EPI - AIPLA IP Practice in Europe Joint Delegation Meeting Confidential Patent Prosecution Communication and the US Attorney-Client Privilege Hello I’m Ray Farrell, I’m a partner at Carter, DeLuca, Farrell & Schmidt in New York and I’ll be presenting today on Confidential Patent Prosecution Communication and the US Attorney Client Privilege. My background has been primarily patent prosecution and legal opinion work for the past 25 years, so I will defer to all you litigators in the group for any corrections and clarifications where I may go astray. NEXT SLIDE Raymond E. Farrell EPI - AIPLA IP Practice in Europe Joint Delegation Meeting Munich March 13, 2014

US Attorney-Client Privilege What Types of Communications? Overview US Attorney-Client Privilege What Types of Communications? Between Whom? Choice of Law Determination Harmonization Attempt

US Attorney-Client Privilege Confidentiality of communications between attorney and client made for the purpose of obtaining legal advice. (Genentech) Full and frank communication between attorneys and their clients, and promotes broader public interests. (Upjohn) Sound legal advice or advocacy serves public ends and that such advice depends upon the lawyer's being fully informed by the client. (Upjohn) Some basic reasoning for the attorney-client privilege is found in the case law, which for the most part note that the privilege: Protects the confidentiality of communications between attorney and client made for the purpose of obtaining legal advice. (Genentech) Encourages full and frank communication between attorneys and their clients, and thereby promotes broader public interests in the observance of law and administration of justice. (Upjohn) ; and It recognizes that sound legal advice or advocacy serves public ends and that such advice or advocacy depends upon the lawyer's being fully informed by the client. (Upjohn)

US Attorney-Client Privilege Privilege only applies if: Asserted privilege holder is or sought to become a client; Person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; Communication relates 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) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort [includes inequitable conduct (Therasense)]; and Privilege claimed and not waived by the client. (Colton) Once a party announces that it will rely on advice of counsel, for example, in response to an assertion of willful infringement, the attorney-client privilege is waived. "The widely applied standard for determining the scope of a waiver of attorney-client privilege is that the waiver applies to all other communications relating to the same subject matter." Fort James Corp. v. Solo Cup Co., 412 F.3d 1340, 1349 (Fed. Cir. 2005). Thus, when EchoStar chose to rely on the advice of in-house counsel, it waived the attorney-client privilege with regard to any attorney-client communications relating to the same subject matter, including communications with counsel other than in-house counsel, which would include communications with Merchant & Gould. See Akeva LLC v. Mizuno Corp., 243 F.Supp.2d 418, 423 (M.D.N.C. 2003).

What Types of Communications? Invention records generally used for inventors to disclose to patent attorneys that an invention has been made: the names of inventors, description and scope of the invention, prior art, dates of conception, disclosure to others, and publication, etc. Documents containing a prior art search may be privileged if the primary purpose of conducting the prior art search was either to evaluate patentability or to aid counsel in the preparation of a patent application. (Spalding)

What Types of Communications? Communications regarding prior art and the duty to disclose material information to the USPTO, including “relevant technical information . . . [required to] evaluate patentability and/or to prepare a patent application.” (Martin Marietta Materials) Documents that appear to be “conveyed from [a corporation’s in-house patent attorney] to . . . outside patent lawyers for the purpose of obtaining legal advice concerning the preparation of the . . . patent applications at issue, or was prepared by the outside patent lawyers in response to such a request.” (Innogenetics) Draft patent applications, invention control reports, inventor questionnaires, and duty of disclosure reminder forms. (McCook Metals)

Between Whom? Attorney-client privilege is not limited to communications directly between the client and the attorney. Rather, if the purpose of the communication is to facilitate the rendering of legal services by the attorney, the privilege may also cover communications between the client and the attorney's representative, between the client's representative and the attorney, and between the attorney and the attorney’s representative. (Golden Trade)

Choice of Law Determination Communications regarding a US patent being litigated in the US US law of privilege applies (Duplan; Golden Trade; Gucci America) Communications relating to patent prosecution or rendering legal advice on the patent law of another country where a related US patent is being litigated in the US Determine which country’s privilege law applies (“Touch Base” test) Determine whether the governing law recognizes privilege for the communications at issue, and the scope of the privilege (Duplan) Gucci America (S.D.N.Y.) held that communications regarding the enforcement of a right arising under US law (in that case a TM) will be governed by US privilege law – the communications “touch base” with the US.

Choice of Law Determination “Touch Base Test” Factors include: Whether the relevant communications involved a US Attorney Whether the client was a US resident Whether the client was attempting to protect a right arising under US law Whether the actions at issue took place in the US If the parties appear to agree that a communication has nothing to do with the US, or, in the court's view, only an incidental connection to the US, the privilege issue will be determined by the law of the other country. (VLT Corp.)

Choice of Law Determination If the communication: “touches base” with the US > incidental connection, but < “touch base” no connection/merely incidental Apply US privilege law “most direct and compelling interest” test law of country where relationship involving the communication was entered into or centered at the time of the communication If the parties appear to agree that a communication has nothing to do with the US, or, in the court's view, only an incidental connection to the US, the privilege issue will be determined by the law of the other country. (VLT Corp.) Note: Public Policy may override the determination (CITE and example????)

Choice of Law Determination “Most Direct and Compelling Interest” Test: The place the allegedly privileged relationship was entered into, and that the relationship was centered at the time of the communication The subject matter at issue (e.g., whether there is a US legal issue or whether the patent at issue is non-US) Whether application of non-US privilege law would be inconsistent with important policies in US law (VLT Corp.) The jurisdiction with the "predominant interest" is either "the place where the allegedly privileged relationship was entered into" or "the place in which that relationship was centered at the time the communication was sent."  (Golden Trade) In Astra, the court found that a specific set of documents "touched base" with Korea, but declined to apply the law of that country because the documents would not have been discoverable in a Korean litigation. The court reasoned that an analysis of "Korean privilege law, or the lack thereof, in a vacuum—without taking account of the very limited discovery provided in Korean civil cases—would offend the very principles of comity that choice-of-law rules were intended to protect." In finding that the application of Korean law would offend the public policy of this forum, the court stated that "[u]nder these circumstances, where virtually no disclosure is contemplated, it is hardly surprising that Korea has not developed a substantive law relating to attorney-client privilege and work product that is co-extensive with our own law.“ As such, for public policy reasons, the court applied US privilege law, even though South Korea had a more direct and compelling interest in the communication than the US.

Choice of Law Determination Example (Astra Aktiebolag v. Andrx Pharm.): Communications were protected by German attorney-client privilege The Astra case illustrates a number of situations involving different parties

Choice of Law Determination Example (Astra Aktiebolag v. Andrx Pharm.): 3 scenarios of Astra’s in-house counsel communicating in regard to prosecution of US patents: The first two are typical situations where US law on privilege is applied: In-house US counsel communication with US outside counsel; In-house US counsel communication with company employees; The third scenario illustrates an application of the Touch Base test where the communications related to prosecution of the US patents and were between in-house counsel and outside Korean counsel. Touch base factors considered were: Where was the relationship centered at the time the communication took place? The relationship is that of the Korean counsel and Astra in general, which was that the Korean counsel was mostly involved with Astra’s Korean subsidiary and therefore the relationship was centered in Korea and Korea would have the most direct and compelling interest in whether that communication was protected or not. 2nd step Although, Korean law

Choice of Law Determination Example (Astra Aktiebolag v. Andrx Pharm.): Court found Korean law was applicable under the Touch Base test – no comparable privilege in Korea existed However, the court still found privilege applied for comity and public policy reasons because the communications would not have been discoverable in Korea In this situation, which although it didn’t involve European communications or parties, I believe helps illustrate how US privilege is determined which will benefit our discussion today. The court determined that Korea had the most direct and compelling connection with the communication so Korean law applied. However, the court applied US law of privilege to find the communications were for public policy reasons. The court’s public policy reasoning for applying US law was that even though Korean law does not provide a privilege for this type of communication, i.e., no evidentiary privilege in Korea for between the company and its patent attorney for prosecution of a Korean patent, the communication would not have been discoverable anyway due to the narrow discovery rules in Korean civil suits.

Harmonization Attempt AIPLA – AIPPI - FICPI PRIVILEGE COLLOQUIUM IN PARIS 26-28 June 2013 Basis: protection of confidentiality of IP advice is being debated in various fora, including WIPO and as a part of the implementation of Europe’s Unitary Patent system Resulted in Joint proposal AIPLA’s Executive Director - Todd Dickinson and Jeff Lewis who was AIPLA’s president at the time participated. From the joint press release: The Colloquium brought senior government representatives together with experienced IP attorneys and representatives of the judiciary and academia to discuss the urgent need to harmonise different countries’ laws so that confidential client communications with IP attorneys are protected against forcible disclosure.

Harmonization Attempt AIPLA – AIPPI – FICPI Joint Proposal “a communication made for the purpose of, or in relation to, an intellectual property advisor providing professional advice on or relating to intellectual property rights to a client, shall be confidential to the client and shall be protected from disclosure to third parties, unless it is or has been made public with the authority of that client”

Harmonization Attempts AIPLA – AIPPI – FICPI Joint Proposal Recognizes specific jurisdictional limitations, exceptions and variations on the scope or effect provided that: “individually and in overall effect do not negate or substantially reduce the objective effect … having due regard to the need to support the public and private interests [of the proposal] to which the effect of the [proposal] is intended to support, and the need which clients have for the protection to apply with certainty”

References Astra Aktiebolag v. Andrx Pharmaceuticals Inc., 208 F.R.D. 92 (S.D.N.Y. 2002) Colton v. United States, 306 F.2d 633 (2d Cir. 1962) Duplan Corp. v. Deering Milliken Inc., 397 F. Supp. 1146 (D.S.C. 1974) Genentech Inc. v. U.S. Intl. Trade Comm., 122 F.3d 1409 (Fed. Cir. 1997) Golden Trade S.r.L. v. Lee Apparel Co., 143 F.R.D. 514 (S.D.N.Y. 1992) Gucci America Inc. v. Guess Inc., 271 F.R.D. 58 (S.D.N.Y. 2010) In re Spalding Sports Worldwide Inc., 203 F.3d 800 (Fed. Cir. 2000) Martin Marietta Materials Inc. v. Bedfor Reinforced Plastics Inc., 227 F.R.D. 382 (W.D. Pa. 2005) McCook Metals LLC v. Alcoa Inc., 192 F.R.D. 242 (N.D. Ill. 2000) Therasense Inc. v. Becton Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) Upjohn Co. v. United States, 449 U.S. 383 (1981) VLT Corp. v. Unitrode Corp., 194 F.R.D. 8 (D. Mass. 2000) https://www.aippi.org/?sel=publications&sub=onlinePub&cf=colloquium

Questions? Raymond E. Farrell www.cdfslaw.com +1 (631) 501-5700 rfarrell@cdfslaw.com