In Nycomed U.S. Inc. v. Glenmark Generics Ltd., 2010 WL 3173785 (E.D.N.Y.) the United States District Court for the Eastern District of New York sanctioned the Defendant, a multinational corporation, $125,000.00, payable in part to Plaintiff and in part to the Court itself, for failing to search and produce documents contained on an outside server and a key employee's laptop. 

In the context of a patent infringement suit, Plaintiff complained of Defendant's ESI searches, pointed out that the production was very small and Defendant failed to produce a keyword search "hit-list" showing all the documents responsive to search-terms alone.  After numerous motions to compel, motions for sanctions and additional pleadings, the Court ordered a discovery conference where the Defendant produced a witness knowledgeable in the Defendant's search efforts.  Examination of the witness revealed that defendant (i) failed to produce two relevant clinical study reports because an employee physically moved the containing emails to a local backup file; (ii) did not search a server operated by a third party web-based document storage and docket management service for use by legal personnel in patent prosecution; and (iii) failed to search for, and produce, documents found on an employee's laptop. 

The Court initially found that no misconduct occurred where the failure to produce clinical reports was a result of an individual employee's decision to backup emails locally and delete them from Microsoft Exchange Servers and journaling systems.  However, the Court found that the Defendant willfully failed to search the third-party web server where the Defendant claimed it overlooked that server as a source for document production and was not in control of the server.  The Court found that control was sufficient where the Defendant had complete access to documents on the server through a password-protected account and the third-party operating the server never touched, modified or deleted documents.  Finally, the Court found that the failure to search a laptop of a key employee responsible for managing and drafting patent applications, including the ones at issue, by not designating her as a document custodian "was plainly willful." 

Expressly considering "the resources of the sanctioned party... a substantial multinational corporation," the Court found that modest fines of $10,000 or $20,000 would "amount to a proverbial slap on the wrist."  Accordingly, the Court fined the Defendant $100,000 payable to the Plaintiff and $25,000 payable to the Clerk of the Court.

For a copy of the opinion, click here.