October 31, 2013
Law360
Authored by Jennifer H. Roscetti and Anthony C. Tridico, Ph. D.
Issues surrounding the application of attorney-client privilege in U.S. litigation often arise when non-U.S. or foreign patent attorneys or agents are involved in patent prosecution and opinion preparation. While the analysis is anything but straightforward, recent case law does provide some principles that companies need to keep in mind when developing internal policies aimed at maintaining privileged communications.
Specifically, federal common law, construed by the Federal Circuit, governs questions of privilege in patent cases and1 most district courts employ a two-step analysis in determining whether non-U.S. counsel's communications are discoverable in U.S. litigation. First, courts determine whether U.S. or foreign privilege law applies.2 Second, the court looks to whether the governing law recognizes privilege for the particular communications at issue and the scope of that privilege.
When analyzing communications involving foreign attorneys and patent agents, courts engage in a "contacts"-like choice-of-law analysis to determine which jurisdictions privilege laws govern.3 The three primary methodologies are employed: (1) the most direct and compelling interest test; (2) the comity plus function approach; and (3) the touch-base test.4
The first approach involves a balancing test to determine which country has "the most direct and compelling interest in whether [the] communications are to be publicly disclosed."5 The second approach is a functional test grounded in comity that looks to the national law of the foreign attorney to determine the extent to which privilege attaches.6
The third approach applies U.S. privilege law where the communication at issue "touches base" with the United States.7 How much association with the U.S. courts require for communications to "touch base" varies by jurisdiction. But, generally, when considering communications by foreign attorneys, courts simply apply the law of the nation in which the patent application, for example, was filed.8
Once the court's choice-of-law analysis establishes the applicable law, the court examines whether that nation's privilege laws protect the communications at issue. If an attorney-client communication touches base with the United States, the proponent of privilege must factually establish that the relevant communication meets all the elements of privilege to prevent disclosure.9 In the context of patent prosecution, the Federal Circuit has confirmed a patentee's right to withhold, as privileged, documents and communications that are commonly created in the course of invention and prosecution.10
If, however, an attorney-client communication does not touch base with the United States, courts generally consider the foreign nation's law to determine if that law "provides a privilege comparable to the attorney-client privilege."11 To determine whether privilege exists in a particular country, statutes are given the most weight, and may be dispositive.12 But courts may also consider other rules of law and regulations before the applicable patent office.13 Establishing foreign attorney-client privilege by reliance on professional secrecy obligations of that forum, however, may not suffice.
District courts often distinguish a professional secrecy obligation from an evidentiary privilege.14 Individuals operating under typical professional secrecy obligations may disclose communications if a court determines the need for the information sufficiently outweighs the secrecy obligation.15 United States attorney-client privilege, in contrast, is absolute.16
In Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer Inc., the district court held that French patent agents' communications were not entitled to protections afforded the attorney-client privilege in the United States17 Specifically, the court interpreted French regulations such that patent agents cannot be held liable for disclosing communications in response to judicial process, resulting in the privilege afforded by those regulations as not rising to the absolute American attorney-client privilege.18 Thus, the court concluded that French patent agents' communications were not entitled to protections afforded the attorney-client privilege in the U.S. because they failed to meet the standards of the attorney-client privilege.19
Similarly, at least one district court has found that Swiss law does not provide a privilege analogous to U.S. attorney-client privilege for Swiss in-house patent attorneys and agents.20 In contrast, Japanese law accords a privilege for communications between Japanese patent agents, "benrishi," and clients, which at least the Southern District of New York has recognized as a matter of comity.21
Foreign substantive law comparable to U.S. attorney-client privilege may not exist because foreign procedural law may never require production of the communications at issue. But because U.S. courts apply their own procedural rules under choice of law rules, this presents a problem.22
For example, in the case where communications of Swiss in-house counsel were not protected by an attorney-client privilege comparable to the U.S. privilege,23 arguably, there is no need for such a privilege because of more limited discovery procedures—a Swiss court would not order disclosure of such communications.24 But the district court in In re Rivastigmine Patent Litigation (Rivastigmine II), while noting the problem, refused to "imply privilege from discovery procedures where none exists."25
In contrast, the court in Astra Aktiebolag v. Andrex Pharmaceuticals Inc., recognized that Korean substantive law protected confidential information received by the attorney and not communications from attorneys to clients.26 Consequently, that Korean substantive law did not recognize an attorney-client privilege comparable to that of the United States.27 Under Korean procedural law, however, the communications at issue were not discoverable and would not have to be produced.28 Recognizing the dilemma, the court applied U.S. privilege law to communications that did not "touch base" with the United States.29 Accordingly, although courts typically first analyze substantive law, an argument based on procedural law may be successful in the context of comity and public policy.
With this background, the question arises: Have U.S. courts recognized a privilege equivalent to that of U.S. privilege in my country?
District courts have unanimously held that German law robustly protects privileged communications.30 This protection extends to communications involving both German attorneys-at-law as well as German patent agents.31 Similarly, in Santrade Ltd. v. General Electric Co., the court accepted the assertion that § 383, 6 of the German Code of Civil Procedure provides for an evidentiary privilege that protects against compelled disclosure in court proceedings.32
Article 378 of the French Penal Code requires French patent agents to maintain client confidences in secret. In the past, courts found that this section provided a basis for finding an attorney-client privilege for communications made with patent agents.33 For example, the court in Duplan Corp. v. Deering Milliken Inc., found that this law was intended to apply to French patent agents, and thus accorded privilege to communications from French patent agents.34
Additionally, Article 422-54 of the French Intellectual Property Code applies to patent agents and states that "[t]he industrial property agent: 2(c): must obey professional secrecy: this secrecy extends to communications that the agent has with his client, to professional correspondence exchanged as well as all documents prepared for this purpose."35 However, the court in Bristol-Myers Squibb further considered Article 12, Section 12.3 which states, "[t]he professional secrecy rules are not enforceable either against persons legally empowered to conduct judicial, administrative or customs investigations or against courts of legal jurisdiction."36
The court interpreted this regulation as holding that French patent agents cannot be held liable for disclosing communications in response to judicial process, meaning the privilege is not equivalent to the absolute attorney-client privilege in the United States.37 Thus, the court concluded that French patent agents' communications are not entitled to protections afforded the attorney-client privilege in this country because they failed to meet the standards of the attorney-client privilege.38
Article L. 422-11, passed in February, 2004 in response to the 1999 Bristol-Myers Squibb decision, created an evidentiary privilege: "In all matters and for all services referred to in Article L. 422-1, the industrial property attorney shall observe professional secrecy."39 But the privilege applies only to Industrial Property Attorneys which "must be independent from other professions and commercial influences and may only associate with or report to supervisors, persons or entities within their profession."40 In Commissariat a l’Engergie Atomique v. Samsung Electronics Co., the court noted, "an Industrial Property Attorney would lose independence if employed by a company or corporation not of his profession."41
Thus, the experts agreed "that employees of a corporation (unlike avocats employed by law firms or Industrial Property Attorneys employed by entities consisting of their profession) do not have independence to assert evidentiary privilege because they are subordinate to management that does not enjoy that right."42 Therefore, this privilege analysis will involve whether those involved in the communication at issue qualify as an industrial property attorney.
At least three district courts have recognized privilege between Swedish patent agents and/or attorneys and their clients. First, in Santrade Ltd. v. General Electric Co., the court found that a declaration submitted by the Swedish patent attorney in question sufficed to provide privilege to the documents in question. 43 Specifically, the affidavit stated that the patent attorney was "recognized as an intellectual property attorney under the laws of Sweden, duly registered to practice before the Swedish Patent Office," and that he had reviewed privileged information as a Sandvik's patent attorney, the party claiming privilege.44 The declarant further stated that under Swedish law, he could not give testimony on privileged information unless there is an extraordinary reason.45
The court noted that although the affidavit did not explain the nature of the "extraordinary reasons," the court interpreted this as very unusual reasons and found that the Swedish law on attorney-client privilege did not contradict North Carolina law.46 Second, Saxholm AS v. Dynal Inc., citing Santrade with approval, found that Santrade alone, in the absence of contrary evidence, sufficiently proved that the attorney-client privilege protected communications between the patentee and its patent agent.47 Finally, in Willemijn Houdstermaatschaapij BV v. Apollo Computer Inc., the court held based on an affidavit that Sweden had "at least some . . . degree of attorney-client privilege, whether it be statutory or common law."48
Once in litigation, one common theme of the case law is the importance of providing expert testimony regarding the laws of the foreign jurisdiction and why a comparable privilege would apply in that jurisdiction. The analysis of a previous court may not be sufficient. While some courts accept case law citations as evidence of privilege in a particular foreign country, others may find reliance solely on case law inadequate.
For example, in In re Rivastigmine Patent Litigation (Rivastigmine I), the judge found that communications between client and Swedish patent agents and/or Swedish law firm were not privileged because the patentees merely cited Santrade.49 Interestingly, Saxholm and Rivastigmine I used the same reasoning to reach opposite conclusions regarding whether the attorney-client privilege protected the communications at issue.50
The importance of submitting an expert declaration also arose in a 2011 case. According to an unchallenged declaration of a Swedish Bar Association member, the attorney-client privilege existing under Swedish law exists only between clients and members of the Swedish Bar Association who bear the title, Advokat.51 Only lawyers in private practice are allowed membership in the Swedish Bar Association and in-house counsel are not permitted to be members or bear the Advokat title.52
Accordingly, the AstraZeneca LP v. Breath Ltd. decision seems to imply that, because the privilege exists only for communications involving an attorney bearing the Advokat title, communications between patent agents and clients are not privileged. But the declaration in AstraZeneca went unchallenged. Here, it appears that the court did not consider an amendment to Swedish Procedural Code in 2010. This amendment also granted patent agents (Sw. patentombud) working with intellectual property law, who are not attorneys or lawyers, the same legal privilege as attorneys.53
However, once you are in litigation it is probably too late. Internal procedures to maintain attorney client privilege should be developed taking into account the laws of the local jurisdiction where a company's in-house and external attorneys practice. If, for example, your in-house counsel is located in a jurisdiction where a U.S. court may not accord a protection, procedures involving your in-house or external U.S. counsel may be something to consider. At the very least, it is critical that all of the counsel you work with, regardless of jurisdiction, understand how the principles of attorney-client privilege may or may not apply prior to hitting send on the email or writing a memo to the file.
Endnotes
1 Astra Aktiebolag v. Andrx Pharm. Inc., 208 F.R.D. 92, 97 (S.D.N.Y. 2002).
2 See Duplan Corp. v. Deering Milliken Inc., 397 F. Supp. 1146, 1169-72 (D.S.C. 1974).
3 See, e.g., Golden Trade, S.r.L. v. Lee Apparel Co., 143 F.R.D. 514, 520 (S.D.N.Y. 1992).
4 The formal distinction between these choice-of-law approaches has eroded such that these tests are combined by many district courts. Indeed, many of the inquiries considered in the comity plus function test and the most direct and compelling interest test are subsumed into the factors used to determine if a communication "touches base" with the U.S. See, e.g., Duplan Corp., 397 F.Supp. at 1169-70 (considering the clash between U.S. privilege rules and of the foreign country and the principle of comity).
5 Id. at 521. Some of the factors that courts consider when applying this test include: (1) the subject matter at issue, for example, whether there is a U.S. legal issue or whether the patent at issue is foreign; (2) where the patent agent-client relationship commenced and was centered at the time the communications at issue took place; and (3) whether application of foreign privilege law would be inconsistent with important policies in U.S. law. VLT Corp. v. Unitrode Corp., 194 F.R.D. 8, 15-16 (D. Mass. 2000) (citing Golden Trade, 143 F.R.D. at 520-21).
6 See, e.g., 2M Asset Mgmt. LLC v. Netmass Inc., No. 2:06-CV-215, 2007 WL 666987, at *3 (E.D. Tex. Feb. 28, 2007) (criticizing the rigid touch-base test and declining to adopt it where the "vast majority" of documents at issue did not apply to a U.S. application).
7 Duplan Corp., 397 F.Supp. at 1169-70.
8 See, e.g., In re Rivastigmine Patent Litig. (Rivastigmine I), 237 F.R.D. 69, 74 (S.D.N.Y. 2006) (stating that "[i]f a communication with a foreign patent agent involves a U.S. patent application, then U.S. privilege law applies," but that if “a communication with a foreign patent agent involves a foreign patent application, then as a matter of comity, the law of that foreign country is considered.").
9 See Paul R. Rice, Attorney-Client Privilege in the United States § 2.1 (2012). The fundamental elements are: (1) the attorney; (2) the client; (3) a communication; (4) the confidentiality that was anticipated and preserved; and 5) the legal advice or assistance that was the primary purpose of the communication. Id.; see also Rivastigmine I, 237 F.R.D. at 73-74 (quoting United States v. United Shoe Machinery Corp., 89 F. Supp. 357, 358-59 (D. Mass. 1950)).
10 In re Spalding Sports Worldwide Inc., 203 F.3d 800, 805, 806 & n.3 (Fed. Cir. 2000) (holding that an internal corporate invention record containing technical information was nonetheless privileged, and further criticizing district court decisions that denied privilege on the argument that the patent attorney was "merely acting as a conduit" to convey information to the USPTO).
11 Softview Computer Prods. Corp. v. Haworth Inc., No. 97 CIV. 8815 KMWHBP, 2000 WL 351411, at *11 (S.D.N.Y. Mar. 31, 2000).
12 Astra Aktiebolag v. Andrex Pharms. Inc., 208 F.R.D. 92, 100 (S.D.N.Y. 2002) ("If no privilege is provided for by the statutes of the foreign forum, no privilege can be implied.").
13 See, e.g., Rivastigmine I, 237 F.R.D. at 96.
14 In re Rivastigmine Patent Litig. (Rivastigmine II), 239 F.R.D. 351, 357 (S.D.N.Y. 2006).
15 Id.
16 Id.
17 Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer Inc., 188 F.R.D. 189, 200 (S.D.N.Y. 1999).
18 Id.
19 Bristol-Myers Squibb Co. v. Rhône-Poulenc Rorer Inc., No. 95 Civ. 8833(RPP), 1998 WL 158958, at *3 (S.D.N.Y. Apr. 2, 1998), mot. for recons. denied, 188 F.R.D. 189 (S.D.N.Y. 1999).
20 See Rivastigmine II, 239 F.R.D. at 357. The court concluded that Swiss patent agents’ professional secrecy obligation was not an absolute evidentiary privilege and thus not protected. Id. The plaintiff referred to three statutes as the basis for arguing that communications with patent agents are privileged. See Basel-City Code of Civil Procedure § 116, translated text from id. at 354 ("Testimony may be denied by: 1. those who would have to speak to their detriment or disgrace in the taking [of the testimony], 2. clergy members, doctors, attorneys, notaries, a child's counsel according to Art. 146 ZGB, as well as those contracted by the complaint body (ombudsman), in reference to facts that were learned in the exercise of their profession and which by their nature are to be kept secret. 3. members and secretaries of the cantonal arbitration boards for questions of discrimination, concerning legal disputes negotiated before the arbitration board."); Article 162 of the Swiss Penal Code, translated text from id. ("He who betrays a manufacturing or commercial secret that he is bound, by legal or contractual duty, to keep, who makes use of this secret of himself or others, will, upon request, be punished with imprisonment or a monetary fine."); Article 321(a) of the Swiss Federal Code of Obligations, translated text from id. ("In the course of the employment relationship, the employee shall not make use of or inform others of any facts to be kept secret, such as, in particular, manufacturing or business secrets that come to his knowledge while in the employer's service. Also, after termination of the employment relationship, he shall continue to be bound to secrecy to the extent required to safeguard the employer's legitimate interests."). The plaintiff also cited Article 42 of the Swiss Federal Act Regarding Federal Civil Procedure, which states in relevant part:
1. The giving of testimony may be refused . . .
(b) by the persons named in Penal Code Code Art. 321, Section 1, with regard to facts, which pursuant to such provision come within professional secrecy, insofar as the holder of the right has not consented to disclosure of the confidential matter.
2. The judge may exempt witnesses from disclosure of other professional secrets as well as of a trade secret if, even with observance of the security measures under Article 38, their interest in confidentiality outweighs the interest in disclosure of the party going forward with the proof.
Rivastigmine II, 239 F.R.D. at 354-55.
Notwithstanding this statutory scheme, the court concluded a judge could require a Swiss patent agent to disclose confidential information so long as the interest in disclosure outweighed the interest in confidentiality. Id. at 357. Specifically, the court noted that the statutes at best created a professional secrecy obligation since courts can still mandate disclosure, not an absolute evidentiary privilege akin to the American attorney-client privilege. Id. Applying this logic to the present case, it is likely that the Court will find that Swiss patent agents do not enjoy an attorney-client privilege akin to the American one, and therefore find the Swiss documents not privileged. But the state of the law in Switzerland is less clear than other countries, as the case law is divergent. For example, the court in Variable-Parameter Fixture Dev. Corp. v. Morpheus Lights Inc., found Swiss documents privileged:
[U]nder Swiss law, [the patent agent] could refuse to disclose only the facts that can be considered as trade or business secrets, but only as far as the secret cannot be preserved otherwise and the interest of keeping it secret outweighs the interest of the litigant to have the information disclosed to the court.
Variable-Parameter Fixture Dev. Corp. v. Morpheus Lights Inc., No. 90 Vic. 5593 (MGC), 1992 WL 203865, at *1 (S.D.N.Y. Aug. 12, 1992).
21 See Eisai Ltd. v. Dr. Reddy's Labs. Inc., 406 F. Supp. 2d 341, 342, 346 (S.D.N.Y. 2005).
22 See Rivastigmine II, 239 F.R.D. at 359.
23 Id.
24 Id.
25 Id.
26 Astra Aktiebolag v. Andrex Pharms. Inc., 208 F.R.D. 92, 100-01 (S.D.N.Y. 2002).
27 Id. at 101.
28 Id. at 101-02.
29 Id.at 102.
30 See, e.g., Golden Trade, S.r.L. v. Lee Apparel Co., 143 F.R.D. 514, 524 (S.D.N.Y. 1992).
31 Softview Computer Prods. Corp. v. Haworth Inc., No. 97 CIV. 8815 KMWHBP, 2000 WL 351411, at *11 (S.D.N.Y. Mar. 31, 2000) (stating that communications by "German patent agents are protected by the attorney-client privilege to the same extent as communications to [U.S.] attorneys.")
32 Santrade Ltd. v. General Elec. Co., 150 F.R.D. 539, 547 (E.D.N.C. 1993). And in Astra Aktiebolag, the district court maintained privilege finding that protecting communications from Astra's outside German counsel under German law would not seriously impinge on any significant policy of this forum. Astra Aktiebolag, 208 F.R.D. at 100.
33 Duplan Corp. v. Deering Milliken Inc., 397 F.Supp. 1146, 1170 (D.S.C. 1974) ("Doctors, surgeons and other health officers, as well as chemists, midwives and all other persons who are depositories, by their condition or profession or by temporary or permanent duties, of secrets which are entrusted to them, who, except in cases where the law obliges or authorizes them to be informers, shall have revealed such secrets, shall be punished by imprisonment of one month to six months and by a fine of 500 to 3,000 francs.").
34 Id.; see also McCook Metals L.L.C. v. Alcoa Inc., 192 F.R.D. 242, 256 (N.D. Ill. 2000) (holding that under French law, communications between patent agents and clients are confidential).
35 Bristol-Myers Squibb Co. v. Rhône-Poulenc Rorer Inc., No. 95 Civ. 8833(RPP), 1998 WL 158958, at *1 (S.D.N.Y. Apr. 2, 1998), mot. for recons. denied, 188 F.R.D. 189 (S.D.N.Y. 1999).
36 Id. at *2.
37 Id.
38 Id. at *3.
39 Commissariat a l'Engergie Atomique v. Samsung Elec. Co., 245 F.R.D. 177, 182 (D. Del. 2007).
40 Id. at 186.
41 Id. at 187.
42 Id.
43 Santrade Ltd. v. General Elec. Co., 150 F.R.D. 539, 546 (E.D.N.C. 1993)
44 Id. at 543.
45 Id.
46 Id. at 546.
47 Saxholm AS v. Dynal Inc., 164 F.R.D. 331, 338 (E.D.N.Y. 1996).
48 Willemijn Houdstermaatschaapij BV v. Apollo Computer Inc., 707 F. Supp. 1429, 1448 (D. Del. 1989).
49 In re Rivastigmine Patent Litig. (Rivastigmine I), 237 F.R.D. 69, 100 (S.D.N.Y. 2006).
50 Moreover, if case law is relied upon solely, there is a risk that rebuttal evidence may undermine that case's holding in case of a dispute. See Burroughs Wellcome Co. v. Barr Labs. Inc., 143 F.R.D. 611, 620 (E.D.N.C. 1992) (holding that, although privilege was established for Austrian patent attorneys, rebuttal evidence established the privilege did not extend to foreign clients).
51 AstraZeneca LP v. Breath Ltd., No. 08-1512 (RMB/AMD), 2011 WL 1421800, at *8 (D.N.J. Mar. 31, 2011).
52 Id.
53 See Susanna Norelid, Sweden, INT'L ASSOC. OF DEF. COUNSEL, http://www.iadclaw.org/UserFiles/file/17_28_Sweden.pdf (last visited Oct. 11, 2013).
Originally printed in Law360 (www.law360.com). Reprinted with permission. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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