A Texas Supreme Court case, In re Silver1, marks the latest development in the trend towards protecting communications between patent agents and their client as privileged communications. It follows a decision by the Federal Circuit in In re Queen’s University of Kingston in 20162 that recognized a new patent-agent privilege in federal courts, and the adoption of 37 C.F.R. §42.57 by the United States Patent and Trademark Office (“USPTO”) in 2017, which formally created a patent-practitioner privilege in proceedings at the USPTO. When considered in combination with this trend, the Texas Supreme Court’s opinion further evidences how patent agents and their clients may expect their communications to be treated. Further still, the In re Silver opinion may suggest that formalized privilege protection for foreign patent practitioners is on the horizon.
The case in In re Silver arose from a breach-of-contract action between an inventor and a company that acquired his patent3. During the course of discovery, the patent owner sought production of emails between the inventor and his registered patent agent who represented him before the USPTO and did so without working under the supervision of a licensed lawyer4. The inventor refused to produce the emails, asserting that they were privileged communications, and characterized two types of communications: those related to patent prosecution and those related to the inventor’s potential litigation with the patent owner, both of which would very likely be privileged if the communications were between the inventor and a lawyer. The patent owner moved the court to compel production of all communications5.
The trial court granted the patent owner’s motion and the inventor sought mandamus relief at the Texas Court of Appeals, asking it to withdraw the lower court’s order6. The appeals court denied the mandamus petition because the court understood the petition to ask the appeals court to create a new, independent patent-agent privilege, which the court stated it would not do as an intermediate court7.
On further appeal, the Texas Supreme Court held that a patent agents’ client may invoke attorney-client privilege. While the lower courts had framed the case as creating a new privilege, the Supreme Court of Texas considered whether the communications between the inventor and his patent agent were protected under the existing attorney-client privilege, which in Texas is codified under Texas Rule of Evidence 503(b):
1. General Rule. A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made to facilitate the rendition of professional legal services to the client:
a. between the client or the client’s representative and the client’s lawyer or the lawyer’s representative;
b. between the client’s lawyer and the lawyer’s representative;
c. by the client, the client’s representative, the client’s lawyer, or the lawyer’s representative to a lawyer representing another party in a pending action or that lawyer’s representative, if the communications concern a matter of common interest in the pending action;
d. between the client’s representatives or between the client and the client’s representative; or
e. among lawyers and their representatives representing the same client8.
Texas Rule of Evidence 503(a)(3) defines the term “lawyer” as “a person authorized, or who the client reasonably believes is authorized, to practice law in any state or nation.”9
The court analyzed whether the rule’s defi nition of “lawyer” could cover a patent agent, and more particularly whether patent agents are “authorized to practice law” in a state or nation10. The court looked to statutes, dictionary definitions, and the Texas State Bar Act to understand the rule’s use of the term “practice of law.”11These sources were compared with the types of activities that USPTO regulations explicitly permit patent agents to perform, namely “preparing… any patent application,” “representing a client” in various matters, and advising clients regarding “alternative forms of protection which may be available under state law.”12And, although not binding on the state court, the Texas Supreme Court considered the Federal Circuit’s decision in In re Queen’s University of Kingston and the US Supreme Court’s decision in Sperry v State of Florida ex rel. Florida Bar, which both found that patent agents engage “in the practice of law itself.”13
The Texas Supreme Court also considered whether patent agents are “authorized” to practice law in a state or nation. The court again cited Queen’s and Sperry, as federal authority recognized that registered patent agents engage in the authorized practice of law before the USPTO even though they are not licensed as lawyers14. Further, dictionary definitions and legislative history showed that the term “authorized” is broader than the term “licensed,” and Rule 503 does not require a licence.
Having found that patent agents “practice law” and that they are “authorized to do so,” the Texas Supreme Court found that patent agents fall within Rule 503’s definition of “lawyer.” The court, therefore, held that clients may invoke attorney-client privilege to protect their communications with patent agents15. The court further held that because a patent agent qualifies as a lawyer under Rule 503, then the patent agent does not need to be supervised by a licensed lawyer for privilege to apply; the privilege applies to patent agents independent of any relationship to a lawyer16. The court conditionally granted mandamus relief and remanded the case to allow in camera review of the emails in question17.
The issue before the Texas courts was a matter of state contract law, not federal patent law18. And while the Federal Circuit formally recognized a federal-law privilege for patent agents, states may reach different conclusions when addressing state law, as the lower Texas courts did19. This distinction between federal and state law fl ows from the US Supreme Court decision in Gunn v Minton, which held that state courts are permitted to hear cases that relate to, but do not involve, patents20. Such cases include the breach-of-contract action at the centre of In re Silver, and other cases that do not involve typical patent law issues like infringement or invalidity21. Th us, state courts can have a role in deciding issues that impact patent law, including patent-agent privilege.
The Texas Supreme Court’s decision has the potential to aff ect privilege for patent-agent-client communications in a majority of US states. Texas Rule of Evidence 503 – the statute interpreted as protecting patent-agent-client communications in In re Silver – is modeled aft er a version of proposed Federal Rule of Evidence 50322. And beyond Texas, 37 other states have adopted the same or a similar rule of evidence. While state supreme court decisions are binding only in their respective states, decisions from other states can be persuasive. As a result, the Texas Supreme Court’s decision may provide persuasive authority to extend existing attorney-client privilege to protect patent-agent-client communications in those states that have a similar rule of evidence.
As patent-agent privilege protections develop, the scope of protection remains an open question. In re Silver is the latest in a trend towards recognizing patent-agent-client communications as privileged. In 2016, the Federal Circuit’s decision in Queen’s – the same Federal Circuit case cited in In re Silver – garnered much enthusiasm for formally recognizing a new patent-agent privilege23. Thenn, in 2017, in the same week oral arguments were occurring in In re Silver, the USPTO issued 37 C.F.R. §42.57 and formally adopted a patent-practitioner privilege.
However, it is not yet clear whether the scope of the federal patent-agent privilege and the scope of the USPTO’s patent-practitioner privilege are the same. The Federal Circuit’s holding in Queen’s and the USPTO’s Rule appear to be closely related. Both limit the scope of privilege to communications regarding activities “necessary and incident” to a patent agent’s authorized practice before the USPTO24. Th us far, what is “necessary and incident” has largely been untested, and practitioners are watching to see if federal and state courts adopt a narrow or broad view of patent-agent privilege. To date, only one federal district court case has applied the new privilege and did so narrowly.
In TCL Communications Technology Holdings Ltd v Telefonaktienbolaget LM Ericsson, the Central District of California stated that Queen’s had “construed the patent agent privilege narrowly” and that “the scope of the patent agent privilege is necessarily narrower than the scope of the attorney-client privilege.”25But the court also acknowledged “there is substantial overlap with the type of patent prosecution activities and related communications that are possibly protected” by the two privileges26. Ultimately, the party asserting privilege did not meet its burden to show that the communications were not primarily business in nature and therefore, the court never explained the overlap or reached the question of whether the patent-agent’s activities were “reasonably incident” to practice before the USPTO27.
Nevertheless, comments published by the USPTO provide some guidance with regard to what activities are within the scope of privilege28. For example, the rules clarify that in addition to preparing and prosecuting patent applications, patent agents may provide validity opinions in contemplation of filing a request for reexamination29. The comments by the USPTO provide flexibility in defining a patent agent’s practice, and specifically recognize that the scope of authorized activities may change over time30. For example, because USPTO rules authorize patent agents to represent clients in other post-grant proceedings – i.e., post-grant reviews, inter partes review, and covered business method review – patent practitioners may reasonably expect that validity opinions regarding such proceedings would likewise be privileged31.
But what about patent-related opinions for litigation outside the USPTO? This question is still at issue in In re Silver. The disputed communications included some that related to patent prosecution and others that related to the strength of the inventor’s breach of contract case with the patent owner. The Texas Supreme Court’s opinion in In re Silver left open the possibility that the second category of documents could also be protected, explaining that “matters outside the agent’s authorized practice area might not be protected.”32 The court remanded the case for in camera review of the documents, so we do not yet know how broadly the Texas court will construe the patent agent’s “practice of law.”
The guidance available from the Federal Circuit and USPTO indicates that for federal law, a patent agent’s litigation opinion may not be privileged. The Federal Circuit in Queen’s, and the USPTO in regulatory comments, have both stated that “communications with a patent agent who is offering an opinion on the validity of another party’s patent in contemplation of litigation or for the sale or purchase of a patent, or on infringement” is not within the scope of privilege33. Th us, while the Texas trial court could defi ne its own standard, the Federal Circuit and USPTO suggest that a validity opinion not related to a proceeding before the USPTO is not protected by patent-agent privilege.
Until the limits of patent-agent privilege are further defi ned, the relevant scope appears to at least cover all prosecution and quasi-litigation activities that occur before the USPTO. However, patent agents practising without the supervision of a licensed lawyer may be advised to take caution in providing legal opinions that are not closely related to matters before the USPTO, as those communications may not be protected under current patent-agent privileges34.
Though much of the conversation surrounding expanded privilege protection has centered on US patent agents, foreign patent practitioners have not been completely ignored. The USPTO’s patent-practitioner privilege expressly provides coverage for a “foreign patent practitioner,” defi ned as:
“a person who is authorized to provide legal advice on patent matters in a foreign jurisdiction, provided that the jurisdiction establishes professional qualifi cations and the practitioner satisfi es them.”35
In fact, the only difference between the proposed rule and the rule ultimately adopted was a clarification that authorized foreign patent practitioners are entitled to patent-practitioner privilege in proceedings before the USPTO36. The adopted USPTO rule further adds that “this rule applies regardless of whether [the foreign] jurisdiction provides privilege or an equivalent under its laws.”37
USPTO rules and guidance are not binding in US courts. Nevertheless, it may prove to be a persuasive authority, encouraging courts to formally recognize protections for foreign patent practitioners in federal courts. And the same may be true for state courts. The Texas Supreme Court, in finding patent-agent privilege, specifically relied on the Texas Rules of Evidence that expressly defi ne a “lawyer” as a person “authorized to practice law by a state or nation.”38The court noted that the term “authorized” means “sanctioned by authority” or “approved” and found that a registered patent agent’s authority ultimately comes from the US, which is “one of the sovereigns” identified by the rule39. Th us, if a party can show that a foreign sovereign nation has “authorized” a practitioner to practice law, an argument can be made that according to In re Silver, that practitioner is within the definition of “lawyer” in Texas’s Rule 503.
It is less clear whether foreign patent practitioners’ client communications will be protected in federal courts. In the past, foreign-patent-practitioner-client communications have not always been protected40. But changes in US law bolstering patent-agent privilege may signal a willingness to likewise protect communications with foreign patent practitioners41. The Federal Circuit in Queen’s was persuaded, in part, to create a new patent-agent privilege because patent agents are authorized to practice before the USPTO42. The requirements for many foreign patent practitioners, including practitioners before the European Patent Office and within various European countries, are comparable to the requirements highlighted and relied on by the Federal Circuit in Queen’s43. The court was also motivated by policy reasons, explaining that a client has a reasonable expectation that legal advice related to a patent will be privileged44. This justification may equally apply to foreign patent legal advice.
While there is potential protection for foreign patent practitioners in US state and federal courts, until it is expressly clarified, foreign patent practitioners should continue to take precautions in the event their client communications could eventually be produced in the course of US litigation.
The Texas Supreme Court’s recent In re Silver decision evidences a continued shift towards broader protection for patent-practitioner- client communications. Although questions remain with respect to the scope of these protections, patent practitioners may be able to enjoy more confidence that their client communications will be protected from discovery in US courts and before the USPTO. Stay tuned as we continue to follow this evolving area of US law.
1 540 S.W.3d 530 (Tex. Sup. Ct. 2018).
2 820 F.3d 1287 (Fed. Cir. 2016).
3 In re Silver, 540 S.W.3d at 532.
4 Id. at 533.
5 Id. at 533.
6 Id. at 533; In re Silver, 500 S.W.3d 644, 646 (Tex.App. 2016).
7 In re Silver, 540 S.W.3d at 533; In re Silver, 500 S.W.3d at 645.
8 Tex. R. Evid. 503(b).
9 Tex. R. Evid. 503(a)(3).
10 In re Silver, 540 S.W.3d at 533-34.
11 Id. at 535-36.
12 Id. (citing 37 C.F.R. §11.5(b) (2017)).
13 Id. (citing Queen’s, 820 F.3d at 1302 and Sperry v State of Florida ex rel. Florida Bar, 373 U.S. 379 (1963)).
14 Id. at 537-38.
15 Id. at 538-39.
18 See id. at 533.
19 See In re Silver, 500 S.W.3d at 646-47.
20 See 568 U.S. 251, 264-65 (2013).
21 See id. at 257.
22 Rules of Evidence for United States Courts and Magistrates, 56 F.R.D. 183, 236 (1972) (including the definition: “A ‘lawyer’ is a person authorized, or reasonably believed by the client to be authorized, to practice law in any state or nation.”) (emphasis added).
23 While the Federal Circuit and the Texas Supreme Court ultimately took different approaches in establishing privilege protections – the Federal Circuit creating an entirely new patent-agent privilege and the Texas Supreme Court expanding existing attorney-client privilege under Rule 503 – the two courts applied similar rationales to find patent agents are entitled to at least some privilege protection. In Queen’s, like In re Silver, the Federal Circuit found that a new patent-agent privilege should be created because: (1) patent agents hold unique roles performing activities the Supreme Court has construed as constituting the practice of law; and (2) because Congress has authorized that practice. The court in Queen’s also considered the current realities of patent litigation that support a patent-agent privilege. See Queen’s, 820 F.3d at 1294-1302.
24 Queen’s, 820 F.3d at 1301-02 (citing 37 C.F.R. §11.5(b)); 37 C.F.R. §42.57(c).
25 SACV 14-00341 JVS (ANx), 2016 WL 6921124 (C.D.Cal. May 3, 2016).
26 TCL Comm’ns, SACV 14-00341 JVS (ANx), 2016 WL 6921124.
28 See Changes to Representation of Others Before the USPTO, 73 Fed. Reg. 47,650 (Aug. 14, 2008) (related to 37 C.F.R. pt. 11) (hereinafter “Representation Before the USPTO”).
29 See id. at 47,670.
30 See id. (“The scope of activities involved in practice of patent law before the Office is not necessarily finite, and is subject to change as the patent statute changes and rules are promulgated to [sic] implement statutory changes.”).
31 See 37 C.F.R. §42.10.
32 In re Silver, 540 S.W.3d at 539 (emphasis added).
33 Queen’s, 820 F.3d at 1301-02 (Fed. Cir. 2016); see also Representation Before the USPTO, 73 Fed. Reg. at 47,670.
34 Note that in the US, most patent agents work in law firms or otherwise work in connection with licenced attorneys engaged in practice for their client. As a result, in most situations, patent agents may be protected under traditional attorney-client privilege as agents of the attorney in representing the client.
35 37 C.F.R. §42.57(b).
36 Compare Rule Recognizing Privilege Communications Between Clients and Patent Practitioners at the Patent Trial and Appeal Board, 81 Fed. Reg. 71,653, 71,657 (Oct. 18, 2016) (to be codified at 37 C.F.R. pt. 42) with 37 C.F.R. §42.57.
37 37 C.F.R. §42.57(b).
38 See supra Section I(B); see also In re Silver, 540 S.W.3d at 536-37.
39 Id. at 538.
40 Compare Duplan Corp. v Deering Milliken Inc., 397 F. Supp. 1146, 1170 (D.S.C. 1974) (interpreting the French Penal Code and finding French patent agent communications privileged) with Bristol-Myers Squibb Co. v Rhone-Poulenc Rorer, Inc., 188 F.R.D. 189, 200 (S.D.N.Y. 1999) (interpreting the same French Penal Code and finding French patent agent communications not privileged).
41 See USPTO, Summary of Roundtable and Written Comments, available at www.uspto.gov/sites/default/files/ documents/Summary%20of%20Privileged%20Communication%20 Roundtable.pdf (“Privilege Report”).
42 Queen’s, 820 F.3d at 1301-02.
43 See, e.g., Regulation on the European qualifying examination for professional representatives – Official Journal EPO 2/2014, www.epo.org/law-practice/legaltexts/official-journal/2014/etc/se2/2014-se2.pdf; European Patent Institute “The Patent Profession in the EPC Contracting States,” http://patentepi.com/assets/uploads/documents/educationtraining/140218_Table_of_Patent_Profession_final.pdf; see also Queen’s, 820 F.3d at 1298-99.
44 Queen’s, 820 F.3d at 1298.
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