A Year Later: Have We Learned Anything About Proportionality in Discovery in Trademark Cases?

Photo of dog and elephant sitting on the beach to illustrate the requirement of proportionality in trademark discovery

About a year ago—on December 1, 2015 to be exact, the 2015 amendments to the Federal Rules of Civil Procedure (“FRCP”) took effect. One of the amendments that received a disproportionate amount of attention was the revision to the scope of discovery language of FRCP 26(b)(1) to emphasize that the scope must be proportional to the needs of the case. I’ve created a redlined version of FRCP 26(b)(1) below that displays the added language in green and the deleted language in red strikeout:

(b) Discovery Scope and Limits.

(1) Scope in General. Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, 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. Information within this scope of discovery need not be admissible in evidence to be discoverable. – including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).

It’s been about a year now that scope of discovery in trademark cases—like all federal cases—has been conducted under the new FRCP 26(b)(1). Curious about how the new rule has been interpreted and implemented in trademark cases, I decided to investigate. This blog post reveals the disappointing results.

Is It Even a New Rule? Has the Scope of Discovery Actually Changed?

According to the Advisory Committee’s Notes, the revised FRCP 26(b)(1) is meant to reinforce the obligation of the parties to consider proportionality but “does not change the existing responsibilities of the court and the parties to consider proportionality.” In explaining this position, the Committee correctly points out that the last sentence of the prior version of FRCP 26(b)(1) stated that “[a]ll discovery is subject to the limitations imposed by Rule 26(b)(2)(C),” and that all but one of the proportionality factors were previously contained FRCP 26(b)(2)(C)(iii), which used to read as follows:

(C) When Required. On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rules if it determines that:

(iii) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.

Of course, FRCP 26(b)(2)(C)(iii) now reads:

(C) When Required. On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rules if it determines that:

(iii) the proposed discovery is outside the scope permitted by Rule 26(b)(1).

So maybe the scope of discovery hasn’t really been changed. But the Committee’s Notes make it clear that FRCP 26(b)(1) was amended because parties and the courts were misinterpreting the scope of discovery (especially due to the inclusion of the phrase “reasonably calculated to lead to the discovery of admissible evidence”) and not giving proportionality its due. At a minimum then, whether the scope has technically changed or not, the amended FRCP 26(b)(1) is intended to force parties and courts to change how they have been interpreting and applying the scope of discovery moving forward, which is a de facto change.

Little Case Law on Proportionality in Trademark Cases in the Last Year

In the last year, there have only been a few federal court and Trademark Trial and Appeal Board (“TTAB”) cases that have addressed the “new” FRCP 26(b)(1) and the proportional limitation on the scope of discovery. Of course, federal courts have addressed it in the context of other areas of the law, but I’m specifically interested in how it’s been applied in trademark cases. Unfortunately, because there are so few trademark cases that have addressed this subject, there isn’t much to hang our hats on. But here’s what we can say based on the last year.

Punting: Go Figure It Out and Come Back

Initially, the parties are expected to meet and confer on discovery and come up with a proposed discovery plan. Although FRCP 26(f) does not specifically mandate conferring regarding proportionality and the scope of discovery, the parties are supposed to meet and confer on the subjects on which discovery may be needed. And before filing any motions to compel or motions for protective order, the parties are required to meet and confer in good faith to try to resolve the discovery dispute. But presuming the parties have met and conferred and are still at an impasse, one of the parties will file a motion and seek the court’s assistance in resolving the dispute.

When the dispute involves the proportionality of the discovery, however, courts seem to struggle and appear reluctant to resolve the dispute—at least initially. During the short time that amended FRCP 26(b)(1) has been in effect, there appears to be a common trend in which judges require the parties to go back and meet and confer yet again to try to resolve the dispute without the court.

For example, in Tween Brands v. Bluestar Alliance, defendants filed a motion to compel interrogatory responses and responsive documents, which the Southern District of Ohio broadly categorized into five groups. Tween Brands Investment, LLC v. Bluestar Alliance, LLC, No. 2:15-cv-2663, 2016 U.S. Dist. LEXIS 129710 (S.D. Ohio Sept. 22, 2016). In considering defendants’ motion to compel, the Court underscored the proportional limitation on the scope of discovery under the 2015 amended Federal Rules of Civil Procedure. But rather than deciding the dispute, for three out of the five categories of discovery, the Court ordered the parties to go back to the drawing board:

  • Category 1: Discovery Concerning the Daisy Design. “To ensure proportionality, the parties must find a way for Defendants to receive the relevant discovery without overly burdening Tween. . . . Accordingly, the parties must submit a joint status report within fourteen days of this Order regarding their strategy for Category 1.”
  • Category 2: Historical Use and Sales of IT’S A GIRL’S WORLD. “While the discovery Defendants seek is relevant, the Court again has concerns regarding proportionality and acknowledges Tween’s concern that compliance might be overly burdensome. The parties are therefore directed to meet and confer, and, consistent with standards of proportionality and the substantive law governing the claims implicated by Requests 16 and 20, address their discovery strategy for Category 2 in their joint status report.”
  • Category 4: Tween’s Documents Concerning Defendants. “The parties must meet and confer and submit a joint status report within fourteen days of this Order regarding their discovery strategy for Category 4.”

Id. at *6-13.

Likewise, in Adidas v. TRB, TRB hired an outside IT vendor who collected about 300GB electronically stored information (“ESI”) from ten document custodians. Adidas America, Inc. v. TRB Acquisitions, LLC, No. 3:15-cv-2113, 2016 U.S. Dist. LEXIS 163309, *16-19 (D. Or. Nov. 28, 2016). Adidas moved to compel because TRB had not fully complied by producing documents responsive to all of its document requests. In response, TRB objected that the requests were overbroad and not proportional to the needs of the case. Rather than deciding the issue, the District of Oregon put the onus back on the parties:

Further, the Court is concerned about the rising expense of discovery in this case and related issues of proportionality (for all parties). Therefore, the Court directs the parties to hold a meaningful additional discovery conference either in person or over the telephone within two weeks from the date of this Opinion and Order.3 At this conference, the parties must discuss, at the minimum, how Plaintiffs reasonably may become satisfied that TRB has engaged in or promptly will perform reasonable steps to gather, identify, and produce responsive documents. The Court is considering several options, but would prefer the parties to discuss these issues and options with each other before the Court makes any further rulings.

Id.

While requiring the parties to re-engage in the meet and confer process is a reasonable first step (or repeat of the first step) towards resolving the dispute, it does add further delay and expense to the discovery process.

A Sneak Peak: If You Don’t Figure It Out, Let Me Tell You What the Court Is Considering

A device that the courts seem to be employing in combination with requiring additional meet and confers is providing the parties with some insight into how the court is thinking about resolving the proportionality dispute. This is likely either for the purpose of guiding the required meet and confer or, if the contemplated solution is equally unappealing to both parties, for the purpose of dissuading the parties from revisiting the dispute with the court. Again, the Tween Brands and Adidas cases illustrate this perfectly.

In Tween Brands, in addition to directing the parties to meet and confer again on discovery relating to the Daisy Design, the Southern District of Ohio gave the parties a glimpse into how the Court would be likely to resolve the dispute if they came back to the court:

To ensure proportionality, the parties must find a way for Defendants to receive the relevant discovery without overly burdening Tween. For example, the various middle-ground solutions the parties propose as to the other categories at issue should also be considered for these requests. (See, e.g., Doc. 131 at 9 (“[T]he way to address those concerns is to order Tween to produce representative documents responsive to these Requests, or to identify the most knowledgeable individuals with certain information, and allow Defendants to follow up as necessary . . . .”)).

Tween Brands, 2016 U.S. Dist. LEXIS 129710, *7 .

In Adidas, the District of Oregon ordered the parties to hold an additional meet and confer but also disclosed two options it was considering to meet the proportionality requirements of discovery. Adidas, 2016 U.S. Dist. LEXIS 163309, at *16-19. The first option required TRB to give Adidas a list of the search terms and ESI parameters that it used to conduct its initial search. Adidas would then be allowed to provide additional search terms or parameters for conducting an additional search. The second option required TRB to remove attorney-client privileged documents from the 300GB of collected ESI and to then provide Adidas with the entirety of the ESI under an Attorneys’ Eyes Only designation to perform its own searching.

Is Proportionality Nonproportional?

Proportionality is not black and white. It is subjective and open to different interpretations. Even the factors listed to help determine what is proportional to the needs of the case are open to different interpretations—especially since the Committee’s Notes make it clear that no one factor is determinative and that the factors need to be balanced against each other to reach a “case-specific determination of he appropriate scope of discovery.” Clearly, each party will try to emphasize and give greater weight to a factor that supports its position—whether it’s the importance of the issues at stake, the amount in controversy, the importance of the discovery, or the burden of the discovery. The parties are also likely to disagree on whether issues are important or the discovery is important or the burden is too great. It seems like a great deal of faith is being placed on the parties’ respective counsel to be civil and cooperate towards an end goal of proportionality when the pervasive lack of civility and cooperation among attorneys is lamented by just about everyone—judges, litigators, in-house counsel, litigants, and legal scholars. If the whole goal of writing proportionality into FRCP 26(b)(1) is to reduce the burden and expense of discovery in litigation, it must be recognized that, in some cases, it will likely increase the burden and expense. Simply responding to overly broad discovery will be replaced with equally (and in some cases more) time consuming meet and confer conferences, including several court-ordered follow-up conferences, and motion practice. This result may still be less burdensome and costly in very large cases involving astronomical amounts of documents and ESI, but probably not in smaller cases.

This Sets Up Sequels Nicely

After doing the legal research on how proportionality has been applied in trademark cases since FRCP 26(b)(1) was instituted a year ago, I strongly considered scrapping this blog post altogether. There weren’t many cases on point, and the few cases addressing proportionality aren’t that informative. But having done the research, I decided that being aware that we are waiting for guidance on proportionality in trademark cases is something worth knowing.

But the paucity of legal results sets this topic up for a few additional blog posts. First, if the scope of discovery hasn’t changed as the Advisory Committee insists, then I should take a look into how federal courts previously applied the proportionality limits before December 1, 2015 when they were contained in the old FRCP 26(b)(2)(C)(iii). These cases should inform—to some degree—how proportionality will be applied moving forward. Second, it makes sense to calendar another blog post on this topic in about a year to see what progress the courts and TTAB have made in applying the new scope of discovery in trademark cases. Proportionality of discovery in trademark cases … stay tuned …

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Bruno Tarabichi