In re Seagate: did it really fix the waiver issue? A short review and analysis of waiver resulting from the use of a counsel's opinion letter as a defense to willful infringement.

• Author: Greenbaum, Dov

INTRODUCTION

This past summer the Federal Circuit, responding to a writ of mandamus, attempted to fix the quagmire nearly a quarter century in the making that started with Underwater Devices (1) and culminated most recently in In re Echostar. (2) In particular, the court sought to definitively determine the various consequences of an assertion of willful infringement by a patentee. Principally, should a party's assertion of an advice-of-counsel defense in response to a patentees contention of willful infringement extend waiver of the attorney-client privilege and work product immunity to communications with the defense's litigation counsel? (3)

Ironically, Echostar--which instigated the writ of mandamus--itself was an attempt by the Federal Circuit to resolve uncertainty surrounding the extent of a waiver of attorney-client privilege--subsequent to the disclosure of an attorney opinion letter as a defense to a willful infringement of a patent. Instead, Echostar led to greater confusion, particularly among the district courts.

A global analysis of waiver of privilege and immunity is beyond the scope of this Paper. What is of most concern to this author is only one of the questions addressed by the court: whether the production of an opinion letter not only waives privilege with regard to opinion counsel, but even encroaches on the work product immunity of an unaffiliated trial counsel. (4)

Those courts that allow for the aforementioned waiver to extend to trial counsel base their rulings on the concern that a determination of willfulness requires an understanding of the complete environment of the putative infringer, including the information that he or she is getting from his or her counsel. If an infringer uses counsel's advice implying that he or she was not infringing as a defense to willfulness, it stands to reason that the court should examine all of the potential opinions that he or she received relating to willfulness to ascertain the true mindset of the infringer, including those opinions of trial counsel. (5)

This expansive notion of waiver, adopted by numerous courts leading up to the Seagate decision is somewhat problematic. Not only does it chill frank discussion between a defendant and her lawyer, but it perversely incentivizes potential infringers to limit the scope and breadth of their understanding vis a vis the infringement at hand. The fewer attorneys involved in determining infringement, the better. The putative infringer is better off getting an opinion letter and never discussing the issue ever again even with other counsel for fear that their conversation and work product will become available to the patent holder. It also incentivizes patentees to claim willfulness on any occasion given the huge payoff it can provide: either the defendant provides a an opinion letter, opening up a treasure trove of formerly privileged documents, or the defendant chooses to retain her privilege and take her chances with the willfulness claim. If she loses she may be liable for treble damages.

This Comment outlines the basic issues of privilege and immunity, presents the history of uncertainty regarding waiver leading up to the recent Seagate decision, examines the potential outcome of the decision, and presents possible resolutions to further resolve the issue and more fully repair attorney-client privilege and immunity. One caveat, the ubiquitously inaccurate and inconsistent usage of the terminology related to privilege and immunity serves only to confuse the issue and the courts, and potentially this author. Establishing a consistent usage of the terms used in court cases and in the literature may be a start to reaching a clear, consistent, and fair rule.

1. ATTORNEY-CLIENT PRIVILEGE

   Attorney-client privilege is an integral component of our adversarial legal system; despite its importance the bounds of the right continue to remain unclear. (6) While its exact historical origins are unknown (7)--it is either a utilitarian, social-good justification or a moral rights concept (8)--the right in its current incarnation in the U.S. judicial system stems from statute and legislation; it is not as of yet seen as a constitutional right. (9)

   In 1972, the Supreme Court proposed a series of privileges to be codified. (10) The mere suggestion of codification drew such passionate criticism, it nearly destroyed the entire process of evidentiary rule revision. (11) Thus, instead of any particular sets of privilege rules, the Rules of Evidence state succinctly, "the privilege of a witness, person, government, State, or political subdivision thereof shall be governed by the principles of the common law as they may be interpreted by the courts of the United States in the light of reason and experience." (12) According to later interpretations by the Supreme Court, this terminology reflects Congress's "affirmative intention not to freeze the law of privilege.... [and] to 'provide the courts with the flexibility to develop rules of privilege on a case-by-case basis.'" (13)

   Importantly, the Court, in formulating the bounds of attorney-client privilege, rejected any balancing or other tests that could create uncertainty in the application of the principle of attorney-client privilege, noting "participants in the confidential conversation 'must be able to predict with some degree of certainty whether particular discussions will be protected. An uncertain privilege, or one which purports to be certain but results in widely varying applications by the courts, is little better than no privilege at all.'" (14)

   In outlining the privilege, the courts have determined that

   [t]he privilege applies only if (1) the asserted holder of the privilege is or sought to be come a client; (2) ... (b)[t]he attorney] in connection with this communication is acting as a lawyer; (3) the 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 (4) the privilege has been (a) claimed and (b) not waived by the client. (15) Privilege may be waived by the client in some circumstances where either the client or attorney testifies about attorney-client communications; through voluntary disclosure or sometimes inadvertent disclosure; (16) or when the client puts the communication at issue--the waiver type most pertinent to the issue at hand. (17)

2. WORK PRODUCT IMMUNITY

   A related but different right (18) limits access to the attorney's work product prepared in anticipation of a litigation. (19) Historically, immunity existed in the federal common law (20) until it was tacitly endorsed by Hickman (21) and finally included in the Federal Rules of Civil Procedure. (22) In Hickman, the Supreme Court ruled that access to opposing counsel's work product

   contravenes the public policy underlying the orderly prosecution and defense of legal claims. Not even the most liberal of discovery theories can justify unwarranted inquiries into the files and the mental impressions of an attorney. ... [T]he general policy against invading the privacy of an attorney's course of preparation is so well recognized and so essential to an orderly working of our system of legal procedure that a burden rests on the one who would invade that privacy to establish adequate reasons to justify production through a subpoena or court order. (23) Despite this rhetoric, the Court did go on to qualify the extent of work product immunity: "We do not mean to say that all written materials obtained or prepared by an adversary's counsel with an eye toward litigation are necessarily free from discovery in all cases." (24)

   Subsequent courts have extended work product immunity beyond the simple meaning of Hickman and Rule 26(b)(3) (25) to a privilege-like immunity for oral statements of the attorney that might embody that attorney's work product or mental impressions. (26)

   Work product can also be divided into two distinct categories: factual and opinion. Factual work product (27) can only be divulged "upon a showing that the party seeking discovery has substantial need of the materials ... and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means." (28) In contrast, opinion work product is subject to more stringent limitations on disclosure. (29) Some courts have even interpreted Rule 26(b)(3) to provide absolute protection to this element of work product. (30) The Supreme Court in Upjohn, while not deciding what showing is necessary for the divulgence of opinion work product, implied that there could still be specific instances where even this immunity would not stand. (31) Subsequently, some federal courts have, in some instances, waived opinion work product immunity: (32) Under current Federal Rules of Civil Procedure work product can be produced if

   the party shows that it has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means. ... If the court orders discovery of those materials, it must protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representative concerning the litigation. (33) Confusingly, the theory underpinning the work product doctrine is distinct from the rationale supporting its waiver. Simplistically, work product immunity is designed to allocate information between adversarial parties in litigation, (34) outlining the bounds of what information ought to be shared between two parties in suit. (35) It is essentially an evidentiary issue. In contrast to the immunity itself, waiver hinges on issues relating to attorney professional responsibility to the client. This confusing nature of the work product doctrine has fed the debate over who...