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Counsel Concerns
Attorney-Client Privilege. The U.S. District Court for the Northern District of Illinois held that Arachnid Inc., a plaintiff in a computer-jukebox patent suit, had waived in limited scope its attorney-client privilege when its lawyer failed to object to the disclosure of attorney advice about the patent during the deposition of a former employee in a prior lawsuit. (Arachnid's lawyer had represented both Arachnid and the former employee in the prior litigation.) Rowe International Corp. v. ECast Inc., 06 C 2703. Plaintiff Arachnid Inc. had obtained a patent for jukeboxes that delivered digital music. Rowe International and Arachnid later filed a patent-infringement suit. During discovery, defendant ECast sought production of 'all privileged communications (including the 'patent reports') concerning the patentability of the inventions claimed in the patents-in-suit, [a prior, similar] Patent, communications relating to the preparation and prosecution of the applications of the patents-in-suit, and communications concerning inventorship.'
The district court additionally found that 'even if [Arachnid counsel John] Held's failure to object at the [prior suit] deposition' to statements by former employee Michael Tillery about counsel's advice on the computer-jukebox patent 'did not waive Arachnid's privilege, Arachnid most certainly waived the privilege when it provided a copy of Tillery's deposition transcript to the [Patent and Trademark Office (PTO)]. It is hard to imagine a more 'knowing disclosure' than making the substance of a privileged communication part of the public record.' But the district court went on to note: 'On the other hand, the Court rejects defendants' contention that the waiver extends to the other patents in suit, inventorship, and issues of patentability generally. Courts narrowly construe the scope of waiver in patent cases.'
ECast also claimed the attorney-client privilege had been waived by the crime-fraud exception because Held had told the PTO '[a]lthough superficially similar,' the prior similar patent 'is, upon close analysis, fundamentally different from applicant's invention.' But the district court emphasized: 'Defendants contend that this statement and others like it are fraudulent because the patent reports reveal that Held believed that [the prior similar patent] blocked patents for inventions such as computer jukebox systems. Held's statements to the PTO do not implicate the crime-fraud exception because he did not misrepresent material facts. Rather, Held's statements constituted legal argument.'
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