightened the pleading standard for non-practicing entities alleging infringement to the plausibility standard required under Twombly and Iqbal. (See, Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009).) In all, these changes have shifted and will continue to shift the legal landscape ' especially for patent troll litigation ' in favor of defendants. Counsel need to understand these new rules and their implications to properly guide their case strategy.
Changes to Rule 26: The Proportionality Standard
While the former Rule 26 invoked the concept of proportionality in the factors previously found under subsection (b)(2)(C), the new rule incorporates such considerations into the definition of the scope of discovery. That is, Rule 26(b)(1) now provides that parties may obtain discovery “relevant to any party's claim or defense and proportional to the needs of the case.” Id. (emphasis added). The amendments thus place the proportionality standard front and center, requiring the parties, as well as the courts, to consider whether discovery is proportional considering “the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Additionally, Rule 26(c)(1)(B) authorizes courts to order cost-shifting and allocate the expenses for certain discovery.
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