Presenting a live 90-minute webinar with interactive Q&A Advice of Counsel Defense in Patent Litigation: Protecting Attorney-Client Privilege Limiting Scope of Discovery, Safeguarding Confidential Communications and Information THURSDAY, MARCH 16, 2017 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Michael E. McCabe, Jr., Member, Funk & Bolton , Baltimore Eleanor M. Yost, Shareholder, Carlton Fields Jorden Burt , Tampa and Washington, D.C. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Advice of Counsel Defense and Waiver of Privilege: An Overview MICHAEL E. MCCABE, JR. STRAFFORD WEBINAR MARCH 16, 2017
Establishing A-C Privilege Holder is or seeks to be a client; Communicates to a member of the Bar of a Court; Confidentially; For the purpose of securing primarily legal advice or services; Not for crime or fraud; The privilege is claimed and not waived by the client . United Shoe , 89 F. Supp. 357 (D. Mass. 1950) 5
Purposes of Privilege Encourage clients to seek legal advice. Promote frank and full discussions with counsel. Aid clients to conform conduct to requirements of the law. 6
Establishing Work Product Protects attorney. A document or tangible thing; Prepared in anticipation of litigation or for trial; and Prepared by or for a party, or by or for his representative. Hickman v. Taylor , 329 U.S. 495 (1947) 7
Purpose of Work Product Establish zone of privacy for strategic litigation planning. Requires counsel to do their own work. Prevents piggybacking. 8
Two Types of Work Product Fact work product: Factual information that pertains to the litigation and is prepared or gathered in connection with it . Opinion work product: Mental impressions, conclusions, opinions, or theories concerning the litigation. Upjohn v. United States , 101 S. Ct. 677 (1981) 9
Qualified Immunity Fact work product: Potentially discoverable upon showing of substantial need, inability to obtain from alternative source without undue expense. Opinion work product: Generally absolutely immune from discovery. Fed. R. Civ. P. 26(b)(3)(A) & (B) 10
Willfulness & Opinions 11
Willful Patent Infringement “The court may increase the damages up to three times the amount found.” 35 U.S.C. § 284 Willfulness may support “exceptional case” finding and award of attorneys’ fees. 35 U.S.C. § 284 12
In The Beginning . . . . Underwater Devices , 717 F.2d 1380 (Fed. Cir. 1983) Infringers with actual notice of another’s patent rights have “affirmative duty” to use due care to avoid infringement. Such care “normally” requires that the infringer consult with an attorney. 13
Birth of the “Adverse Inference” Kloster , 793 F.2d 1565 (Fed. Cir. 1986) Infringer's "silence on the subject, in alleged reliance on the attorney-client privilege, would warrant the conclusion that it either obtained no advice of counsel or did so and was advised that its importation and sale of the accused products would be an infringement of valid U.S. patents." 14
Willfulness Factors – Read v. Portec (1992) Deliberate copying. Duration of misconduct. Good faith belief of Remedial action by accused infringer. defendant. Infringer’s litigation Motivation for harm. behavior. Size and financial Whether defendant condition. attempted to conceal misconduct. Closeness of case. 15
Willfulness-Privilege Quagmire Either get an opinion, produce the opinion and waive the attorney- client privilege, or Suffer the consequences and risks of an adverse inference that you received no opinion or that the opinion was bad. 16
2004: End Of The Inference “We now hold that no adverse inference that an opinion of counsel was or would have been unfavorable flows from an alleged infringer’s failure to obtain or produce an exculpatory opinion of counsel.” Knorr-Bremse , 383 F.3d 1337 (Fed. Cir. 2004) 17
Opinions & Waiver 18
Value of Opinions Study found willfulness alleged in 92% of complaints. Moore, Empirical Statistics on Willful Patent Infringement, 14 Fed. Cir. B.J. 227 (2004) Post- Knorr - Opinions of counsel still valuable even if not required. Right opinion testimony could be excellent defense to willfulness allegation. 19
Reliance on Opinions & Scope of Waiver “Precedent is inconsistent on the scope of the waiver that ought to apply to the attorney-client privilege when the infringer relies upon an opinion of counsel--namely, whether the waiver applies to only pre-opinion work or pre-complaint work or whether it includes everything right up to trial and whether it applies only to opinion counsel or to opinion and trial counsel .” Moore, 14 Fed. Cir. B.J. at 233 20
Inconsistent Scope of Waiver Cases Novartis v. Eon (Del. 2002) – if opinion counsel is trial counsel, all post-complaint legal advise discoverable. Thermos v. Starbucks (N.D. Ill. 1998) – Trial counsel work product must be produced if contradicts or casts doubt on opinion counsel’s opinion. Thorn v. Micron (Del. 1993) – opinion counsel work-product need not be produced unless communicated to client 21
EchoStar , 448 F.3d 1294 (Fed. Cir. 2006) TiVo sues EchoStar for infringement. EchoStar asserts advice of counsel defense. Pre-suit: In-house counsel advice. Post-suit: Obtained additional advice from outside opinion firm (Merchant & Gould) but decided not to rely on it. 22
EchoStar – District Court Reliance on advice of in-house counsel waived A/C privilege and w/p relating to advice of any counsel regarding infringement. Waiver scope included communications made either before or after complaint filed and any work product of M&G, even if not communicated. 23
EchoStar – CAFC Applies Fed. Circuit law to scope of waiver when advice of counsel defense raised as defense to willful infringement. 24
EchoStar – CAFC First Waiver Category Waiver of privilege applies to all other communications relating to same subject matter. EchoStar’s choice to rely on opinion of in-house counsel waived A/C privilege with regard to any communications on subject matter with any counsel, including M&G. 25
EchoStar – CAFC Second Waiver Category W/p waiver only extends to inform court of infringer’s state of mind. What counsel prepared but did not communicate to client not relevant to willfulness. Therefore uncommunicated w/p not discoverable. 26
EchoStar – CAFC Third Waiver Category A/C and W/P waived for documents in atty’s file that reference client communications, but were not themselves communicated to client . Discoverable. Non-communicated w/p should be redacted from materials that may be otherwise discoverable. 27
EchoStar Temporal Scope of Waiver M&G (post-suit) communications waived. Footnote 4 says waiver extends to a/c and w/p communicated to client post- litigation. 28
Post- EchoStar Temporal Scope of Waiver Some courts extended waiver to communications post-suit with trial counsel when material to subject of opinion. Others extended waiver to trial counsel communications contradicting opinion counsel. Others extended waiver to any communications with trial counsel on subject matter of opinion. 29
Change of Willfulness Standard & Impact on Waiver: Seagate 30
Seagate , 497 F.3d 1360 (Fed. Cir. 2007) Two-part test for willfulness. Part 1 – Threshold showing of objective recklessness. No duty of care to avoid infringement. Could be based on strength of defenses at trial. State of mind of infringer not relevant. 31
Seagate , 497 F.3d 1360 (Fed. Cir. 2007) Part 2 - Only if satisfy Part 1 does court consider whether objectively high risk either known or should have been known to accused infringer. 32
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