In an opinion recently made public, Judge Leonard Stark granted in part and denied in part a motion for a protective order barring discovery of information subject to attorney-client privilege. In this patent infringement action relating to dynamic integrated circuits, a defendant asserted that the plaintiffs had improperly instructed multiple witnesses not to answer questions at depositions on the basis of privilege. After a lengthy meet and confer process and a hearing, Judge Stark instructed the parties to identify the specific privilege assertions being challenged and the plaintiffs to move for a protective order if necessary. Defendant Xilinx identified several privilege assertions that it wished to challenge, and Defendant Altera added four additional documents, described as the “Runway Reports,” which were “created in the ordinary course of business for potential or actual patent acquisitions.” Intellectual Ventures I LLC, et al. v. Altera Corp., et al., C.A. No. 10-1065-LPS, Memo. Op. at 1-2 n.2 (D. Del. July 25, 2013). The plaintiffs then filed a motion asking the Court for a protective order barring additional testimony in response to the disputed deposition questions and production of the identified documents. Id. at 1-2.
Judge Stark denied the motion for protective order with respect to the Runway Reports, but granted the motion in all other respects. Generally, the subject matter at issue was “communications related to the acquisition, due diligence, valuation, and licensing of the patents-in-suit,” which the defendants contended was not privileged “because Plaintiffs’ business model involves such activities.” Id. at 3-4. Patrik Edenholm, who works as a patent “finder” for the plaintiffs, was the first witness at issue. Judge Stark found that the assertions of privilege made during Mr. Edenholm’s deposition were proper because knowledge of the plaintiffs’ patent valuation process “while in this instance tied to business decisions of patent acquisition, may be intertwined with legal analysis, including considerations of claim scope, validity, and licensing power.” Id. at 5-6. The second witness at issue was Ryan Morrison, a transactional attorney who provided the plaintiffs legal advice related to patent acquisitions. The defendants sought information from Mr. Morrison about the contents of reports regarding patent assets under consideration for purchase and his thought processes in providing advice concerning patent due diligence. Judge Stark agreed with the plaintiffs that this information was privileged, stating that Mr. Morrison is an attorney and “to the extent that Mr. Morrison’s work and analyses also include business advice, this does not, under the circumstances, vitiate the attorney-client privilege.” Id. at 6-9. Judge Stark also noted that “[e]ven if Plaintiffs’ assertion of privilege were improper, the Court is not persuaded by [defendant’s] general argument that its inability to obtain discovery on due diligence and valuation is highly relevant to standing as well as to damages.” Id. at 8 n.6.
Judge Stark also reviewed certain privileged documents that had been disclosed to a Mr. Belgard, who was a consultant for the plaintiffs. Because Mr. Belgard was described as “an independent contractor” who had an “arm’s length” relationship with the plaintiffs, he was not “the functional equivalent of an employee” and thus not a “privileged person.” Id. at 9-11. Nevertheless, disclosure of documents to Mr. Belgard did not waive privilege with respect to those documents because he had a “common legal interest . . . in properly acquiring patents.” In adopting this position, Judge Stark rejected the defendant’s “application of the common interest doctrine [as] too narrow” in its position that the common legal interest doctrine applies only to attorneys. Id. at 11-12.
Judge Stark did, however, order production of the Runway Reports, which he found to be insufficiently supported by the plaintiffs’ “conclusory statement that the Runway Reports contain ‘attorney notes, attorney-client communications, and work product information.’” Judge Stark explained that “[t]he Court specifically ordered the parties to communicate so that neither party would waste time or effort briefing unchallenged privilege assertions. The Court concludes, regrettably, that the parties have failed to adequately communicate with each other to ensure that all parties were sufficiently apprised of all of the ripe privilege issues . . . While both sides are to blame for the lack of communication, the Court concludes that Plaintiffs were on sufficient notice that the Runway Reports were being put at issue . . . [and] have not met their burden of establishing privilege with respect to the Runway Reports.” Id. at 12-14.
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