Privilege in Multinational IP Litigation...Dec 15, 2017 · Privilege for Foreign Patent Agents 37 C.F.R. § 42.57: New privilege rule, effective as of December 7, 2017 • Protects

Privilege in Multinational IP Litigation

Keith Slenkovich - WilmerHaleRoman Krupenin - Yandex

December 15, 2017

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Agenda

I. Hypothetical Fact Pattern

II. Privilege Issue Questions in Multinational Litigation

III. U.S. Privilege Law Basics

IV. Privilege Outside of the United States

V. Foreign Privilege Law in U.S. Courts

VI. Recommendations for Preserving Privilege

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Hypothetical Fact Pattern

PersonalEmoji

• Chinese mobile application software developer• Flagship product is FaceEmoji, a mobile app that allows a user

to personalize 3D emojis, by importing a picture and creating a 3D version

• FaceEmoji is wildly popular worldwide• PersonalEmoji has an R&D office in California, and it maintains

sales and marketing offices in all major European, Asian, and U.S. markets

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HolidayEmoji

• A California-based mobile applications developer

• Recently launched EmojiGram app. Product is similar to FaceEmoji, but with the focus is on supplying vivid life-like emojis for holiday occasions

• Founded by former product manager for PersonalEmoji

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Qualitrics

• Chinese electronics manufacturer• Has a contract with PersonalEmoji to include FaceEmoji as a

standard application in all its handheld devices such as mobile phones and tablets

• Sells its devices in all major European, Asian, and U.S. markets

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Disputes

PersonalEmoji sued HolidayEmoji for patent infringement in the jurisdictions of China, Germany, France and the United States

Patent Infringement Claims

HolidayEmoji responded with assertion of its own patents and petitioned to the PTAB for inter partes review, and launched invalidity proceedings in the Federal Patent Court in Germany

Invalidity and Counter Claims

FTC (US) and MOFCOM (China) opened investigations into alleged unfair and monopolistic trade practices by PersonalEmoji, including its attempt to monopolize the personalized emoji market using its “patently invalid” patents

Government Investigations

PersonalEmoji and HolidayEmoji have substantial patent and trademark assets in major jurisdictions, including the US, European and Asian countries

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Coordinating Litigation

HolidayEmoji also sued Qualitrics for infringing the same patents as PersonalEmoji in parallel actions in China, Germany, and France.

Coordinating counsel for PersonalEmoji is based in California and is interfacing with the following groups of lawyers:

1. Patent litigation counsels in China, Germany and France2. Patent prosecution attorneys and agents in the US and Germany3. Competition counsels in the US and China4. Counsels for Qualitrics in China, Germany, and France

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Privilege Issue Questions in Multinational Litigation

1. How to create a privilege protection plan and identify potential risks in exchanging information with foreign legal counsels and patent agents/attorneys?

2. Are protections available in other jurisdictions similar to those set out in the US?

3. What are the safeguards that needs to be put in place in order to maintain common interest privilege? Is selective waiver possible under the circumstances?

4. How privilege protection is maintained in case where foreign in-house counsel is involved?

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Elements of U.S. Attorney-Client Privilege

A communication

Made in Confidence

Between or among privileged persons

For the purpose of obtaining legal advice

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Waiver of Attorney-Client Privilege

Subject-Matter Waiver • Federal Rules of Evidence 502(a): If a disclosure is voluntary, then all

communications relating to the same subject matter are waived

Implied Wavier• Client or attorney acts in a manner inconsistent with maintaining confidential

nature of privileged communications or fails to take reasonable steps to preserve confidentiality

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Selective Waiver Doctrine

Usually raised in government investigations

• Companies voluntarily disclose privileged materials to investigating agencies in hope of winning cooperation credit from the government, but claim privilege as to civil litigants

• Diversified Industries, Inc. v. Meredith, 572 F.2d 596 (8th Cir. 1977)• Court held that defendant’s production to the SEC amounted only to a

limited waiver of the attorney-client privilege• Reasoned that “to hold otherwise may have the effect of thwarting the

developing procedure of corporations to employ independent outside counsel to investigate and advise.”

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Selective Waiver Doctrine

Most circuits reject the selective waiver doctrine

• Other than the Eight Circuit, all circuits that examined this doctrine ultimately rejected it

• First, Second, Third, Fourth, Sixth, Ninth, Tenth, and D.C. Circuits have held that voluntarily disclosure to government agencies waived privilege

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Elements of the Work Product Doctrine

• Documents and tangible things

• Prepared in anticipation of litigation

• By a party or a party’s representative

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Waiver of Work Product Immunity

Work product protection is waived when disclosed in a manner inconsistent with maintaining its confidentiality

• Voluntary disclosure to an adversary waives the protection for the material disclosed

• Providing a document to a testifying expert ordinarily waives the protection for the document

Disclosure to third parties constitute a waiver if the disclosure substantially increased the possibility that an adversary could obtain the information

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Common Interest Doctrine

Allows a party to share privileged materials with a third party who has the requisite common interest without waiving privilege

• Doctrine is not a freestanding form of privilege, but rather an exception to privilege waiver

• Does not confer any additional protection if the shared material is not otherwise privileged

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Application of Common Interest Doctrine

• Jurisdictions differ as to (1) the definition of a “common interest”; (2) when the common interest privilege may be invoked; and (3) what type of agreement is necessary

• Presence of Attorney: The Third Circuit holds that for the common-interest privilege to apply, a codefendant or an attorney must direct communications to a group member’s attorney. Meaning that direct disclosure to a member may destroy the privilege.

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Waiver and Common Interest Doctrine

• A party cannot unilaterally waive privilege to information received in connection to a common interest agreement

Unilateral Disclosure

• Even following termination of the agreement, one party may not disclose to a third party confidential information obtained from the other party

Termination of Common Interest Agreement

• In a subsequent dispute between the common interest parties, the shared information is not privileged

Dispute Between the Parties

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Patent Agent Privilege Recognized by the Federal Law

Sperry v. State of Florida ex rel. Florida Bar, 373 U.S. 379 (1963)

• Held that the “preparation and prosecution of patent applications for other constitutes the practice of law.”

In re Queen’s University at Kingston, 820 F.3d 1287 (Fed. Cir. 2016)

• Privilege applies to communications “reasonably necessary and incident to the preparation and prosecution of patent applications or other proceeding before the Office involving a patent application or patent in which the practitioner is authorized to participate.”

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Scope of Patent Agent Privilege

Only in relation to practice before the USPTO

• Includes those tasks “which are reasonably necessary and incident to the preparation and prosecution of patent applications or other proceeding before the Office involving a patent application or patent in which the practitioner is authorized to participate.”

• Does not cover communications regarding opinion on the validity of another party’s patent related to potential litigation or purchase or sale of a patent, or in which a patent agent provides an opinion on infringement.

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State Law on Patent Agent Privilege

Uncertain if state courts will recognize the privilege• The In re Queen’s University decision is not binding on state courts

In re Silver, 500 S.W.3d 644 (Tex. App. 2016)• State law contract dispute related to payments due under license

agreements. • Two types of communications: (i) related to patent prosecution; and (ii)

commercialization of technology• Result: Court upheld lower court’s order to produce all communications.

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Privilege for Foreign Patent Agents

37 C.F.R. § 42.57: New privilege rule, effective as of December 7, 2017

• Protects communications between a client and a USPTO patent practitioner or a foreign patent practitioner from discovery in PTAB proceedings

• Communications will be given the same protections of privilege as found under Federal law for communications between a client and an attorney authorized to practice in the United States

Rule does not require reciprocity from foreign jurisdictions

Scope of coverage• Shall receive the same treatment on all issues affecting privilege or waiver, including

communications with employees or assistants of the practitioner

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Discovery in Support of Foreign Litigation

28 U.S.C. § 1782(a) provides a possibility to obtain discovery from persons located in the U.S. to be used in foreign litigation

Threshold: (i) person must reside in the district; (ii) type of proceedings; (iii) application made by respective tribunal or any interested party

No requirement to show foreign discoverability

WilmerHale 24Source: Wikipedia // https://en.wikipedia.org/wiki/List_of_national_legal_systems

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Privilege Outside of the United States

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Common Law Constructs

• Privilege INCLUDES confidentiality requirement

• Focus is on privileged nature of communications, which are shielded from disclosure

• In-house counsel privilege is generally viewed the same as outside counsel, with a few exceptions

• Extensive discovery is possible

Civil Law Constructs

• Confidentiality (professional secrecy) requirement SUBSTITUTES for privilege

• Focus is on enforcement of attorneys’ professional secrecy obligation

• Several exceptions apply to in-house counsel

• Privilege has importance mostly in criminal and administrative proceedings because there is virtually no discovery in commercial litigation

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Approach to Privilege in EU-Wide Actions

• No privilege for communications with in-house attorneys in relation to competition law investigations by the EU Commissions

• Case C550/07 P, Akzo Nobel Chemicals Ltd v. European Commission, 2010 E.C.R. I-8301 (Sept. 14, 2010)

• Could be applied more broadly for other types of EU-wide proceedings• However, local legislation shall apply in patent infringement litigation in

individual jurisdictions of the European Union

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Privilege in England

Legal Advice Privilege• Protects confidential communications between attorney and client whose

dominant purpose is seeking or providing legal advice • Similar to U.S. attorney-client privilege

Litigation Privilege• Protects confidential communications between attorney and client or

attorney and third parties whose dominant purpose is to be used in connection with actual or contemplated litigation

• Similar to U.S. work product doctrine

Applies to external and in-house counsel• Covers only legal advice, not compliance or business administrative advice

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Privilege in Germany

Professional Duty of Confidentiality• Attorneys are obligated to protect confidential information obtained from

the client or third parties in the course of representation• Attorneys can refuse to testify on confidential information or produce

client documents

Disclosure Requirement in Civil Cases• A litigant has no duty of full and frank disclosure. Litigant is allowed to

withhold facts detrimental to its case if such information does not change the facts presented to the court. No duty to produce documents, but there is a burden to provide evidence in support of the position.

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Scope of Privilege in Germany • Only attorneys may refused to testify on confidential information

received during the client-attorney relationship so the court may compel the client to testify about the advice received from the lawyer

• Only protect documents in attorney’s possession. No protection for confidential documents in client’s custody.

• Whether in-house attorneys have the duty of confidentiality is very uncertain and disputed.

• Section 421 of ZPO (Zivilprocessordnung) sets out that a party could request the court to direct the other party to produce a record or document, which is limited to specific document or record in the hands of the opponent or to which opponent refers in its pleadings.

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Privilege in France

Duty of Professional Secrecy• External attorneys have an obligation of absolute professional secrecy and

cannot disclose confidential information provided by clients• May refuse to testify in court or produce documents

No privilege for in-house counsel

Discovery in Civil Cases• Limited discovery allowed• Parties are only required to disclose information to support their claims or

defense.• A party can request that specific evidence be disclosed, but cannot make

broad requests

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Privilege in Russia Advocate Secrecy

• An advocate may refuse to testify on attorney-client secrets or product confidential client documents

• Only applies to “advocates,” meaning qualified lawyers admitted to the barNo Privilege for lawyers who are not “advocates”

• Russia does not require lawyers to be admitted to the bar to practice law• Majority of Russian lawyers who work in-house or in law firms are not

admitted to the bar, known as “legal consultants”• Commercial secrecy regime provides protection for information only in

private relations and does not limit production at request of the court or administrative body

• Parties may request that the proceedings in relation to information covered by commercial secrecy be not public

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Privilege in China

Duty of Confidentiality• Attorneys admitted to the bar have a duty to keep client communications

and documents confidential• Duty of confidentiality does not permit an attorney to refuse to testify or

produce information if ordered by the court or a government agency• If an attorney refuses to testify, she may lose license or go to jail

In-house counsel are viewed differently than outside lawyers

Chinese privilege law is still developing• Although China does not recognize a principle of attorney-client privilege

similar to the United States, it is becoming more receptive to the concept of privilege

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Privilege Comparison Chart United States United Kingdom Germany France Russia China

Type of Law Common Common Civil Civil Civil Civil

Broad Discovery Yes Yes No No No No

Types of Privilege

1. Attorney-Client Privilege

2. Work Product Doctrine

1. Legal Advice Privilege

2. Litigation Privilege

Professional Secrecy

Professional Secrecy Advocate Secrecy Not Available

Privilege for In-House Counsel? Yes Yes Unclear No No No

Common Interest or Joint Defense Exception to Waiver

Yes Yes No No No No

Selective Waiver? No Yes Yes No No No

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Foreign Privilege Law in U.S. Courts Choice of Law

• Choice of privilege law questions do not arise unless the privilege rules of the two jurisdiction differ

• If there is no difference, Court will apply U.S. federal common law to patent cases

• Privilege questions are not unique to patent cases so the court will apply the privilege law of the regional circuit rather than the law of the Federal Circuit

Burden of Proof • The party requesting the court apply the privilege law of another jurisdiction

has the burden to prove that the foreign privilege law is applicable

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“Touch Bases” Test to Determine Choice of Law

Determine whether the communication “touch bases” with the United States

• Asks whether the communications focused on a U.S. proceedings or laws • Asks whether the communications involved U.S. clients or attorneys

If the communication does not touch bases with the United States, the court determines the country with the strongest interest in the communication.

• Determine which country has the most compelling or predominant interest in whether the communications should remain confidential• Asks where did the communication take place and where did the attorney-client

relationship form• Court will apply the law of the country with the most compelling or predominant

interest in the communication, unless the foreign law is contrary to U.S. public policy

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More on ‘Touch Bases’ ApproachExamples of compelling or predominant interest analysis

• Patent Prosecution: Golden Trade, S.r.L. v. Lee Apparel Co., 143 F.R.D. 514 (S.D.N.Y. 1992)

• Court considered what “contacts” the communications had with the United States

• “[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.”

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More on ‘Touch Bases’ Approach

• Patent Litigation: Gucci America, Inc. v. Guess?, Inc., 271 F.R.D.58, 65 (S.D.N.Y.2010).

• “Communications that relate to legal proceedings in the United States, or that reflect the provision of advice regarding American law, “touch base” with the United States and, therefore, are governed by American law, even though the communication may involve foreign attorneys or a foreign proceeding.”

• “Conversely, communications regarding a foreign legal proceeding or foreign law “touch base” with the foreign country.”

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Substantive vs. Procedural Law Courts will apply federal procedural rules even if they decide that substantive foreign privilege law applies.

Foreign countries may not have robust privilege protections because their procedural rules does not permit the discovery of the communications at issue.

• In re Rivastigmine Patent Litigation, 237 F.R.D. 69 (S.D.N.Y. 2006): Although a foreign court would not order disclosure of the communications at issue, the court refused to imply privilege from discovery procedures where none exists.

• Astra Aktiebolag v. Andrex Pharma. Inc., 208 F.R.D. 92 (S.D.N.Y. 2002) : The communications at issue were not privileged under the foreign substantive law; however, the communications would not be discoverable under the foreign procedural law. Recognizing this dilemma, the court applied U.S. privilege law even though the communications did not touch base with the United States.

Foreign Privilege Law Substantive

U.S. Discovery ProcessProcedural

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Recommendations for Preserving Privilege

Communications with In-house Counsel for Foreign Clients

• Determine whether the foreign privilege law applies to in-house counsel in the same manner as external lawyers

• If the client’s in-house counsel is not admitted to the bar, make sure that they are acting at a licensed attorney’s direction

• Retain external counsel as early as possible to avoid privilege issues related to communications with in-house counsel

• Advise your client to be mindful of information shared with in-house counsel

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Sharing Information in Coordinated Litigation

• Enter into an common interest agreement before disclosing confidential information to third parties to reduce risk of privilege waiver

• Involve U.S. lawyers to support that the communication “touches base” with the United States and U.S. privilege law should apply

• Include explicit language about the measures to maintain the confidentiality of the communications

• Avoid storing documents in countries with weak privilege protections

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Limitations of Common Interest Agreements

• Even if there is an agreement, the doctrine will not protect communications shared before the triggering event required under the applicable circuit law

• A common interest agreement is not dispositive of whether the doctrine actually applies to the communications at issue

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Questions