Attorney-Client Privilege Remains Intact When Inadvertently Produced Invention Records Are Promptly Clawed Back

March 28th, 2018

The United States District Court for the Central District of California recently held attorney-client privilege applies to a company’s invention record reviewed by a committee including persons other than lawyers when the primary purpose is to obtain legal advice. Cal. Inst. of Tech. v. Broadcom Ltd., CV 16-3714-GW, slip op. at 5 (C.D. Cal. Mar. 19, 2018).  The court further held that waiver of the attorney-client privilege did not occur when the invention record was inadvertently disclosed and clawed backed during a deposition, reasoning the privilege holder promptly took reasonable steps to rectify the error. Id., slip op. at 5.

With regard to the finding of an attorney-client privilege, In re Spalding Sports Worldwide, Inc. provides the relevant guideposts for determining when attorney-client privilege protects an invention record. 203 F.3d 800 (Fed. Cir. 2000).  More specifically, in Spalding, the United States Court of Appeals for the Federal Circuit held that an invention record submitted to a corporate legal department primarily for the purpose of obtaining legal advice on patentability or legal services associated with the preparation of a patent application was protected by attorney-client privilege. Id. at 806.  In so holding, the Federal Circuit noted that “[i]nvention records are standard forms generally used by corporations as a means for inventors to disclose to the corporation’s patent attorneys that an invention has been made and to initiate a patent action.” Id. at 802 n.2.  Further, the Federal Circuit reasoned the inclusion of technical information or prior art in an invention record does not render the invention record, or portions thereof, discoverable because such information is generally necessary for providing legal advice on patentability. Id. at 806. Indeed, the Federal Circuit found no need to dissect an invention record and separately evaluate its components. Id.  Rather, “[i]t is enough that the overall tenor of the document indicates that it is a request for legal advice or services.” Id.

In contrast, invention records created primarily for business purposes may not be protected by attorney-client privilege.  For example, the United States District Court for the Eastern District of Texas held invention records undergoing multiple levels of business and technical review before being provided to outside counsel were not created primarily to obtain legal advice and, therefore, were not privileged. Raytheon Co. v. Cray, Inc., No. 2:15-CV-01554-JRG-RSP, 2017 U.S. Dist. LEXIS 85563, at *5 (E.D. Tex. June 5, 2017).

In Cal Tech., the court determined the subject invention record was privileged despite being submitted to a “Patent Review Committee” (PRC) including technical experts in addition to attorneys and inventors. Slip op. at 3.  In its briefing, plaintiff, California Institute of Technology, asserted that defendant, Broadcom Limited (Broadcom), failed to establish the invention record was privileged because the technical assessments made by Broadcom’s engineers serving on the PRC were business decisions and not legal decisions. Pl’s Resp. to Def’s Supplemental Submission Regarding Ex. 341 at 2, Cal. Inst. of Tech. v. Broadcom Ltd., CV 16-3714-GW (C.D. Cal. Feb. 16, 2018), ECF No. 432.  The court found this argument unpersuasive and concluded that privilege was unaffected by technical experts assisting attorneys in evaluating whether to pursue patent protection. Id., slip op. at 4.  Furthermore, while the invention record did not expressly state a request for legal advice, the court found such request to be implied and concluded that Broadcom’s invention record was protected by attorney-client privilege. Id.

Furthermore, with regard to the preserving of the attorney-client privilege, an inadvertent disclosure of a privileged document does not constitute waiver when the privilege holder meets certain requirements. See Fed. R. Evid. 502(b).  In particular, disclosure of a privileged document does not waive privilege when “(1) the disclosure is inadvertent; (2) the holder of the privilege or protection took reasonable steps to prevent disclosure; and (3) the holder promptly took reasonable steps to rectify the error . . . .” Fed. R. Evid. 502(b).  The third prong of Rule 502(b) may be satisfied when the privilege holder “objects immediately upon discovery of the inadvertent disclosure.” Luna Gaming-San Diego, LLC v. Dorsey & Whitney, LLP, No. 06-CV-2804-BTM, 2010 U.S. Dist. LEXIS 3188, at *13 (S.D. Cal. Jan. 13, 2010).

Additionally, even if the objection is not “immediate,” courts have held that privilege is not waived when a privilege holder discovers an inadvertent disclosure of privileged documents during a deposition and objects to the use of such privileged material during the same deposition. See, e.g., Valenzuela v. Union Pac. R.R. Co., CV-15-01092-PHX-DGC, 2016 U.S. Dist. LEXIS 176640, at *31-34 (D. Az. Dec. 21, 2016) (finding prompt reasonable steps taken when the privilege holder objected during the afternoon session of deposition to exhibits used in a morning session of the same deposition).  Furthermore, Rule 502(b) has been found satisfied when privilege was asserted during a deposition after counsel reviewed full versions of redacted documents presented earlier in the same deposition. See Datel Holdings Ltd. v. Microsoft Corp., C-09-05535-EDL, 2011 U.S. Dist. LEXIS 30872, at *4-5, *15-16 (N.D. Cal. Mar. 11, 2011).  Conversely, waiver has been found when a document presented in a deposition was not clawed back until two months later. See Skansgaard v. Bank of America, C11-0988-RJB, 2013 U.S. Dist. LEXIS 48176, at *8 (W.D. Wash. Mar. 6, 2013).

In Cal Tech., the privileged invention record was clawed back at the deposition during which the inadvertent disclosure was discovered. Slip op. at 5.  More specifically, a Broadcom engineer testified that one of the deposition exhibits was “sent to the internal IP committee at Broadcom in the hope of commissioning a patent.” Id., slip op. at 2.  Broadcom’s counsel permitted the engineer to answer just one more question before asking for a break to confer with the witness about the nature of the exhibit. Id.  Notably, Broadcom’s counsel called for the break only fifty seconds after the engineer’s remarks. Id., slip op. at 5.  Upon returning from the break, Broadcom’s counsel clawed back the privileged invention record. Id., slip op. at 2.  As such, the court found Broadcom’s steps to rectify the erroneous production reasonable and determined that the attorney-client privilege had not been waived. Id., slip op. at 5.

TAKEAWAY: Attorney-client privilege may protect invention records reviewed by a committee including persons other than lawyers or inventors so long as the primary purpose of the committee’s review is determining whether patent protection should be sought.  Additionally, if a privileged document, such as an invention record, is inadvertently produced, reasonable steps taken to rectify the inadvertent production may preserve the attorney-client privilege of such document.