To Quash Or Not To Quash – That Is One Of The Questions (Among Many) To Ask When Served With A Third-Party Subpoena From The ITC
The U.S. International Trade Commission’s (“ITC”) popularity as a venue for deciding intellectual property disputes continues to rise. Even if a company is not named as a respondent, the increasing number of investigations at the ITC bring an increased possibility of being served with third-party subpoenas. While no entity looks forward to being involved with a Section 337 investigation between other parties, understanding how to respond to these subpoenas, as compared to district court subpoenas, can make things proceed more efficiently.
Third Party Subpoenas Issued By The ITC
Section 210.32 of the ITC Rules governs issuance of subpoenas, including third party subpoenas. Parties apply for subpoenas to the Administrative Law Judge (“ALJ”) assigned to handle the investigation. The ALJ can issue subpoenas to third parties which can be served anywhere in the United States. The subpoenas typically include a copy of the Ground Rules and, if the issuing party is seeking confidential information, a copy of the Protective Order issued in the investigation.
Though these subpoenas do not issue out of a United States district court, ignoring the subpoena is not a viable option. ITC subpoenas can be ultimately enforced by a United States District Court with jurisdiction over the recipient. The enforcement mechanism, however, is fairly complex which may provide some leverage in negotiating limits to the subpoena.
Moving to Quash or Modify
Many of the matters before the ITC are important cases, and the litigants leave no stone unturned. When a third party may have helpful information, many ITC litigants do not hesitate to ask the ALJ to issue a subpoena seeking extensive documents and testimony. If you receive a third party subpoena which you believe is overly broad or unduly burdensome, you have options. As a threshold matter, you can always reach out to the party that requested the subpoena to be issued and try to come to an agreement narrowing the scope of the requests. In fact, the Ground Rules of the investigation might require you to make a good faith effort to resolve the dispute before filing a motion to quash. If that fails, the ITC Rules provide a means for challenging the subpoena. Under the rules, it is possible to either completely quash the subpoena or have the subpoena modified to limit its scope.
Review The ALJ’s Ground Rules
However, before you file a motion to quash or modify a subpoena, it is critical to review the Ground Rules which are issued by the ALJ for each investigation. These Ground Rules are typically included with the subpoena when it is issued. It is important to carefully read, understand and follow the Ground Rules, which have relevant information regarding responding to subpoenas, resolving disputes, and moving to quash or modify the subpoena. The Ground Rules may provide procedural safeguards and relief in responding to the subpoena. But beware – failure to follow the Ground Rules can extinguish your right to relief from the subpoena. A recent example of this type of issue occurred in Certain Electronic Devices with Communication Capabilities, Components Thereof, and Related Software, Inv. No. 337-TA-808, Order No. 10 (March 9, 2012) (hereinafter “Certain Electronic Devices”). In that investigation, third party Openwave filed a motion to quash a subpoena issued on behalf of Apple arguing, among other things, that Apple had violated a Ground Rule that required subpoenas to be issued in time to allow for the filing of a motion to quash. Unfortunately for Openwave, while the ALJ rejected its Ground Rules argument, he found that Openwave itself had violated the Ground Rules by failing to certify that it had made a good faith effort to resolve the dispute. This failure alone, ALJ Pender noted, was sufficient grounds to deny the motion. See our March 15, 2012 post for more information on this order. The lesson here is that, although there are some protections given to third parties, failure of a third party to comply with the Ground Rules can lead to harsh results. Bad results for non-parties failing to follow the rules are not uncommon. For example, Chief ALJ Bullock recently denied a non-party motion to quash that was filed after the date set in his Ground Rules. Certain Digital Televisions and Components Thereof, Inv. No. 337-TA-789, Order No. 48 (April 24, 2012). See our April 27, 2012 post for more details on this order.
Include Detailed Evidence In Your Motion To Quash
Simply put, you need evidence and detailed arguments to support your motion to quash. The party seeking to quash the subpoena bears the burden of proof, so mere attorney argument that the subpoenas are, say, overly broad and unduly burdensome will not succeed. See, e.g., Certain Electronic Devices discussed above. Though this will require some up-front expenditure of resources to determine what documents you have and where they reside, it is a necessary investment if you stand any chance of succeeding.
The Relevant Factors
ALJ’s typically weigh three factors when considering whether to quash or modify a subpoena: (1) the relevance of the discovery sought, (2) the need of the requesting party for the information; and (3) the potential hardship to the party responding to the subpoena.
The burden of proof falls on the party seeking to quash or modify a subpoena and this burden is higher when moving to quash the subpoena in its entirety. See Truswal Sys. Corp. v. Hydro-Air Eng’g. Inc., 813 F.2d 1207, 1210 (Fed. Cir. 1987). This is a consideration that should factor into the decision regarding the scope of the relief you seek – since you might obtain sufficient relief by filing a motion for a more limited form of protection.
1. Relevance of Discovery
The ITC permits parties to obtain discovery on any non-privileged matter that is relevant to any claim or defense. ITC Rule 210.27(b). Subpoenas can issue for any documents in a company or individual’s “possession, custody or control.” ITC Rule 210.32(b). Traditional relevance arguments can prevail here. For example, if it is demonstrated that the requested documents are not relevant to any prong of the analysis, the party moving to quash can prevail. See, e.g., Certain Dynamic Random Access Memory and NAND Flash Memory Devices, Inv. No. 337-TA-803, Order No. 23 (Feb. 13, 2012) (quashing subpoena seeking information not relevant to investigation.) See also our February 20, 2012 post for more details on this order.
Another issue to consider is whether you truly have possession, custody or control of the documents sought by the subpoena. Sometimes parties have subpoenas issued to a subsidiary that are actually attempts to gain documents owned by a foreign parent corporation. If that is the case, the subpoena can be quashed or modified on that basis. The party seeking the documents bears the burden of proving control. To determine if a subsidiary has control, the ITC considers whether: (1) the alter ego doctrine warrants “piercing the corporate veil”, (2) the subsidiary was an agent of the parent in the transaction giving rise to the lawsuit, (3) the agent-subsidiary can secure documents from the principal-parent to meet its own business needs and documents helpful for use in litigation, (4) the subsidiary can access the documents when the need arises in the ordinary course of business, and (5) the subsidiary was a marketer and servicer of the parent’s products in the United States. U.S. Int’l Trade Comm’n v. ASAT, Inc., 411 F.3d 245, 254 (Fed. Cir. 2005). Simply sharing some documents during the ordinary course of business is insufficient to deem a subsidiary as having control. Id. at 255.
2. Need of the Requesting Party for the Information
The fundamental question for this prong is not whether the requesting party needs the documents; it is whether they need the documents from you. Subpoenas seeking, for example, publicly available documents or documents in the possession of one of the parties can be quashed or modified on that basis. See Certain Adjustable Keyboard Support Systems and Components Thereof, Inv. No. 337-TA-670, Order No. 18 (Sept. 29, 2009). See also our October 5, 2009 post for more details on this order.
3. Potential Hardship of Responding Party
Traditional hardships, such as the expense or disruption of searching for relevant documents or providing testimony, are relevant in determining whether to quash or modify. See Certain Adjustable Keyboard Support Systems and Components Thereof, Inv. No. 337-TA-670, Order No. 11 (August 29, 2009). See also our September 1, 2009 post for more details on this order. But there is another, related form of hardship that has found success at the ITC. Several nonparties have successfully had subpoenas quashed or modified because the subpoenas were worded in such a way that it required the nonparty to perform a claim construction or detailed technical analysis in order to comply with the subpoena. For example, ALJ Pender quashed a subpoena as unduly burdensome because it required a nonparty to perform a detailed technical analysis just to determine what documents might be relevant. See Certain Light-Emitting Diodes and Products Containing Same, Inv. No. 337-TA-798, Order No. 20 (March 1, 2012). See also our March 8, 2012 post for more details on this order.
Third-party subpoenas are a common way of obtaining information in ever-popular ITC investigations. If you find yourself a subpoena target, it is important to stay calm and quickly evaluate how you want to respond. If you choose to fight the subpoena you have numerous tools at your disposal. Be sure, however, to review the Ground Rules controlling your investigation and provide detailed factual and legal arguments to support your motion to quash or modify an issued subpoena.