Courts Continue to Debate and Refine the Privilege’s Applicability in Patent Cases

July 26, 2006

The debate over the privilege’s applicability in patent infringement cases has not subsided in the wake of the Federal Circuit’s encouraging holding in Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337 (Fed. Cir. 2004) that the patent holder cannot argue an adverse inference based on the accused infringer’s decision not to waive the privilege covering its lawyer’s potentially exculpatory opinion.

In Trading Technologies International, Inc. v. eSpeed, Inc., No. 04 C 5312, 2006 U.S. Dist. LEXIS 30087 (N.D. Ill Apr. 17, 2006), the court found that Knorr-Bremse did not eliminate the debate about whether to bifurcate such infringement trials into a liability phase (where the lawyer’s opinion is not relevant) and a damages phase (where it can play a central role in rebutting a finding of willfulness). An infringement defendant frequently wants to bifurcate the trial so that it does not have to reveal the opinion unless and until it loses the liability phase — but that causes judicial inefficiency. About two weeks later, the Federal Circuit continued to analyze privilege issues in In re Echostar Communications Corp., 448 F.3d 1294 (Fed. Cir. 2006). The Federal Circuit court determined that a party’s reliance on advice of counsel triggered a subject matter waiver that covered: (1) privileged communications with outside and inside counsel; and (2) work product conveyed to the client and uncommunicated documents that reflect such communications (which presumably include such documents as memoranda memorializing communications). This represents a more restrictive view than taken by some courts, which had held that the subject matter waiver covered even documents that the lawyer had not sent to the client.

The Knorr-Bremse fall-out continues.