The 21st Century Equivalent of Making Copies? Electronic Discovery Cost-Shifting Examined by Federal Circuit
There is an ongoing debate over what constitutes “making copies” within the scope of Fed. Rule Civ. Pro. 1920(4). The latest case to review an award which includes certain electronic discovery costs is CBT Flint Partnership, LLC v. Return Path, Inc. and Cisco Ironport Systems, LLC, No. 2013-1036 (Fed.Ct. December 13, 2013). CBT sued the defendants for patent infringement, but lost the case. Defendants filed a bill of costs in accordance with 28 U.S.C. § 1920(4). The lower court allowed many costs to be taxable, including $243,453 in fees paid for electronic discovery, calling such to be “the 21st Century equivalent of making copies.”
The reviewing court cited the US Supreme Court opinion Taniguchi v. Kan Pacific Saipan, Ltd. 132 S. Ct. 1997 (2012), which reiterated “the narrow scope of taxable costs” and their limitations “to relatively minor, incidental expenses.” In this light, the Federal Court of Appeals ruled that recoverable costs under § 1920(4) were limited to “costs necessary to duplicate an electronic document in as faithful and complete a manner as required by the rule, by court order, by agreement of the parties, or otherwise.” This included costs to format the data when particular characteristics are required, such as metadata.
So how did the court apply this rule to the electronic discovery costs? It divided the entire bill of costs regarding the eDiscovery into three separate stages to examine separately:
Stage One: The vendor copied or “imaged” the computer hard drives and other “source media” that contained the requested data and documents. The court explains that this is also called a forensic copy or mirror imaging of a hard drive.
Stage Two: The documents from the source are organized into a database to be indexed, decrypted and de-duplicated, as well as filtered, analyzed, searched and reviewed for privilege to cull the production.
Stage Three: The documents culled into the production are copied onto “memory media” such as DVDs, hard drives or secured computer. Although in some cases this stage may include converting into “image file” formats like TIFF documents, they did not do that in this case.
So how did the court rule for taxation of costs under § 1920(4) in regards to each of these three stages? We will delve further into the court’s opinion in our next blog.