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Appeals Court Upholds Defendant’s Request for eDiscovery Cost Reimbursement: eDiscovery Case Law

In Deere & Co. v. Duroc, LLC et. al., No. 2014-1697 (Fed. Cir., May 26, 2016), after the defendants conceded much of the storage and hosting costs they had claimed, the Federal Circuit Court of Appeals affirmed the district court ruling to uphold cost taxation requested by the defendants, including eDiscovery costs.

Case Background

In this case where the plaintiff sued the defendants for patent infringement, the court granted summary judgment in favor of the defendants and ordered the Clerk of Court to enter judgment for both Defendants, with costs to be assessed against the plaintiff.  The defendants submitted their bills of costs, and the Clerk’s assessment was reviewed and affirmed by the district court, which stated that it had “carefully studied the parties’ submissions and held a telephonic hearing solely to address these costs issues”.

The plaintiff appealed the summary judgment of non-infringement, which was vacated on appeal and remanded for trial.  After trial, the jury found that the plaintiff’s patent was not infringed, and the district court entered judgment in favor of the defendants, who again submitted their bills of taxable costs.  The plaintiff objected to various requested costs as excessive, beyond the authority of the district court to tax, or lacking the required documentation.  The district court reviewed the assessments and upheld most of the costs, approving the taxation as “supported by 28 U.S.C. § 1920, legal authorities cited in the Defendants’ briefs, and in view of the length and complexity of the fourteen-day long patent trial.”

The plaintiff appealed, challenging the assessment of costs in three areas: (1) costs related to document copying, (2) costs related to eDiscovery, and (3) costs related to trial exemplifications.  With regard to eDiscovery, various aspects of the eDiscovery process were governed by a negotiated ESI Agreement that required various eDiscovery actions to be undertaken. The ESI Agreement required that all documents be produced electronically in a database format, product numbered, searchable, with OCR and metadata extracted and identified, and produced on suitable storage media.

Appellate Court’s Ruling

With regard to the eDiscovery costs, the defendants conceded much of the storage and hosting costs they had claimed on appeal, leaving the appellate court to address only the issue of whether e-discovery costs are taxable as a matter of law.  The appeals court noted that “The district court held that when the costs of complying with the agreement are within the obligations of the Agreement and reasonably incurred in complying with the Agreement, they are recoverable” and those costs “are within the scope of § 1920”.  As a result, the appeals court concluded that the district court acted within its discretion and upheld the remaining eDiscovery costs claimed, as well as the other costs related to document copying and trial exemplifications.

So, what do you think?  Will ESI agreements make it easier to recover eDiscovery costs?  Please share any comments you might have or if you’d like to know more about a particular topic.

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