International Trade Commission Proposes Amendments to Rules Concerning Scope of Discovery in Section 337 Investigations

by Wilson Sonsini Goodrich & Rosati

The International Trade Commission (ITC) recently published proposed amendments to its Rules of Practice and Procedure. These amendments address long-standing concerns about the broad scope of discovery in investigations conducted under section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337).

While the Federal Rules of Civil Procedure have been amended in recent years to focus discovery efforts and reduce the burden on parties in district court litigation, parties involved in section 337 investigations still were required to search and produce large volumes of electronically stored information in discovery although only a small fraction of that information ultimately is admitted into the investigation record. This has left parties questioning whether the potential benefit of discovered materials justifies the costs associated with current discovery obligations.

The ITC indicates that it believes that the proposed amendments will increase the efficiency of section 337 investigations by reducing expensive, inefficient, unjustified, or unnecessary discovery while preserving the opportunity for fair and efficient discovery for all parties. In addition to amending 19 C.F.R. § 210.27(b) to allow limitations on discovery, the proposed amendments add three subsections to § 210.27 that: (1) limit discovery of electronically stored information, (2) limit burdensome discovery, and (3) add uniform procedures regarding privilege.

The first major amendment adds subsection (c), which provides specific limitations on electronically stored information. Based on Federal Rule of Civil Procedure 26(b)(2)(B), proposed subsection (c) states that discovery of electronically stored information need not be provided from sources identified as not reasonably accessible because of undue burden or cost. A requesting party may, however, compel discovery upon a showing of good cause and in consideration of certain limitations in proposed subsection (d), which is discussed below. The ITC further contemplates that an administrative law judge (ALJ) may impose conditions on discovery depending upon the specific circumstances of a given investigation. For example, an ALJ could condition discovery upon payment by the requesting party for part or all of the reasonable costs of obtaining information from sources that are not reasonably accessible. The ITC also intends that case law developed under FRCP 26(b)(2)(B) provide guidance for the application of this new subsection.

The second major amendment adds the aforementioned subsection (d), which requires ALJs to limit discovery otherwise allowed in certain circumstances. Based on FRCP 26(b)(2)(C), proposed subsection (d) requires limitations on discovery if the ALJ determines that the discovery sought is duplicative or can be obtained from a less burdensome source, that the party seeking discovery has had ample opportunity to obtain the information, or that the burden of the proposed discovery outweighs its likely benefit. Unlike FRCP 26(b)(2)(C), proposed subsection (d) further requires the ALJ to limit discovery when the entity from whom discovery is sought has waived the legal position that justified the discovery or has stipulated the facts to which the requested discovery pertained. Furthermore, proposed subsection (d) does not require analysis of the importance of the issues at stake in the action. Instead, the ALJ should consider the importance of the discovery in deciding which issues will be decided by the ITC.

The final major amendment adds subsection (e), which provides a uniform set of procedures under which parties can make claims of privilege or work product using a privilege log. It also includes a predictable procedure for determining the consequences of a disclosure of communications or other information covered by attorney-client privilege or work-product protection, similar to FRCP 26(b)(5). Unlike FRCP 26(b)(5), however, subsection (e) provides prompt deadlines for resolving privilege disputes. The ITC emphasizes that subsection (e) is not a categorical claw-back rule. Rather, the ALJ will apply federal and common law to determine the consequences of any alleged inadvertent disclosure, including whether the holder of the privilege or protection took reasonable steps to prevent disclosure of the information, along with other considerations found in Federal Rule of Evidence 502.

How much of a difference these amendments will make remains to be seen. Similar practices and considerations already exist on an ad hoc basis by virtue of stipulations between specific parties, certain ground rules, and the practices of individual ALJs. The implementation of uniform provisions and the potential application of case law developed under the Federal Rules of Civil Procedure, however, likely will lead to more measureable limits on discovery during section 337 investigations. Further, as with previous notices of rulemaking, multiple bar groups and associations are likely to provide feedback on the proposed language and rules and their effects, so precise implementation also remains to be seen.

For more information on practice before the ITC or related matters, please contact Larry Shatzer, Stefani Shanberg, or another member of Wilson Sonsini Goodrich & Rosati's intellectual property litigation and counseling practice.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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