Attorney-Client Privilege And Work Product Immunity In Patent Litigation

Jun 20012001 Intellectual Property Law Update, edited by Anthony B. Askew and Elizabeth C. Jacobs, Aspen Law & Business.

§ 1.01 INTRODUCTION AND OVERVIEW

"Lawyers love to know the secret communications between opposing parties and their counsel. And some lawyers love to strike fear into the hearts of opponents by attempting to discover those communications."[2] On the other hand, assertions of attorney-client privilege or work product immunity are "a hindrance, albeit a tolerated one, to the disposition of justice"[3] and often "stand as a major obstacle to the fact-finding process."[4] Between these two extremes lies the battleground over the discovery of documents and communications withheld on the basis of privilege and work product. Perhaps nowhere is the battle over privilege and work product waged with more intensity and vigor than in the litigation of a patent case.

Although the general legal principles underpinning the attorney-client privilege and work-product immunity doctrine are the same in patent cases as they are in other areas of the law, a number of issues seem to arise again and again that are, by and large, unique to patent disputes. For example, in patent cases, there are frequently disputes as to whether, and to what extent, communications with U.S. or foreign patent agents may be privileged. In nearly every patent case, there are also questions about whether documents relating to conception, reduction to practice, and the patent application process are privileged or work product. In those cases where an accused infringer seeks to rely upon an opinion of counsel as a defense to the charge of willful infringement, the patentee may seek a broad waiver of the attorney-client privilege. When there is an issue regarding inequitable conduct, the accused infringer may try to pierce the patentee's privilege or immunity under the "crime-fraud" exception. At least one of these issues invariably arises in every patent case.

This chapter provides the general rules that apply to assertions of privilege and work product. Against this background, the discussion focuses on how the general rules have been applied to those questions that arise most frequently in patent cases.[5]

§ 2.01 GENERAL RULES AND AXIOMS

The Federal Rules of Civil Procedure broadly define what is discoverable, and narrowly define what is privileged subject matter. In particular, Fed. R. Civ. P. 26(b)(1) provides for a relatively broad scope of discovery, permitting discovery of:

any matter, not privileged, which is relevant to the subject matter

involved in the pending action . . . . The information need not be

admissible at the trial if the information sought appears reasonably

calculated to lead to the discovery of admissible evidence.

The "discovery provisions are to be applied as broadly and liberally as possible."[6] Consequently, there are few limitations on discovery.

It is, of course, proper to withhold documents that are protected by the attorney-client privilege. In contrast to the discovery provisions, however, "the privilege limitation must be restricted to its narrowest bounds,"[7] because privilege "is an obstacle to the investigation of truth."[8]

Although the party seeking to withhold documents always bears the ultimate burden of showing that they are privileged or immune as work product, the party requesting discovery bears an initial threshold burden of establishing that the discovery requested is both relevant and that there is a reasonable basis to believe that the information sought is not privileged or immune under Fed. R. Civ. P. 26(b)(3).[9] An in camera review of withheld documents for the purpose of evaluating the privilege or immunity claimed is not automatic. One court has explained the importance of the initial showing requirement as follows:

Although in camera review of documents does not destroy the attorney-client privilege, it is an intrusion which must be justified. Some threshold must be met by the party contesting the application of the privilege before the court examines the the materials. . . . . To empower the district court to review the disputed materials in camera, the party opposing the privilege need only show a factual basis sufficient to form a reasonable, good faith belief that in camerainspection may reveal evidence that information in the materials is not privileged. If the party makes such a showing, the decision whether to conduct the review rests within the discretion of the district court.[10]

This minimum threshold requirement is designed to prevent the district court from having to embark on "'groundless fishing expeditions.'"[11]

If the party requesting the discovery meets this initial burden, then the burden shifts to the party withholding the information from discovery to show that the material was either"'prepared in anticipation of litigation or for trial'"[12] (for work product assertions), or that the communication is attorney-client privileged.[13] Ipse dixit or blanket assertions of privilege or work product are not sufficient.[14] It is also the proponent's burden to show that the privilege or immunity has not been waived.[15] In any event, whether a privilege or immunity applies should be determined on a case-by-case basis.[16]

[A] Adequacy Of Privilege Log

Fed. R. Civ. P. 26(b)(5) provides the sole means by which a party resisting discovery on the basis of privilege (or work product) may withhold documents:

When a party withholds information otherwise discoverable under these rules by claiming that it is privileged or subject to protection as trial preparation material, the party shall make the claim expressly and shall describe the nature of the documents, communications, or things not produced or disclosed in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the applicability of the privilege or protection.

By its terms, the Rule does not mandate the creation of a privilege "log." Nevertheless, in patent cases involving sometimes hundreds or even thousands of assertedly privileged documents, parties do not hesitate to create a table or log that identifies the privileged documents. Regardless of its form, courts have consistently defined what information would be necessary to permit "other parties to assess the applicability of the privilege or protection":

To properly demonstrate that a privilege exists, the privilege log should contain a brief description or summary of the contents of the document, the date the document was prepared, the person or persons who prepared the document, the person to whom the document was directed, or for whom the document was prepared, the purpose in preparing the document, the privilege or privileges asserted with respect to the document, and how each element of the privilege is met as to that document.[17]

A party may support its claim of privilege either by the submission of an "adequately detailed privilege log in conjunction with evidentiary submissions to fill in any factual gaps," or by the submission of "affidavits or equivalent statements that address each document in issue."[18] In addition, some federal district courts have local rules which further define what information must be included in a privilege log.[19]

The consequences of failing to comply with these prerequisites are severe. The failure to provide the requisite information results in the denial of the asserted privilege and the production of the document(s) in question.[20] New designations and numerous new reasons for withholding documents as work product or privileged should be given no weight.[21]

§ 3.01 ATTORNEY-CLIENT PRIVILEGE ISSUES

[A] General Principles

To sustain a claim of attorney-client privilege, the withheld document or communication must meet a number of requirements. Though there is not one "test" for whether a communication is or is not privileged, the standard set forth in United States v. United Shoe Machinery Corp. is often cited as "the" test for privilege:

The privilege applies only if (1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication is made (a) is a member of the bar of a court, or his subordinate and (b) in connection with the communication is acting as a lawyer; (3) the communication related to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion on law or (ii) or legal services or (ii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client.[22]

While the United Shoe standard is widely applied, other courts have utilized variations of that test. For example, the Supreme Court of the United States has held that the elements of attorney client privilege are: (1) a communication between client and counsel, (2) intended to be and in fact kept confidential, and (3) made for the purpose of obtaining or providing legal advice.[23] According to the Federal Circuit, the "central inquiry" in determining whether a communication is privileged is "whether the communication is one that was made by a client to an attorney for the purpose of obtaining legal advice or services."[24]

"Confidentiality is a critical element of the privilege, and it is well established that once a party has made a voluntary disclosure of part of a privileged communication, the privilege is lost for all communications relating to the same subject matter."[25] The mere existence of an attorney-client relationship does not raise a presumption of confidentiality.[26]

The scope of the attorney-client privilege is somewhat broader than strictly those communications held with the attorney. The attorney-client privilege also protects documents and other information prepared for the purpose of seeking legal advice; the attorney-client privilege extends to such documents if the documents are eventually submitted to an attorney for the purpose of obtaining legal advice. More particularly, in preparation for obtaining legal advice from an attorney, employees of a corporation will often prepare documents. The attorney-client privilege has been found to apply to such documents prepared for the purpose of obtaining legal advice if they are eventually transmitted to an attorney for that purpose.[27]

There are also limitations to the attorney-client privilege. While the attorney-client privilege serves a very important purpose, the privilege is also an obstacle to the investigation of the truth. Therefore, the privilege is typically strictly confined within the narrowest possible limit consistent with the logic of its principal,[28] with courts viewing their duty as that of achieving a balance between the need for the disclosure of all relevant information and the need to encourage free and open discussions by clients in the course of legal representation.

The attorney-client privilege applies to communications from an attorney only to the extent that they reflect information obtained in confidence from the client for the purpose of obtaininglegal advice, as opposed to business information.[29] To the extent that a communication by an attorney is based on some other source—for example, public information or information from a third party—it is not protected by the attorney-client privilege.[30] Furthermore, simply because an attorney may have been copied on a communication does not make that communication privileged. Legal advice must have been sought or requested for the communication to be privileged. [31]

An ordinary business document does not become privileged merely because a copy was sent to an attorney.[32] "A corporation cannot be permitted to insulate its files from discovery simply by sending a 'cc' to in-house counsel."[33] Even legal advice may not be privileged if it is merely incidental to business advice.[34] The fact that the attorney was not the primary recipient of a document suggests two reasons for believing that the document is not privileged. First, documents circulated to nonlegal personnel are more likely to concern business rather than legal matters, which would indicate that the attorney was not acting in a legal capacity.[35] Second, the more a document is circulated to nonlegal personnel, the harder it is to conclude that the document was intended to be confidential.[36]

[B] Communications Relating To Conception, Invention, And Patenting

One issue which arises with great frequency in patent litigation is whether, and to what extent, documents that allegedly evidence the creation of an invention, or communications made in connection with the preparation or prosecution of a patent application, are privileged. The Federal Circuit's recent decision in In re Spalding Sports Worldwide, Inc.[37] provides an appropriate starting point for the analysis.

[1] The Spalding Decision

In Spalding, the district court ordered plaintiff to produce in discovery an invention record[38] of the patent-in-suit. The patentee filed a petition for writ of mandamus with the Federal Circuit seeking to vacate the district court's order. Concluding that the document was privileged, the Federal Circuit granted the writ. The court's decision is significant in a number of different respects, both procedural and substantive.

As a procedural matter, the court made clear that mandamus is an appropriate remedy, given the importance of protecting the attorney-client privilege. The court explained that mandamus is proper "when a petition is based on a substantial allegation of usurption of power, and raises an issue of first impression."[39] The court held that whether the attorney-client privilege applies to an invention record "is an important issue of first impression," and that mandamus is appropriate "'because maintenance of the attorney-client privilege up to its proper limits has substantial importance to the administration of justice, and because an appeal after disclosure of the privileged communication is an inadequate remedy."[40]

Another significant procedural matter--indeed, perhaps the most significant part of the Federal Circuit's decision--was the court's choice of law analysis. The Federal Circuit held that it would decide the privilege question as a matter of Federal Circuit law, and not the law of the regional circuit (the First Circuit, in that case). The court determined that whether an invention record is privileged is a question "unique to patent law because the invention record relates to an invention submitted for consideration for possible patent protection; it clearly implicates substantive patent law." Id. at 804. In deciding the choice of law issue, the Federal Circuit distinguished the facts in Spalding from the court's earlier decision in In re Regents of the University of California.[41] In Regents, the Federal Circuit had applied the law of the regional circuit in concluding that communications between a licensor and the attorneys of its licensee were privileged. The Federal Circuit in Spalding explained that because the licensing communication at issue in Regents involved parties to a contract (the patent was said to be "irrelevant"), the privilege issue presented in Regents was not "unique to patent law."

Having answered the fundamental choice of law question, the Federal Circuit then turned to the underlying substantive issue of whether the patentee's invention record was privileged as a matter of Federal Circuit law. The court concluded that "an invention record constitutes a privileged communication, as long as it is provided to an attorney 'for the purpose of securing primarily legal opinion, or legal services, or assistance in a legal proceeding.'"[42] Applying this standard, the court held that Spalding's invention record was privileged because it "was prepared and submitted primarily for the purpose of obtaining legal advice on patentability and legal services in preparing a patent application." Id.

The court explained that the privilege applied notwithstanding the fact that the document included "technical information" which would eventually be made public once the patent issued. The Federal Circuit reasoned that:

The fact that much of the technical information in one form or another

finds its way into the patent application, to be made public when the

patent issues, should not preclude the assertion of the privilege over the

communication in which that information was disclosed to the attorney.[43]

In dicta, the court also expressed its view on the so called Jack Winter[44] line of district court decisions which hold that the transmission of technical information to an attorney, and documents relating to patent prosecution, are not privileged because the attorney is acting merely as a "conduit" between the client and the PTO.[45] The Federal Circuit distinguished the Jack Winter line of authority as "not deal[ing] specifically with invention records" and found that, any event, those cases were "not binding on this court."[46] The Federal Circuit in Spalding remarked that "the better rule is the one articulated in this case."[47] The court in Spalding also cited with approval the Court of Claims decision in Knogo Corp. v. United States[48]and its progeny, a line of cases which had expressly rejected the Jack Winter "conduit" theory.[49]

[2] The Impact Of Spalding

The Spalding case does not stand for the blanket proposition that all invention and patent prosecution-related communications are privileged; its holding, strictly speaking, is limited to invention records submitted to patent counsel for purposes of legal advice on patentability. Nevertheless, the court's choice of law analysis, coupled with its criticism of the "conduit" theory, suggest that Spalding may have a significant impact in broadening the limits of the attorney-client privilege. Given the nature of the corporate invention and patent application process, it is not much of a logical stretch to argue that other kinds of documents relating to invention and patenting, like the invention records at issue in Spalding, also "implicate substantive patent law." Id. at 804. By deciding the privilege issue in Spalding as a matter of Federal Circuit law, the court has effectively freed itself from having to deal with the Jack Winter/conduit line of cases. Moreover, the court's dictum suggests that if given the opportunity in the future, the Federal Circuit would be willing to apply the same rule regarding privilege espoused in Spalding to other types of communications relating to the preparation and prosecution of patent applications.

In fact, district courts have begun to do just that. For example, in Softview Computer Products Corp. v. Haworth, Inc.,[50]the court observed that, "[t]heSpalding court relied in part on Knogo Corp. v. United States... The line of cases that follow Knogo stand for the proposition that the attorney-client privilegemay attach to communications regarding patent prosecution, so long as those communications meet the other criteria of the privilege."[51] The district court in Softview proceeded to apply the Spalding standard for privilege to all of the withheld documents at issue relating to the patentee's U.S. patent application.[52]

Likewise, in McCook Metals L.L.C. v. Alcoa Inc.,[53] the district court applied Spalding in concluding that a variety of prosecution-related documents, including draft patent applications, invention control reports, inventor questionnaires, and a duty of disclosure reminder form, were all privileged.[54] With regard to draft patent applications in particular, the district court in McCook acknowledged that other courts have refused to extend the privilege to such documents on the ground that "much of the information contained in the drafts has already made it to the public domain by means of a successful patent prosecution."[55] The court in McCook expressly disagreed with the rationale of those contrary cases because they "fail to recognize the legal importance that a first-rate patent attorney adds to the legal protection afforded the client by the proper legal draftsmanship of an airtight patent that is successfully and properly prosecuted."[56]

Finally, in Transonic Systems, Inc. v. Non-Invasive Medical Tech.,[57] the district court held that a document which included the patentee's in-house counsel's comments about a patent examiner's communication concerning the patent at issue was privileged. In that case, the court also applied and followed the Spalding test for privilege.[58]

[3] What Spalding Does Not Change

Notwithstanding the district courts' apparent willingness to apply the rationale of Spalding beyond invention records to encompass other types of documents created in connection with the patent application and prosecution process, that does not mean that all such documents will now be privileged. Regardless of how the communication is labeled, it still must meet all of the other requirements for privilege.[59]

Even under the Spalding test for privilege, the purpose of the communication must still be primarily for the purpose of obtaining legal advice or legal services.[60] The invention record at issue in Spalding was submitted by the inventors to Spalding's legal department for the purpose of making a patentability determination.[61] If the attorney is merely directing or transmitting documents or communications between the client and a governmental agency (such as the United States PTO or a foreign country's patent office), without any request (or response to a request) for legal advice or services,[62]then there is no privilege that attaches to such communications.[63] While there are no per se rules in determining whether a particular document constitutes a request for legal advice, the court must look to "the overall tenor of the document" to determine if such a request was either expressed orimplied.[64]

In addition, even under the Spalding test for privilege, the attorney-client communication must be "confidential" to qualify for any protection.[65] To the extent that a communication by an attorney is based on some other non-confidential source—for example, public information or information from a third party—it is not protected by the attorney-client privilege.[66] Even an "opinion letter" can be found not to be privileged if it relies on nonconfidential information and does not reveal the substance of any confidential communication with the client.[67]

The privilege also does not apply to documents relating primarily to business matters rather than legal advice.[68] Thus, a communication reporting an official action to a client is not, without more, privileged, since the communication is neither confidential information nor legal advice.[69] Transmittal letters and fax cover sheets are also rarely, if ever, privileged, since they do not normally contain either (1) confidential factual communications from the client for the purpose of securing legal advice, or (2) legal advice, opinions, or analysis from counsel which would reveal such communications.[70] One district court, applying Spalding, concluded that a client's authorization to file a patent application, a memorandum of a conference with a patent examiner, a status report regarding a patent application, a memorandum regarding a patent search, and a notification that the client's patent was about to issue and instructions to mark its device with the patent number, all were not privileged because none of those documents contained any confidential information or legal advice.[71]

Whether a "prior art" search is or is not considered a privileged communication in the aftermath of Spalding is not clear. Prior to Spalding, a number of district court cases held that prior art searches and prior art studies were not privileged because they do not contain or reflect information obtained in confidence from the client.[72] In Spalding, the accused infringer argued that a portion of Spalding's invention record that included a list of prior art should be disclosed since it did not request legal advice.[73] The Federal Circuit rejected that argument, finding that it was unnecessary "to dissect the document to separately evaluate each of its component."[74] According to the court, it is enough that the "overall tenor of the document indicates that it is a request for legal advice or services."[75] Since the Federal Circuit in Spalding based its privilege decision on the invention record as a whole, it still remains an open question whether a prior art search, standing alone, is a privileged communication. Based upon the broad standard set forth in the Spalding decision, however, such a document would probably be considered privileged if the primary purpose of conducting the prior art search were either to evaluate patentability or to aid counsel in the preparation of a patent application.[76]

The courts have not been consistent in applying the privilege to communications from the attorney to the client. In American Standard Inc. v. Pfizer,[77]the Federal Circuit refused to overrule a district court's determination that an opinion letter on patent validity from counsel to the client was not privileged. In that case, the court observed that some courts have found that the privilege applies to lawyer-to-client communications that reveal, either directly or indirectly, the substance of a confidential communication by the client.[78] In concluding that the opinion letter in issue was not privileged, the court inPfizer explained:

The 'opinion letter' is not signed, is not addressed to Biomet or anyone

else, and bears no letterhead or other indication of source. It discusses no

prior action of Biomet and recommends no action to be taken by Biomet, but

merely concludes that the '123 patent is invalid. Because the record is devoid

of any indication that the validity opinion reveals the substance of a confidential

communication by Biomet, we cannot view as clearly erroneous the district

court's finding that the opinion was not privileged.[79]

The Spalding decision and its choice of Federal Circuit law also has no application when the communications in question are not unique to patent law, or are not affected by substantive patent law. Thus, for example, when the communication or document in question relates to patent licenses or similar types of contractual issues, the law of the regional circuit, and not the Federal Circuit, should be applied in determining whether or not the communication is privileged.[80]

[C] Communications With Patent Agents

Apart from the issue of whether the substance of a particular communication qualifies as privileged is whether the persons involved in the communication can create a privilege. The attorney-client privilege applies to communications between the attorney and client. The issue often arises in patent cases as to whether the privilege extends to communications with a U.S. patent agent.[81] Is there a "U.S. patent agent-client" privilege? An even more complex privilege issue involves the privileged status of communications with foreign (i.e. non-U.S.) patent agents. The cases are not uniform in their treatment of whether communications with patent agents (either domestic or foreign) are privileged.

[1] U.S. Patent Agents

[a] Courts Not Recognizing Privilege

The greater weight of authority strictly, and literally, interpret the "attorney" prong of the attorney-client communication requirement. Those courts reason that because a U.S. patent agent is not a member of the bar of any court, communications between a patent agent and their client are not privileged.[82]Although a patent agent may not be able to create or receive a privileged communications in his own right by virtue of his status, their communications could still be privileged if the agent is acting under the supervision and control of an attorney.[83] In this respect, the U.S. patent agent is treated like any other non-attorney who advises and assists counsel and acts under their supervision and control.

[b] Courts Recognizing Privilege

In the other camp are those district courts that do recognize a form of attorney-client privilege for patent agents, notwithstanding the fact that the agent is not a member of the bar of any court.[84] The rationale behind extending the attorney-client privilege to patent agents is that, as held by the United States Supreme Court, "[t]he preparation and prosecution of patent applications for others constitutes the practice of law.'"[85] In Sperry, the Supreme Court explained the attorney-like function of patent agents as follows:

Such conduct inevitably requires the practitioner to consider and advise his clients as to the patentability of their inventions under the statutory criteria as well as to consider the advisability of relying upon alternative forms of protection which may be available under state law. It also involves participation in his drafting of the specification and claims of the patent application which this Court long ago noted 'constitute(s) one of the most difficult legal instruments to draw with accuracy.' And upon rejection of the application, the practitioner may also assist in the preparation of amendments which frequently requires written argument to establish the patentability of the claimed invention under the applicable rules of law and in light of the prior art.

In light of the Supreme Court's recognition that patent agents are authorized to practice law, some courts have reasoned that the recognition of a "patent agent privilege" is simply a logical extension of the Sperry decision. For example, in In re Ampicillin Antitrust Litigation,[86] the court explained the rationale behind recognizing a "patent agent privilege" as follows:

Where a client, in confidence, seeks legal advice from a registered

patent agent who is authorized to represent that client in an adversary

process that will substantially affect the legal rights of the client, which

thereby necessitates a full and free disclosure from the client to the

representative so that the legal representation may be effective, the

privilege will be available.[87]

Still, it is important to recognize that not all courts agree that the Sperry decision—which was not a case about whether a patent agent enjoys a form of attorney-client privilege—should be read so broadly as to imply a patent agent-client privilege.[88] Thus, it remains an open issue as to whether a U.S. patent agent privilege exists, with cases going both ways on the question.

[c] Limited Scope Of Patent Agent-Client

Privilege

Assuming that the court in which you are litigating recognizes a form of attorney-client privilege for patent agents, that does not mean that all of their communications are subject to the privilege. Assuming it exists at all, the "patent agent privilege" is strictly limited. A patent agent's registration before the PTO "does not authorize the general practice of patent law, but sanctions only the performance of those services which arereasonably necessary and incident to the preparation and prosecution of patent applications."[89]Consequently, "[n]o case provides blanket attorney-client privilege between a USPTO recognized non-lawyer patent agent and his client over all intellectual property matters."[90] In fact, those courts that have recognized a patent agent privilege have limited the scope of that privilege to encompass only those services that such agents are legally licensed to perform: i.e., representation in preparing and prosecuting patent applications before the PTO.[91] When a patent agent goes beyond that limited role, their "status" as a patent agent does not provide him with any special protections. As one district court explained:

A patent agent's claim to attorney-client privilege has its foundations in the USPTO's limited authorization to non-lawyer patent agents to practice law. Essentially, the authorization provides the individual with the status of an attorney, but only for a limited purpose, i.e., the purpose for which the USPTO registered the non-attorney as an agent to practice before it. Thus, by definition, communications between a patent agent and a client beyond that "limited purpose" are not privileged.[92]

This express limitation is nothing more than an extension of the rule that the attorney-client privilege does not apply to communications with an attorney who is acting in a nonlegal capacity.[93] For example, communications between a client and a U.S. patent agent concerning the licensing or enforcement of issued patent would not be privileged, since the PTO bar membership would not extend to such post-issuance activities.

[d] Patent Agents Acting Under Supervision

And Control Of Counsel

The privilege may still apply when the PTO registered patent agent is performing duties directly under the supervision and control of an attorney.[94] In that instance, the attorney-client privilege does not apply to the agent in his own right. Rather, it arises because of counsel's role in supervising and controlling the patent agent's activities and communications.[95] In this respect, the privilege could apply (assuming all other elements of the test are met) to the client's communications with the patent agent in the same manner as it could apply to communications between a client and any other non-attorney specialist working at the direction and control of counsel.[96] It is important to note, however, that some courts have refused to extend this same rationale to patent agents, on the basis that patent agents are independent entities who function as agents of the client, and not agents of counsel.[97]

[2] Communications With Foreign Patent Agents[98]

Determining whether the attorney-client privilege applies to communications with foreign patent agents "has not always been simple or consistent."[99]There are few, if any, bright line rules. Part of the difficulty is due to the fact that foreign patent agent communications can arise in a number of different contexts. Communications with foreign patent agents typically can be categorized as either:

(1) communications between an American client and a foreign patent agent concerning U.S. patents;

(2) communications between an American client and a foreign patent agent concerning foreign patents;

(3) communications between a foreign client and a foreign patent agent concerning U.S. patents; or

(4) communications between a foreign client and a foreign patent agent concerning foreign patents.[100]

The context of the communication will thus control the analysis and, ultimately, the outcome of the privilege question.

Under Fed. R. Evid. 501, courts look to federal law to determine whether an evidentiary privilege may be invoked.[101] While there are a few courts that have refused to recognize an attorney-client privilege for foreign patent agents under any circumstances,[102] most federal courts seem to apply a two-part analysis in answering the privilege question as it applies to foreign patent agents. First, the court determines whether it should apply U.S. privilege law or foreign privilege law to the communication. Second, if the court determines that foreign privilege law applies, the court must then determine whether the particular foreign law in question recognizes an evidentiary privilege for patent agents. If an attorney-client privilege exists in a foreign country, then comity requires the court to apply the foreign privilege law to the communications at issue.[103]

[a] Choice Of U.S. Versus Foreign Law

In determining whether the privilege applies to foreign patent agents, most federal courts begin by engaging in a choice of law analysis. The courts apply several different approaches to addressing the issue. Some courts' choice of law analysis focuses on whether the patent agent communications "touch base" with the United States.[104] The "touching base" approach has been described as follows:

[C]ommunications by a foreign client with foreign patent agents 'relating

to assistance in prosecuting patent applications in the United States' are

governed by American privilege law whereas communications 'relating

to assistance in prosecuting patent applications in their own foreign

country' or 'rendering legal advice . . . . on the patent law of their own

country' are, as a matter of comity, governed by the privilege 'law of

the foreign country in which the patent application is filed,' even if the

client is a party to an American lawsuit.[105]

Those courts that apply the "touch base" approach look to the foreign law of privilege only where those communications relate solely to activities outside of the United States.[106] Under this "general" approach, "[i]f a communication with a foreign patent agent involves a foreign patent application, then as a matter of comity, the law of that foreign country is considered regarding whether that law provides a privilege comparable to the attorney-client privilege."[107] Under a strict interpretation of the "touching base" approach, however, "even a minimal amount of contact with the United States would preclude the application of foreign law to the question of privilege."[108] Some courts have criticized the "touching base" approach as "too rigid," observing that under that standard, "a document could touch base with the United States if it merely emanated here" or if it simply mentioned a United States patent.[109]

Other courts have applied a "traditional balancing test" to the choice of law question.[110] Under this "traditional" approach, the court attempts to ascertain which country has the most "dominant interest" in the communication, considering such interests as "the parties to and substance of the communication, the place where the relationship was centered at the time of the communication, the needs of the international system, and whether the application of foreign privilege law would be 'clearly inconsistent with important policies embedded in federal law.'"[111] The "traditional" approach is also viewed by some courts as being consistent with the Restatement (Second) of Conflicts.[112]

Some courts have even endorsed using a combination of the "touching base" and "traditional" tests. Under the combination approach, the court applies a "touching base" approach to those communications that have no connection, or only an incidental connection, to the United States, and applies the "traditional" approach to those communications that have more than an incidental connection to the United States.[113]

Still other courts seem to skip the threshold choice of U.S. versus foreign law question altogether in deciding whether foreign patent agent communications are privileged. In those cases, the courts appear to follow the "general rule" that "no communication from patent agents, whether American or foreign, are subject to the attorney-client privilege in the United States" but that "the privilege may extend to communications with foreign patent agents related to foreign patent activities if the privilege would apply under the law of the foreign country and that law is not contrary to the law of this forum."[114]

[b] Ascertaining Patent Agent Privilege Under

Foreign Law

Assuming that the district court decides that the foreign agent privilege question must be decided as a matter of foreign law, the next steps in the process are for the court to determine:

(1) whether the law of the applicable foreign country recognizes a privilege for communications with patent agents; and

(2) if so, whether all of the requirements for asserting the privilege under the law of that foreign country have been shown by the party seeking to assert the privilege.[115]

In every case, "[t]he burden is on the party asserting the privilege to provide the court with the applicable foreign law, and [to] demonstrate that the privilege applies to the documents it seeks to exclude from discovery."[116] The party seeking to establish the privileged nature of foreign patent agent communications involving multiple countries also must show that the privilege is recognized "for each and every country for which it claims the privilege."[117] Normally, to meet this burden, the party asserting the privilege will need to "provide affidavits from legal experts in the laws of these countries stating the applicable law of the attorney-client privilege, and demonstrating that the law supports the privilege asserted."[118] The privilege for foreign patent agents, like privilege in other contexts, is "strictly construed, and all doubts should be resolved in favor of disclosure."[119]

Even if the party seeking to withhold documents shows that patent-agent communications are eligible for privilege protection under the law of the applicable nation, it must still show that each document it has withheld satisfies the requirements of that country's privilege law. Thus, for example, some countries do not provide any protection to documents intended to be filed with the foreign patent office, or information reporting on actions taken by the foreign patent office, since that information would not be considered confidential.[120] While the issue may have been resolved under U.S. law as to whether the "conduit" theory applies, as a matter of foreign law, that issue still remains. Consequently, the same prosecution documents that may be privileged under U.S. law may not necessarily be privileged under foreign law. If such documents are in the possession of a litigant's foreign agent, they may have to be produced.

If the communication is substantive, and is not merely being forwarded to the foreign patent office, it is privileged to the same extent as any communication between an attorney and a non-lawyer working under his supervision.[121] Just as communications between an attorney and a paralegal are privileged because the paralegal is working at the attorney's direction or on the attorney's behalf, communications between the client's U.S. counsel and its foreign associates may privileged as well.[122] Determining whether a particular country's laws recognize an evidentiary privilege for patent agents is a difficult, time consuming, and expensive task. Furthermore, as some of the cases below illustrate, the results can be uncertain: courts attempting to ascertain the law of the same foreign country have reached different conclusions as to whether or not a privilege is recognized for patent agents.[123]

[i] Japan

A number of district courts have considered the issue of whether Japanese law recognizes an evidentiary privilege for communications with Japanese patent agents ("benrishi") or Japanese attorneys ("bengoshi"). Most of the courts that have considered this issue and have issued published decisions have concluded that there is no privilege that covers communications with either a Japanese patent agent or patent attorney.[124] At least one district court, however, has reached the opposite conclusion, finding that such communications are afforded an evidentiary privilege under Japanese law.[125]

[ii] France

Whether France recognizes an attorney-client privilege for communications with French patent agents has also been the subject of differing views.[126] InBristol-Meyers Squibb Co. v.Rhone-Poulenc Rorer, Inc.[127], the Southern District of New York concluded that French law does not recognize an attorney-client privilege for patent agents. Other federal district courts, however, have found that French law recognizes an evidentiary privilege for confidential communications between a client and it French patent agent.[128]

For example, in The Duplan Corp. v. Deering Milliken, Inc.,[129] the district court held that, as a matter of French law, communications to or from French patent agents who are acting as patent counsel in France are protected from discovery in the United States by the attorney-client privilege. The district court concluded that the attorney-client privilege protects communications with French patent agents who "are rendering legal advice to foreign corporate control group members, their representatives, or foreign attorneys on the patent law of their own country."[130]

[iii] Germany

Several district courts have held that an evidentiary privilege applies under German law which protects from discovery confidential communications between patent agents and clients.[131] At least one district court has found that there was no German patent agent privilege.[132]

[iv] United Kingdom

A number of cases have found that communications between a British patent agent and their client are privileged under the law of the United Kingdom.[133] At least one district court has limited such a privilege "only to patent agent communications concerning formal patent proceedings before the appropriate British tribunals."[134]

[v] Canada

At least one court has held that "communications with Canadian patent agent[s] are not accorded the attorney-client privilege under Canadian law."[135]

§ 4.01 WORK-PRODUCT IMMUNITY ISSUES IN PATENT LITIGATION

[A] General Principles

The work-product privilege (also known as the "work-product immunity doctrine") is a related yet distinct concept from the attorney-client privilege.[136]The work-product immunity doctrine protects from discovery materials developed in anticipation of litigation or for trial by an attorney, or on his behalf.[137]To be afforded protection under the work-product immunity doctrine, the document in question must have been "prepared in anticipation of litigation or for trial."

For a document to properly be considered "work product," litigation need not have actually been commenced. All that is required is that a "substantial probability" of litigation existed when the document was created.[138] While it is typically not required that the work-product privilege only pertain to a specific litigation (typically the litigation in which the privilege is being asserted as a reason for withholding discovery),[139] the "mere possibility" of future litigation is insufficient to evoke the work-product privilege.[140] The work product assessment is a fact specific inquiry, and in making the determination as to whether a particular document was created in anticipation of litigation or for trial, the court must look at the circumstances of each case.[141] Like attorney-client privilege, the work product exception must be "strictly confined within the narrowest possible limits consistent with the logic of its principle."[142]

Work product comprises the "'files and the mental impressions of an attorney . . . reflected, of course, in interviews, statements, memoranda, correspondence, briefs, mental impressions, personal beliefs, and countless other tangible and intangible ways' prepared in anticipation of litigation."[143]More specifically, work product is "(1) a document or tangible thing, (2) that was prepared in anticipation of litigation and (3) was prepared by or for a party, or by or for his representative."[144] Documents prepared in the ordinary course of business, or for any other non-litigation purpose, are not covered by the work product privilege.[145]

The fact that litigation does, in fact, ensue does not necessarily ensure that the prepared materials are work product, as the work product doctrine is not invoked simply because there is a remote possibility of some future litigation.[146] Not only must there be an articulable claim or threat that is likely to lead to litigation, but the articulable claim must pertain to a particular opposing party, not the world in general.[147] Routine analysis of competitor's products do not, without more, qualify as work product.[148]

[B] When Do Business Documents Constitute Work Product

There is no "protection [for] documents that are prepared in the ordinary course of business or that would have been created in essentially similar form irrespective of the litigation. It is well established that work-product privilege does not apply to such documents."[149] As with the attorney client privilege, the work product protection extends only to legal advice and does not encompass information generated by or on behalf of attorneys when the attorney was principally concerned with business matters.[150] Furthermore, even legal advice may not be privileged if it is merely incidental to business advice.[151]

The question of whether the attorney work product doctrine applies can arise in a situation involving communications with an attorney in a business context. Such situations are often found during the evolution of a particular project within a corporation. During the earlier aspects of such projects the concerns may be primarily of a business nature, i.e., the discussions may deal with questions as to how to penetrate a certain market. Later these may be replaced with concerns more of a litigation nature, i.e., the discussions may deal with consideration of how the company's patent assets might be used against the competition. To determine when the shift from ordinary business to anticipation of litigation has occurred and the attorney work-product doctrine applies, courts look at the facts of each case and determine whether the attorney reasonably concluded at the time the documents were prepared that a substantial probability of litigation existed.[152]

The burden is on the proponent of the privilege to provide enough information in its privilege log to show that these communications were motivated mainly by legal rather than business concerns.[153]

[C] Patent Prosecution Documents As "Work Product"

Patentees in a patent litigation sometimes try to withhold documents prepared in connection with patent prosecution activities on the basis of the work product immunity doctrine (usually this is done in addition to claiming that the document is attorney-client privileged). Whether drafts of patent applications and similar types of documents prepared in the ordinary course of patent prosecution are immune from discovery as work product is an open question, and courts have not uniformly treated such documents.

Some courts have held that the work-product immunity does not extend to preparation for ex parte proceedings, such as patent proceedings.[154]Moreover, documents generated in connection with a patent application are not protected by the work product doctrine simply because an issued patent may give rise to an infringement action.[155] The mere fact that a document is prepared when litigation is foreseeable does not mean that the document was prepared in anticipation of litigation. "The document must be prepared because of the prospect of litigation when the preparer faces an actual claim or a potential claim following an actual event or series of events that reasonably could result in litigation."[156] Patent prosecution documents ordinarily cannot be protected as work product because they are not typically created in "anticipation of litigation."[157]

The court in Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc.[158] rejected the proposition that patent prosecution documents are work product. The court reasoned that documents relating to or in furtherance of the prosecution of a patent application are not "work product" because the primary motivating purpose behind the performance of the work is to obtain a patent.[159]The court held that patent prosecution documents are not covered by the work-product privilege because patent prosecutions was not "in anticipation of" or "concerning" litigation.[160] A patent prosecution is not adversarial, but rather proceeds ex parte.[161] Since the purpose of the work-product privilege is to protect the adversarial process,[162] normally there is no basis for extending it to patent prosecutions.

Other courts have extended the work-product privilege to protect documents prepared in connection with patent prosecution activities.[163] In In re Minebea Corp.,[164] the patentee sought work product protection of documents created as early as eleven months before the patent issued. The district court explained the rule as follows:

Generally, work performed by an attorney to prepare and prosecute a patent application

does not fall within the parameters of the work-product protection . . . since the

the prosecution of a patent application is a non-adversarial, ex parte proceeding . . .

This rule does not, however, preclude application of the work product protection

to work performed to prosecute a patent application if it was also performed

in anticipation of or concerning litigation.[165]

The court in Minebea went on to hold that information pertaining to the patent prosecution was protected as "work product" if it was prepared on or after the date that the patentee anticipated litigation, regardless of the fact that the patent did not issue for almost one year later.[166] According to some courts, the "crucial date is the date upon which the party asserting the work-product doctrine anticipated litigation regarding the patent, not when the patent was actually issued."[167]

While most courts do not recognize work product protection for patent prosecution documents in the absence of other circumstances, courts do recognize that documents prepared in connection with a PTO interference or reexamination proceeding[168] or other adversary proceeding can constitute attorney work product and thus qualify for work product immunity.[169] Work can be protected if the primary motivating purpose behind the performance of the work was to assist in the pending or impending adversarial proceeding.[170]

[D] Substantial Need Exception To The Work Product Immunity

An adverse party may obtain access to some of the materials developed by the other party's attorney in anticipation of litigation for trial by demonstrating "a substantial need of the materials in the preparation of the party's case and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means."[171] However, the law affords absolute protection to the "mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation.[172] In determining whether work product information should be produced, "attention is directed at alternative means of acquiring the information that are less intrusive to the lawyer's work and whether or not the information might have been furnished in other ways."[173]

§ 5.01 WAIVER OF PRIVILEGE OR IMMUNITY

[A] Waiver By Disclosure

Issues often arise in patent litigation regarding the possible waiver of the privilege or work product immunity. Voluntary waiver of the confidentiality, without limitation, of one or more privileged documents reflecting communications between an attorney and the client in discussing certain subject matter waives the privilege as to all contemporaneous communications between that attorney and that client on that subject matter.[174] When a client voluntarily waives the privilege as to some documents that the client considers not damaging and asserts the privilege as to other documents that the client considers damaging, the client may be compelled to produce all documents relating to the matter. The rationale for this rule is that a client cannot be allowed, after disclosing as much as he pleases, to withhold the remainder. He may elect to withhold or to disclose, but after a certain point the election remains final. Voluntary disclosure of privileged communications or work product to an adversary waives the privilege as to other parties.[175]

The privilege may also be lost through an "inadvertent waiver." These situations typically arise if the corporate entity is not careful in maintaining the confidentiality of its privileged documents, or, in litigation, if privileged documents are produced to the other party through error resulting from a careless production procedure.[176] The district courts are all across the map regarding their treatment of whether an inadvertent production waives privilege. Some courts hold that an inadvertent production is never a waiver, some courts hold that it is always a waiver, and still other courts hold that it is only a waiver if, in the totality of circumstances, adequate measures were not taken to avoid the disclosure.[177] In fact, some district courts subscribe to all three views.[178]

In a patent litigation that involves the production of sometimes tens or hundreds of thousands of documents, even the best of counsel can let a privileged document or two "slip" into the hands of the other side. A common procedure for avoiding the possibility (not to mention the expense and embarrassment) of litigating over a possible waiver issue is to include a provision dealing with inadvertent disclosures in the protective order. When parties have stipulated to such a provision, the rules of that district for inadvertent production are, in effect, "trumped" by the protective order.[179] An illustrative case on this point is VLT Corp. v. Unitrode Corp.[180] In that case, the protective order provided:

Inadvertent production of documents subject to work product immunity or

the attorney-client privilege shall not constitute a waiver of the immunity or

privilege, provided that the producing party shall promptly notify the receiving

party in writing of such inadvertent production after the producing party learns

of such inadvertent production. . . such inadvertently produced document and

all copies thereof shall be returned to the producing party or destroyed, upon

request . . . [181]

Plaintiffs produced two documents which it later claimed were privileged and had been inadvertently produced. When plaintiffs demanded that the document be returned, defendant refused, claiming that the documents were not privileged. After determining that the documents were in fact privileged, the district court concluded that plaintiffs had met the conditions in the protective order and, therefore, the court ordered that the documents be returned.

Regardless of whether a protective order controls the issue, the burden rests on the producing party to establish that its disclosure was truly inadvertent.[182] Moreover, courts have required parties seeking the return of a privileged document allegedly produced inadvertently to act timely.[183] If the producing party engaged in purposeful or grossly negligent acts in allowing the production of privileged documents, the court might very well find that their production was not "inadvertent."[184] Some courts have refused to order the return of a privileged document if it was produced because of a mistake of counsel or counsel's exercise of poor judgment, finding that such conduct was "advertent" and not "inadvertent."[185]

[B] Waiver By Reliance On Advice Of Counsel

Where an accused infringer is alleged to have acted willfully, the advice of the accused infringer's lawyer may be relevant to the question of whether he acted with a "willful" state of mind. At trial, an accused infringer may—but is not required to—rely upon the advice of its counsel as a defense to the patentee's charge that the accused infringer acted "willfully." Although most courts find that if the accused infringer chooses to make an "advice-of-counsel" defense, it has waived the attorney-client privilege, this waiver is limited.[186]

What is normally the critical issue is not whether there is or is not a waiver, but the scope of that waiver. Many courts have recognized that "[t]he scope of the waiver, however, is narrowly construed in patent cases."[187] Significantly, "the disclosure of a privileged communication will not serve as a wholesale waiver of the attorney-client privilege."[188] Instead, the waiver should be limited only to the subject matter of the disclosure.[189]

Thus, for example, in Applied Telematics, Inc. v. Sprint Corp.,[190] a defendant relied upon an opinion of counsel to defend against a charge of willful patent infringement. The district court held that the defendant waived the privilege, but only as to the legal opinions regarding its non-infringement of the patents.[191] In Saint-Gobain/Norton Industrial Ceramics Corp. v. General Electric Co.,[192] the district court similarly held that a defendant's reliance on an opinion of counsel as a defense to a charge of willful patent infringement waived the privilege, but limited the scope of the waiver only "with respect to `all communications to and from counsel concerning the transaction for which counsel's advice was sought.'" Likewise, in F & G, the district court concluded that defendant's reliance on an advice of counsel defense to a charge of willful patent infringement waived the attorney-client privilege, but again limited the waiver to "documents relating to counsel's infringement opinion."[193]

There is, however, no universally accepted scope of the waiver that the district courts have adopted when willful infringement is in issue. As discussed above, some district courts have narrowly construed the scope of the waiver. See, e.g., Saint-Gobain, Applied Telemetics, and Katz, supra. Other courts have found that the scope of the waiver of the attorney-client privilege is much more expansive. See, e.g., Mushroom Assoc. v. Monterey Mushrooms, Inc.[194] InMushroom Assoc., the district court determined that the waiver extended to "all documents pertaining to the infringement of the '832 patent." Thus, whether the court in which you are litigating will broadly or narrowly construe the scope of the waiver could largely depend upon where the case is being litigated, and whether there is any controlling case law on point from that jurisdiction.

[C] Waiver By Disclosure Without Community Of Interests

A waiver of the privilege or work product immunity may also occur when two or more parties share otherwise privileged documents without there being a requisite "community of interest." For a "community of interest" to exist between two or more unrelated parties, the allegedly privileged communication must relate to "a matter in which the clients have a substantial identity of legal interests."[195] The "key consideration" in determining if a community of interest exists between separate companies is that "the nature of the interest be identical, not similar, and be legal, not solely commercial."[196] When there is a "disparity of interests" between multiple persons trying to claim the privilege, there can be no "community of interest" (and hence no privilege) between them.[197]

The "community of interest doctrine" is not a privilege, but rather is an exception to the rule regarding waiver by disclosure to a third party. The community of interest doctrine:

serves to protect the confidentiality of communications passing from one party to the attorney for another party where a joint defense effort or strategy has been decided upon and undertaken by the parties and their respective counsel.[198]

Only communications made in the course of a common enterprise and intended to further the enterprise are protected.[199]

One example of the application of the community of interest doctrine in a patent case is In re Regents of the University of California ("UC').[200] In UC, the Federal Circuit found that the parties to a license had a community of interest. The court specifically relied upon the fact that the licensing arrangement between the parties was exclusive. Moreover, in UC, the Lilly attorneys represented both UC and Lilly, and the Federal Circuit pointed to the "joint client doctrine" in order "to overcome what would otherwise have constituted a waiver." The Federal Circuit also held that the community of interest doctrine shields communications between parties to a joint enterprise, stating "[t]he protection of communications among clients attorneys allied in a common legal cause has been long recognized."[201] Parties jointly developing a patent share a "common legal interest" in obtaining the greatest protection and in exploiting the patents.[202] Consequently, a "community of legal interest may also arise between parties jointly developing patents; they have a common legal interest in developing the patents to obtain greatest protection and in exploiting the patents."[203] Thus, where a common legal interest exists in developing, prosecuting and protecting patents, some courts have found that the attorney-client privilege and work product immunity are not waived by disclosures pertaining to the shared interest amongst the parties sharing the interest.[204]

If there is no sufficient community of interest shown, the attorney-client privilege is waived if the client voluntarily gives privileged documents to a third party.[205] In fact, one court has held that "where confidential attorney-client communications are transferred from a corporation selling assets to the corporation buying the assets, the privilege is waived as to those communications."[206]

§ 6.01 PIERCING THE PATENTEE'S PRIVILEGE: THE CRIME-FRAUD

EXCEPTION

In many patent infringement cases, the defendant alleges that the patent-in-suit is unenforceable due to inequitable conduct. When inequitable conduct is an issue, there is always the possibility that the alleged infringer will attempt to pierce the patentee's attorney-client privilege based upon the application of what is commonly referred to as the "crime-fraud" exception. The crime-fraud exception to the attorney-client privilege addresses communications made by the client to his attorney in furtherance of an ongoing or future crime or fraud.[207] The exception is grounded on the theory that it is an abuse of the attorney-client privilege to use an attorney's services in an effort to break the law.[208] A person or entity should not be permitted to hide its criminal or fraudulent conduct from disclosure simply by passing the information on to his attorney.[209]

The crime-fraud exception typically arises in patent litigation context in cases where the accused infringer alleges that the patent in dispute was procured by inequitable conduct.[210] At the outset, it is important to distinguish the concept of fraud from that of inequitable conduct. Although they are closely related[211] and often rely upon the exact same proofs, for purposes of piercing privilege, they are legally distinct concepts.[212] The Federal Circuit has explained that "inequitable conduct is a broader, more inclusive concept" than is common law fraud.[213] To invoke the crime-fraud exception, a showing of inequitable conduct is insufficient. The party challenging the privilege must "make a prima facie showing that the communication was made 'in furtherance of' a crime or [common law] fraud."[214]

To establish the "fraud" prong of the crime-fraud exception, the party challenging the privilege must show: (1) a misrepresentation of a material fact, (2) with intent to deceive, (3) reliance upon the misrepresentation by the party deceived, and (4) resultant injury.[215] Common law fraud includes both affirmative misrepresentations as well as a failure to disclose a material fact where there is a duty of disclosure. The concept of fraud is not limited to affirmative misrepresentations. It includes a failure to disclose a material fact where there is a duty of disclosure.[216] And since such a duty exists in the patent-application context, the deliberate failure to disclose material information to the PTO can constitute fraud.[217] Fraud also includes half-truths: statements that are true as far as they go, but that are misleading because they leave out material information.[218] "Concealment and nondisclosure may be 'evidence of and equivalent to a false representation, because the concealment or suppression is, in effect, a representation that what is disclosed is the whole truth.'"[219] Because every patent applicant has a duty to disclose "material" information to the PTO, a deliberate failure to disclose material information to the PTO can constitute fraud. [220]

In establishing the fraud necessary to pierce the privilege in a patent infringement case, the most difficult areas usually involve making the requisite prima facie showings of deceptive intent and detrimental reliance. Rare indeed is the case where the patentee has among its privileged documents a "smoking gun" that directly and unequivocally establishes his or her intent to deceive the PTO. And fraud by its nature is not something that people admit to.[221] Thus, proof of deceptive intent normally must be "inferred from the facts and circumstances surrounding the applicant's conduct."[222]While there must be a factual basis for a finding of deceptive intent,[223] the withholding of a highly material prior art reference can, in some cases, warrant the inference of an intent to deceive the PTO.[224] Evidence of "a state of mind so reckless as to the consequences" also can be considered the equivalent of an intent to deceive.[225]

Courts have divided on the question whether, in addition to meeting the common-law standard for fraudulent intent, the party seeking to invoke the crime-fraud exception must also establish that the PTO relied on the misrepresentation by granting a patent that it would have denied had it known the true facts. Some district courts have held that such reliance need not be shown,[226] while other courts have held to the contrary.[227] In Nobelpharma, the court wrote that the fact misrepresented must be 'the efficient, inducing, and proximate cause, or the determining ground' of the action taken in reliance thereon."[228] The Federal Circuit's decision in Spalding contains language suggesting that proof of reliance is necessary, but since the decision turned on the issue of intent rather than reliance, that language is dictum.[229]

In addition to piercing privilege for fraud, the privilege can also be pierced when the lawyers services are used in commission of, or in furtherance to, a "crime." If the privilege is sought to be pierced by proof of a "crime," arguably, one need not prove reliance. Under 18 U.S.C. § 1001, deliberate misrepresentations to federal government agencies such as the PTO are punishable as felonies. More particularly, they constitute felonies even where the misrepresen­tation does not induce reliance.[230] Deliberate misrepresentations to the PTO may in some circumstances be punishable—without proof of reliance—as mail fraud, wire fraud, or conspiracy to defraud the United States.[231] Reliance is not an element of mail fraud and wire fraud because the statutes punish fraudulent schemes without regard to whether the schemes succeed.[232] While such allegations of criminal misconduct are theoretical possibilities, they are rarely, if ever, litigated in a patent case, and if a party to a patent suit is going to try to pierce the attorney-client privilege, they typically will do so by trying to show that a fraud was committed on the PTO during patent prosecution.

The party seeking to invoke the crime-fraud exception is not required to prove conclusively that the opponent sought to commit a crime or fraud; a prima facie showing is enough. The "prima facie" standard equates to probable cause: "Both require that a prudent person have a reasonable basis to suspect the perpetration of a crime or fraud."[233] The law of the regional circuit is controlling on the issue of the applicability of the crime-fraud exception, since that issue is not unique to patent law and does not implicate substantive patent law.[234]

In deciding whether the requirements of the crime-fraud exception have been satisfied in a particular case, the court may review the disputed documents in camera.[235] Some courts hold that such an in camera review is required before the court orders the production of documents that would otherwise be privileged.[236] But the evidentiary showing that is necessary in order to justify in camera review is less than the showing necessary to actually overcome the privilege.[237] All that is required is "a factual basis adequate to support a good faith belief by a reasonable person that in camera review of the materials may reveal evidence to establish the claim that the crime-fraud exception applies."[238]

§ 7.01 SUMMARY

In patent lawsuits, issues concerning the proper scope and applicability of the attorney-client privilege and work product immunity are frequently the subject of side skirmishes and motions battles. As the above discussion (hopefully) illustrates, the law is not always clear on what is and is not protected as privileged or work product. In fact, with regard to many of the most frequently litigated issues, there is usually no definitive answer to the question, and cases can be found that go both ways. Consequently, counsel can almost always find some authority for treating a particular communication as privileged, or not privileged, as the case may be.

The cases on privilege can lead to confusing and counter-intuitive results, especially in the context of patent agent communications. For example, a district court might very well find that a communication involving a U.S. patent agent is not privileged, but that the same communication with a foreign patent agent is. The same district court also could decide that, as a matter of U.S. law, documents relating to the invention and prosecution of the patentee's U.S. patent application are privileged, while the very same records, when in the possession of the foreign agent in connection with foreign prosecution, are not privileged under foreign law.

In light of the nonuniform state of the law, patent owners who seek patent protection in foreign countries should be cognizant of the fact that any communications with their foreign agents might have to be divulged in litigation. Prudence would dictate that patentees seeking foreign patent protection determine before they begin patenting their invention overseas whether communications with their foreign patent agents and "associates" are afforded any protection under foreign law. If there is no such protection, a company that is considering, or is in the midst of, a U.S. patent litigation might think again about pursuing the prosecution in a foreign country that does not afford protection for confidential communications.

Regardless of which side they are on, litigants in patent cases must always ensure that their privilege logs meet all of the requirements of the Federal Rules, including any local rules that apply. Moreover, during document production, extreme care must be taken to reduce the possibility of any accidental disclosures of privileged communications or work product. As a matter of course, an effective document handling and review procedure must be in place to ensure that all documents are reviewed for privilege or work product issues by at least one (and preferably several) experienced practitioners before they are produced. While a protective order may help to minimize the risk of a waiver due to an "inadvertent" disclosure, prevention is always the best medicine.

McCabe, Jr., Michael E., Attorney-Client Privilege And Work Product Immunity In Patent Litigation in 2001 Intellectual Property Law Update, edited by Anthony B. Askew and Elizabeth C. Jacobs, Aspen Law & Business.