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July Newsletter

July 2012
Colorado Bar Association
Intellectual Property Section
In this issue...
Upcoming IP Section Events—Register Now!

IP Section Lunch: A Conversation about IP Legislation

Date and Time: Noon on Thursday, July 12

Date and Time: Location: Denver Chop House

Speakers: Aaron Cooper, Chief Counsel for Intellectual Property and Antitrust to Senator Leahy on the Senate Judiciary Committee

As lead intellectual property counsel, Aaron Cooper had primary responsibility for many important IP-related bills enacted over the past two Congresses, including the Leahy-Smith America Invents Act. Aaron will share his behind-the-scenes view into the shaping and reshaping (and reshaping again) of IP legislation, and he will provide insight into what we should all expect to see from the legislative branch in the coming years. Prior to serving for Senator Leahy, Aaron was legal counsel to Senator Sarbanes (2005–2006), an associate at Covington & Burling (2001–2005), and law clerk for Judge Tjoflat on the United States Court of Appeals for the Eleventh Circuit (2000–01).

RSVP by calling Melissa at 303-860-1115 ext. 727 or by emailing lunches@cobar.org

Social Event—Take the IP Section Out to the Ballgame!

Date and Time: Early September Night Game
Location: Coors Field

No speakers. No talking shop. Just baseball, beer, and fun. More details on time, date, cost, and registration coming soon.

Past IP Section Events

Luck/Unluck of the Draw: An Empirical Study of Examiner Allowance Rates

This month’s IP Section lunch at the Denver Chophouse featured Dr. Shine Tu, formerly a patent attorney with Foley & Lardner and presently an Associate Professor of Law at West Virginia University. For the past year, Dr. Tu, along with various colleagues and students, conducted a massive empirical examination of patent prosecution by analyzing the prosecution behavior of every patent issued in the last ten years. Among other interesting findings, Dr. Tu’s research shows that applicants receive allowances much more often and with much less prosecution when their applications happen to be assigned to primary examiners than when assigned to secondary examiners. More findings and details of Dr. Tu’s research can be found at here and in a forthcoming issue of the Stanford Technology Law Review.

Other News

Denver Selected as USPTO Satellite Office Location

In addition to the satellite office that just opened on July 13 in Detroit, MI, the USPTO announced plans to open another three regional satellite offices in or around Dallas, TX, Denver, CO, and Silicon Valley, CA. The four offices will function as hubs of innovation and creativity, helping protect and foster American innovation in the global marketplace, helping businesses cut through red tape, and creating new economic opportunities in each of the local communities. After the announcement, acting Secretary Blank and Under Secretary Kappos traveled to Denver to meet with local businesses, entrepreneurs, and public officials about the new office openings. In addition to raising the profile of the Colorado IP bar, the Denver patent office is expected to bring hundreds of jobs, hundreds of millions of dollars in revenue, and other exciting benefits to the state.

Special thanks go out to John Posthumus, Michael Drapkin, and Tom Franklin, all members of the CBA IP Section, for their tireless efforts over the past five years and incredible success in bringing the PTO to Denver, and raising the profile of our IP community on the national stage.

IP Section Website

Don’t forget to check out the CBA IP Section website. Please refer to it often for updates on news and events.
The CBA has posted online member directories for each practice section. Click here to see our directory.
Our contact at the CBA is Melissa Nicoletti, Director of Sections and Committees. She can be reached at 303-824-5321, or melissan@cobar.org.

IP Section Blog

The IP Section blog is at ipsectioncolorado.org. You can find news from and links to other Colorado and national IP resources, connect with other IP Section members, provide input to Section Officers, and get up-to-date information about IP Section activities. Be sure to register to get the full benefit of the blog.

Classified Advertising

Furniture Row Legal Position

Privately held, financially strong Denver-based group of companies with diverse interests including retail, manufacturing, real estate, and transportation, seeks an organized, personable lawyer with exceptional communication, writing, and legal skills for a new Associate General Counsel position in a nine person fast-paced legal department. The successful applicant will have ten to twenty years of experience in patent and trademark prosecution, copyrights, and licensing, and a willingness to assist in other legal areas as needed. Salary commensurate with experience. Resumes may be sent by email only to the attention of General Counsel, Furniture Row Legal Department at janine.wood@furniturerow.com.

Subject to editorial review, classified advertisements are printed by the IP Section free of charge and will run for three months, unless we receive a request to drop or continue running the ad. Submit or resubmit your ad by e-mailing the proposed text to Danny Sherwinter at dsherwinter@mfblaw.com.

Taped IP Section Luncheon Meetings

CBA-CLE tapes the IP Section Luncheons for later access and CLE credit. The following IP Section meetings are now available online:

After All the Waiting, What Exactly Did Bilski Do?… and Other Patent—Segment 1 of Half-Day, Half-Year IP Fall Update 2010

Do “Nooks and Crannies” Matter? Trade Secret Issues in the News—Segment 3 of Half-Day, Half-Year IP Fall Update 2010

Emerging Trends and Strategies in Reexamination

Call for Suggestions, Ideas, and Articles

Luncheon Program Topics and Speakers

The IP Section Officers are also soliciting your suggestions and ideas for topics and speakers for our Luncheon programs for 2013. Please forward any comments you may have to Danny Sherwinter or our Programs Committee Chairperson, John Kennedy.

Articles for The Colorado Lawyer

The IP Section is in the process of compiling and evaluating articles to publish in The Colorado Lawyer this coming year. If you have an interest in submitting an IP-related article for TCL, please contact Danny Sherwinter. We encourage individuals who may be on their own but nonetheless would like to team up with a senior or junior practitioner to contact us so we can help facilitate that relationship.

IP Section Newsletter

Subject to editorial discretion and review, the IP Section Newsletter is open to the submission of short articles and columns on IP topics of interest. If you are interested in contributing, please contact Danny Sherwinter.

Recently Filed U.S.D.C. Colorado Cases
Caption Type Date Filed Case Number Judge Filing Attorneys
Malibu Media, LLC v. Felitti et al Copyright 6/12/12 1:2012-cv-01522 Judge Martinez, referred to Magistrate Judge Hergarty Jason Aaron Kotzker Kotzker Law Group
Broadcast Music, Inc. et al v. H&W Incorporated et al Copyright 6/18/12 1:2012-cv-01576 Judge Jackson Ian L. Saffer Kilpatrick Townsend & Stockton, LLP
Boatman v. United States Racquetball Association Copyright 6/19/12 1:2012-cv-01590 Judge Krieger, referred to Magistrate Judge Shaffer Evan Andrew Andersen Carolyn E. Wright, LLC
Patrick Collins, Inc. v. John Does 1–23 Copyright 6/24/12 1:2012-cv-01641 Judge Krieger, referred to Magistrate Judge Boland Jason Aaron Kotzker, Kotzker Law Group
Patrick Collins, Inc. v. John Does 1–32 Copyright 6/24/12 1:2012-cv-01642 Judge Arguello, referred to Magistrate Judge Hegarty Jason Aaron Kotzker, Kotzker Law Group
Patrick Collins, Inc. v. John Does 1–18 Copyright 6/24/12 1:2012-cv-01643 Judge Krieger, referred to Magistrate Judge Hegarty Jason Aaron Kotzker, Kotzker Law Group
Brownell et al v. Waggoner-Patton et al Copyright 7/10/12 1:2012-cv-01789 Judge Brimmer, referred to Magistrate Judge Shaffer Robert Michael Horowitz, Horowitz & Burnett, P.C.
Textile Network, Inc. v. Gerald Shcwartz, Inc. Patent 6/13/12 1:2012-cv-01536 Judge Jackson Benjamin Baughman Lieb, Shridan Ross, P.C.
Recognicorp, LLC v. Liberty Media Corporation et al Patent 7/9/12 1:2012-cv-01771 Judge Krieger, referred to Magistrate Judge Shaffer John R. Posthumus, Sheridan Ross, P.C.
Thule Organization Solutions, Inc. v. Merkury Innovations LLS Patent 7/11/12 1:2012-cv-01809 Judge Jackson Ian Richard Walsworth, Sheridan Ross, P.C.
Big O Tires, LLC v. Ken’s Enterprises, Inc. et al Trademark 6/12/12 1:2012-cv-01511 Judge Brimmer, referred to Magistrate Judge Tafoya Harold R. Bruno, III, Robinson Waters, & O’Dorisio, P.C.
Wolf Robotics, LLC v. Fleet Service Corporation Trademark 6/14/12 1:2012-cv-01544 Chief Judge Daniel, referred to Magistrate Judge Boland J. Mark Smith Pendleton, Wilson Hennessey & Crow, P.C.
ZO Skin Health, Inc. v. Advanced Skin Care, LLC et al Trademark 6/18/12 1:2012-cv-01584 Judge Krieger, referred to Magistrate Judge Hegarty Carolyn J. Fairless, Wheeler Trigg O’Donnell, LLP
Epitouran, LLC v. Cooking Vacations, LLC Trademark 7/10/12 1:2012-cv-01785 Judge Martinez, referred to Magistrate Judge Tafoya Katherine Anne Keating, Bryan Cave LLP
Wolf Robotics, LLC v. Blue WOlf Enterprises, Inc. Trademark 7/11/12 1:2012-cv-01806 Judge Martinez, referred to Magistrate Judge Boland William W. Cochran, Cochran Freund & Young, LLC

Please email Danny Sherwinter at dsherwinter@mfblaw.com with any interesting Colorado District Court IP decisions or IP news involving Colorado Companies.

IP Law Developments from BNA

Patents

Third Circuit Says Reverse Payments In Drug Patent Cases Presumptively Illegal

In re K-Dur Antitrust Litigation, 3d Cir., No. 10-2077, 7/16/12

Key Development: In what antitrust experts are calling a landmark decision, the Third Circuit finds reverse payments in drug patent cases are presumptively illegal.

Next Steps: Experts say Supreme Court is likely to take up the case.

By Dana A. Elfin

A reverse payment settlement between a branded and generic drug manufacturer is prima facie evidence of an unreasonable restraint of trade, the U.S. Court of Appeals for the Third Circuit ruled July 16 (In re K-Dur Antitrust Litigation, 3d Cir., No. 10-2077, 7/16/12).

In its ruling, which some antitrust experts are already calling a “landmark” decision, the court reversed the decision of a New Jersey federal trial court in a case involving the high blood pressure medication K-Dur 20.

Pay-for-delay or reverse payment settlements feature payments from patent-owning, brand-name drug manufacturers to generic drug manufacturers with the agreement by the latter not to challenge the patents’ validity. As a result, the brand maker is able to delay competition from generic drugs.

Such settlements have been challenged in the courts as anti-competitive by the Federal Trade Commission and by drug payers, such as employers, benefit funds, and drugstore chains. Circuit courts are split on the issue, but recent decisions have generally rejected the antitrust challenges. The Third Circuit’s decision was against that trend.

Judge Dolores Korman Sloviter, writing for the court panel, said that patent holders “may attempt to rebut the prima facie case by demonstrating that the reverse payment offers a competitive benefit that could not have been achieved in the absence of a reverse payment.”

This possible defense “attempts to account for the—probably rare—situations where a reverse payment increases competition,” she said.

For example, the judge wrote, “a modest cash payment that enables a cash-starved generic manufacturer to avoid bankruptcy and begin marketing a generic drug might have an overall effect of increasing the amount of competition in the market.”

Class Action Revived

The appeals court’s decision reinstates a class action lawsuit brought by private party direct purchasers against Schering-Plough Corp. (now part of Merck & Co.), and the generic drug companies Upsher-Smith and ESI, over the companies’ patent settlements over the blood pressure treatment K-Dur 20 (potassium chloride).

The appeals court said that the drug companies must show that the reverse payment patent settlement has pro-competitive effects in order not to run afoul of antitrust laws. In 2010, Judge Garrett E. Brown Jr. of the U.S. District Court for the District of New Jersey dismissed the private payers’ class action, finding that the patent settlements between the branded and generic drug companies over K-Dur 20 did not violate antitrust laws (82 PTCJ 159, 6/3/11).

“The decision is probably the second most important health care decision in many years, eclipsed only by the Supreme Court’s recent decision on the constitutionality of PPACA [the Patient Protection and Affordable Care Act],” James M. Burns, an antitrust attorney in the Washington, D.C., office of Dickinson Wright, told BNA July 16.

And David A. Balto, an antitrust lawyer in Washington who formerly served as an FTC policy official, told BNA July 16, “This is a landmark decision that clarifies why these pay-for-delay deals violate mainstream antitrust law.

Win for FTC

The panel’s ruling is a huge win for FTC, which filed an amicus brief in the case urging the appellate court to reverse the district court’s K-Dur decision (82 PTCJ 159, 6/3/11). The FTC argued that the district court’s analysis conflicted with basic antitrust principles, as well as patent law and the policies of the Hatch-Waxman Act.

In a July 16 statement, FTC Chairman Jon Leibowitz praised the ruling, saying “the Third Circuit Court of Appeals seems to have gotten it just right: These sweetheart deals are presumptively anticompetitive.”

While the FTC consistently has taken the position that pay-for-delay settlements are presumptively anti-competitive, up to this point, the commission had little luck in convincing courts of that position. Indeed, most courts have held that the right to enter into reverse payment agreements falls within the terms of the exclusionary grant conferred by the branded drug manufacturer’s patent.

Prior to the Third Circuit panel’s decision, only one reverse payment deal—addressed by two district courts—was ruled an antitrust violation, by the U.S. Court of Appeals for the Sixth Circuit, in In re Cardizem CD Antitrust Litigation, 332 F.3d 896 (6th Cir. 2003); and by the District of Columbia Circuit in Andrx Pharmaceuticals Inc. v. Biovail Corp., 256 F.3d 799 (D.C. Cir. 2001) (see 68 PTCJ 665, 10/15/04).

More recently, circuit courts have ruled against the FTC, allowing such settlements unless they exceeded the scope of the patent’s protection:

  • the 11th Circuit in Schering-Plough Corp. v. Federal Trade Commission, 402 F.3d 1056, 92 USPQ2d 1545 (11th Cir. 2005) (69 PTCJ 502, 3/18/05);
  • the Second Circuit in In re Tamoxifen Citrate, 429 F.3d 370, 77 USPQ2d 1705(2d Cir. 2005)(71 PTCJ 34, 11/11/05); and
  • the Federal Circuit in In re Ciprofloxacin Hydrochloride Antitrust Litigation, 544 F.3d 1323, 88 USPQ2d 1801 (Fed. Cir. 2008) (76 PTCJ 894, 10/24/08).

Supreme Court Review Likely

The FTC had been actively seeking to try to create a circuit split so that the U.S. Supreme Court would have no choice but to resolve it, and experts agreed that the high court is highly likely to be the ultimate arbiter in the case.

“The case immediately becomes ‘one to watch’ for the Supreme Court’s next term,” Burns said, adding that “the ruling seems to present a circumstance where the Supreme Court is virtually compelled to accept the case and create a uniform rule on reverse payments.”

Richard Samp, chief counsel for the Washington Legal Foundation, a free enterprise group that filed a brief urging affirmance of the district court’s dismissal of the suit, agreed. “Because the decision conflicts with decisions from the Second, Eleventh, and Federal Circuits, the U.S. Supreme Court is highly likely to review today’s decision,” Samp said in a July 16 statement.

Samp said the Third Circuit’s decision “fails to account for the patent law’s inherently anticompetitive nature; Congress has determined that society benefits when inventors are provided monopoly profits for a finite number of years, thereby encouraging innovation.” Indeed, Samp said, “So long as a patent settlement does not prevent competition for a period that exceeds the life of a patent, the antitrust laws should be deemed inapplicable.”

Generic Drug Industry Response

Ralph G. Neas, president and chief executive of officer of the Generic Pharmaceutical Association in Washington, D.C., echoed Samp’s point.

In a July 16 statement, Neas said, “GPhA believes the Court’s decision is inconsistent with previous federal court rulings, which have time and again found patent settlements to be a lawful and valuable tool for bringing affordable medicines to market sooner than otherwise would be possible,” he said. And he added, “Pro-consumer patent settlements have never prevented competition beyond a patent’s expiration. Indeed, they have resulted in making lower-cost generics available months and even years before patents have expired, saving consumers billions of dollars.”

In contrast, Balto lauded the decision as one that “will finally reverse the past decade of misguided decisions that have cost consumers billions in higher drug prices.”

Judge Thomas I. Vanaskie and Judge Lawrence F. Stengel of the U.S. District Court for the Eastern District of Pennsylvania, sitting by designation, joined the opinion.

David Francis Sorensen of Berger & Montague, Philadelphia, and Steve D. Shadowen of Hangley Aronchick Segal Pudlin & Schiller, Harrisburg, Pa., represented the class challenging the agreement. John W. Nields Jr. of Covington & Burling, Washington, D.C., represented the drug companies. Malcolm E. Stewart of the Office of Solicitor General, Department of Justice, Washington, D.C., argued on behalf of the government.

Legislation/Trade Secrets

Kohl Introduces Legislation Seeking to Create Federal Jurisdiction Over Trade Secrets Thefts

S. 3389: Protecting American Trade Secrets and Innovation Act of 2012 (Sponsor: Sen. Herbert H. Kohl (D-Wis.))

Key Development: Introduced July 17.

What Does It Mean?: Creates federal jurisdiction for civil claims of misappropriation of trade secrets in international contexts or when nationwide service of process is needed.

Next Steps: Referred to the Senate Committee on the Judiciary.

By Anandashankar Mazumdar

A bill introduced July 17 in the Senate would amend the U.S. criminal code to extend federal jurisdiction over civil claims of theft of trade secrets, a matter that up to now has been governed largely by state law.

The Protecting American Trade Secrets and Innovation Act of 2012 (S. 3389), sponsored by Sen. Herbert H. Kohl (D-Wis.), would amend 18 U.S.C. Chapter 90, to allow potential victims of economic espionage or theft of trade secrets to bring claims in federal court if the case would require nationwide service of process or if the alleged misappropriation crosses national borders.

“Stolen trade secrets cost American companies billions of dollars each year and threaten their ability to innovate and complete globally,” according to a statement by Kohl upon his introduction of the bill. “Our bill ensures that companies have the most effective and efficient ways to combat trade secret theft and recoup their losses, helping them to maintain their global competitive edge.”

Kohl noted that the Economic Espionage Act of 1996 provided for criminal prosecution under the federal law for economic espionage and trade secret theft. However, Kohl said, a civil remedy is necessary to “complement the criminal enforcement of economic espionage and State trade secret laws.”

Having to bring civil claims in state courts “under a patchwork of State laws,” represents a hindrance in “major trade secret cases,” he said. S. 3389 would limit federal jurisdiction to cases in which a plaintiff certifies that there is “either a substantial need for nationwide service of process or the misappropriation of trade secrets from the U.S. to another country.”

Furthermore, he said, the bill would “help fill a gap in Federal intellectual property law by providing legal protections for non-patentable, non-copyrightable innovations, on the condition that the owner of the innovation has taken reasonable measures to keep the innovation a secret.”

The bill would allow a plaintiff alleging misappropriation of trade secrets to seek pre-judgment injunctive relief. Courts would also be empowered to issue seizure orders to prevent the destruction of evidence.

Provisions

The bill would amend 18 U.S.C. §1836 to allow those claiming to be victims of economic espionage under 18 U.S.C. §1831, or theft of trade secrets under 18 U.S.C. §1832, to bring a civil action. It would also create a civil cause of action for “a misappropriation of a trade secret that is related to or included in a product that is produced for or placed in interstate or foreign commerce.”

Federal courts would be empowered to issue seizure orders upon ex parte application by a party. Such orders could require retention of property, the making of copies, or protection of confidential, private, proprietary, or privileged information.

Remedies available upon resolution of a claim would include injunctive relief, protective orders, reasonable royalties, damages for actual loss, damages for unjust enrichment, and enhanced damages for willful or malicious misappropriation.

If a court were to find bad faith litigation tactics or willful and malicious misappropriation, it could award attorneys’ fees to the prevailing party. The bill would also insert definitions of “misappropriation” and “improper means” in 18 U.S.C. §1839.

The bill has been referred to the Senate Committee on the Judiciary, of which Kohl is a member.

Other Pending Trade Secrets Legislation

In March 2011, Kohl introduced the Economic Espionage Penalty Enhancement Act (S. 678), which would increase penalties for misappropriation of trade secrets for the benefit of foreign entities (81 PTCJ 746, 4/8/11).

The bill would increase from 15 to 20 years the maximum penalty provided for economic espionage under the Economic Espionage Act of 1996, 18 U.S.C. §1831(a). S. 678 got the Judiciary Committee’s stamp of approval in December (83 PTCJ 214, 12/16/11).

A bill similar to S. 678 was recently introduced in the House of Representatives (84 PTCJ 395, 7/13/12). The Foreign and Economic Espionage Penalty Enhancement Act of 2012 (H.R. 6029) was sponsored by Rep. Lamar S. Smith (R-Texas), the chairman of the House Judiciary Committee.

H.R. 6029 was introduced June 27 and favorably reported out of committee on July 10 (84 PTCJ 393, 7/13/12).

The Smith bill would increase the maximum fine from $500,000 to $5 million. However, it differs slightly from the Kohl bill.

S. 678 would direct the U.S. Sentencing Commission to consider amending its guidelines to provide for enhanced penalties if a person convicted for misappropriation “intended that the offense would benefit a foreign government, foreign instrumentality, or foreign agency.” It also would urge the Sentencing Commission to set minimum sentences for transmission of trade secrets overseas or for economic espionage.

H.R. 6029, on the other hand, would directly amend the relevant statute by striking out the current maximum penalty of $10 million for such a conviction and inserting “not more than the greater of $10,000,000 or three times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided.”

Patents/Attorney-Client Privilege

Fairness Balancing Applies to Attorney-Client Privilege Waiver in Patent Opinion Disclosure

Wi-LAN Inc. v. LG Electronics Inc., Fed. Cir., No. 2011-1626, 7/13/12

Case Summary: District court erred in assuming that pre-litigation disclosure of an opinion letter waives attorney-client privilege.

Key Takeaway: When a patent owner discloses an attorney’s patent infringement opinion to a purported infringer, any waiver of privilege should be limited by fairness balancing.

By Tony Dutra

A patent owner’s pre-litigation disclosure of its attorney’s infringement opinion required waiving attorney-client privilege, but the waiver should be limited to preventing unfair prejudice against the infringement defendant, the U.S. Court of Appeals for the Federal Circuit ruled July 13 (Wi-LAN Inc. v. LG Electronics Inc., Fed. Cir., No. 2011-1626, 7/13/12).

The court reversed a lower court’s sanctions against Kilpatrick, Townsend & Stockton for failing to comply with a magistrate judge's discovery order.

The appeals court’s decision resulted from interpreting the likely holding of the U.S. Court of Appeals for the Ninth Circuit, which has not yet ruled on the issue: whether an express, extrajudicial disclosure waives the privilege entirely, or whether the lower court should conduct “fairness balancing” to limit the waiver.

One member of the panel agreed with the decision “with doubt,” expressing skepticism about the majority's confidence in predicting how the Ninth Circuit would rule.

Law Firm Fights Privilege Waiver

Tri-Vision Electronics Inc. received a patent (5,828,402) related to V-Chip technology that enables parents to block television programming based on program content.

Tri-Vision had a license with digital television (DTV) manufacturer LG Electronics Inc., but at some point after Tri-Vision assigned the patent to Wi-LAN Inc., LG determined that it was not practicing the patent technology and stopped paying royalties.

Wi-LAN intentionally disclosed to LG a Kilpatrick Townsend opinion letter that concluded LG had infringed and owed royalties. When LG continued its nonpayment, Wi-LAN sued for patent infringement by LG’s DTV receivers in the U.S. District Court for the Southern District of New York.

LG served a subpoena on Kilpatrick Townsend, in Palo Alto, Calif., for documents and testimony related to the subject matter of the opinion letter.

Kilpatrick Townsend moved the U.S. District Court for the Northern District of California to quash the subpoena. Magistrate Judge Paul Singh Grewal refused to do so, ordering the law firm to disclose “all communications and work product related to the subject matter covered by the Townsend [opinion] Letter.”

The firm continued to ignore the request and the district court found it in contempt. The court entered sanctions in the amount of LG’s costs and fees.

Kilpatrick Townsend appealed the contempt sanctions.

Separately, as to the merits of the case litigated in New York, the court found that LG was not liable for infringement. Wi-LAN has appealed that decision to the Federal Circuit. No. 2012-1273 (Fed. Cir., appeal filed March 20, 2012).

Ninth Circuit Would Do Fairness Balancing

Senior Judge Raymond C. Clevenger III acknowledged that the Federal Circuit must apply the law of the Ninth Circuit to the question at issue here, and that its sister circuit has precedent indicating that “when a client discloses to another person the content of a privileged attorney communication, the resulting privilege waiver may extend beyond the communication itself to other related matter.”

However, the court said that Fed. R. Civ. P. 502(a) and recent rulings in other circuits suggest “fairness balancing” to determine the extent of the waiver. Though the Ninth Circuit has not yet ruled on a case similar to the disposition of the instant case, the court said, “We conclude that the Ninth Circuit would find fairness balancing to be required.”

The Federal Circuit determined that the Ninth Circuit has, in at least three other cases, referred favorably to a Second Circuit case, Auersperg ex rel. von Bulow v. von Bulow, 828 F.2d 94 (2d Cir. 1987). In that case, the court said, fairness led the Second Circuit to rule that Claus von Bulow’s extrajudicial disclosure—he allowed his criminal case attorney Alan Dershowitz to include portions of their communications in the book Reversal of Fortune—did not allow for broad discovery in a subsequent civil action.

Though the Ninth Circuit’s approval of von Bulow was clearly dictum in one case, the court said, “in light of our duty to predict how the Ninth Circuit would resolve this appeal, it is persuasive dictum. It indicates that the logical path we have laid out herein, the path leading through von Bulow‘s fairness inquiry, is headed in the right direction.”

Though the court acknowledged that decisions of the Ninth and other circuits that applied fairness balancing—five other circuits were cited—often relate to disclosures during litigation, it said that the Ninth Circuit “has never set forth, either expressly or inherently, any rule barring fairness’s application to extrajudicial disclosures.“

Dig at Law Firm in Wrap-Up

The court thus vacated the lower court’s orders related to the scope of waiver, including the contempt sanctions. It ordered the district court to consider “whether LG would be unfairly prejudiced by Wi-LAN’s assertion of privilege against discovery into attorney-client communications beyond the four corners of the Townsend letter.”

However, it chastised Kilpatrick Townsend for what the court characterized as inviting a contempt citation in order to obtain appellate review. The firm had two options, the court said: (1) moving for certification of interlocutory appeal, or (2) seeking mandamus “when faced with an unlawful production order.”

The court thus said its decision to vacate was related only to the lower court’s sanctions resulting from “legal error in its application of privilege doctrine.” And it allowed that the district court could still rule that the firm should pay a penalty for rejecting the proper options and choosing instead to fail to comply with a judicial order.

Judge Kimberly A. Moore joined the opinion.

Opinion Dubitante

Judge Jimmie V. Reyna wrote an “opinion dubitante” expressing doubt about the majority’s confidence on how the Ninth Circuit would have ruled.

“[T]he majority discerns a trend in the law and on that basis takes a guess that the Ninth Circuit, if its hand were at the helm, would hold that there must be a fairness balancing in the context of express extrajudicial waivers,” Reyna said. “I examine the trend and find in it no gates that lead to secure blue water. Indeed, I find that even a route that lies opposite the route charted by the majority is as good a route as any.”

He indicated that his “instinct” favored the majority’s decision but “I am concerned that our heading is not based on an accurate bearing. As I cannot prove or disprove our result, I go along with the majority—but with doubt.”

Kirkland Townsend's David E. Sipiora represented the firm. James J. Lukas Jr. of Greenberg Traurig, Chicago, represented LG.

A special thanks goes to BNA for allowing the IP Section to print its stories. If you are interested in receiving a free 15 day trial from BNA, please contact George Tanguay at 1-800-542-1113 or at gtanguay@bna.com.

IP Section Officer Contact Information

Chair

Michael P. Dulin
Polsinelli Shugart, P.C.
1515 Wynkoop Street #600
Denver, CO 80202
303-572-9300
mdulin@polsinelli.com

Vice Chair

Mollybeth (Molly) Kocialski
Oracle America, Inc.
500 Eldorado Blvd., M/S UBRM 01-200
Broomfield, CO 80021
303-272-9945
Mollybeth.kocialski@oracle.com

Secretary/Treasurer

Danny Sherwinter
Marsh Fischmann & Breyfogle LLP
1881 9th Street, Suite 335
Boulder, CO 80301
720-562-5500
dsherwinter@mfblaw.com

 

All correspondence, phone calls, facsimiles, and emails concerning this newsletter, as well as advertising submissions should be directed to Danny Sherwinter at dsherwinter@mfblaw.com.

This newsletter is for information only and does not provide legal advice.

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