Robert Bosch LLC v. Pylon Manufacturing Corp.
Robert Bosch LLC v. Pylon Manufacturing Corp.
Opinion of the Court
MEMORANDUM ORDER
Consistent with the instruction of the court, the parties filed cross-opening and cross-responsive memoranda addressing Bosch’s motion to compel production of privileged materials allegedly waived by Pylon. The parties filed their cross-opening memoranda on August 6, 2009,
Apparently, not satisfied with the prior submissions, Bosch submitted further comments by letter on October 23, 2009, to which Pylon objected and responded on the same date. On October 26, 2009, the discovery matters related to the privilege issue were referred to Magistrate Judge Thynge.
Parties’ Positions
Bosch moved to compel production of certain documents, specifically communications between Pylon and its third party supplier, Unipoint, which Pylon contends are subject to a common interest privilege. Bosch maintains that such documents are discoverable because the opinions of counsel shared between Unipoint and Pylon were not subject to the common interest or joint defense strategy. Bosch further argues that Pylon waived any privilege with regard to all documents and testimony related to validity and infringement of the patents-in-suit because it voluntarily produced documents which reflect advice of counsel. As a result, it claims that Pylon waived attorney-client privilege to such communications on the same subject matter, relying on documents Pylon previously produced and the testimony of Pylon’s witnesses. It maintains that the documents which Pylon voluntarily produced contain attorney advice; that Pylon is selectively withholding communications with its suppliers; and that Pylon waived such privilege, to the extent that it ever existed.
Pylon denies that it waived any attorney-client privilege, noting that communications prepared by Unipoint or Chin Pech (suppliers of beam blades to Pylon) do not operated to destroy its attorney-client privilege; that Pylon’s disclosure of documents relating to Chin Pech does not waive privilege; and, that it shares a legitimate joint-client and common interest privilege with Unipoint. Pylon also notes that the documents identified by Bosch do not contain attorney advice, and if they do, no waiver occurred since it has not placed the advice “at issue,” and previously advised that it does not intend to rely on advice of counsel as a defense. Pylon notes that none of the documents that it produced reveal the substance of any opinion.
Standards and Applicable Law
Attorney-Client Privilege
The attorney-client privilege exists to encourage full and frank communications between counsel and their clients.
The privilege applies only if (1) the asserted holder of the privilege is or sought to become a client; (2) the person to whom the communication was made (a) is a member of the bar of a court, or his subordinate and (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (I) an opinion on law or (ii) legal services or (iii) assistance in some legal proceeding, and not (d) for the purpose of committing a crime or tort; and (4) the privilege had been (a) claimed and (b) not waived by the client.10
The party seeking to invoke the attorney-client privilege has the burden of establishing the existence of an attorney-client relationship and the confidential nature of the communication.
Waiver of the attorney-client privilege occurs when voluntary disclosure to an unrelated third party occurs, unless such disclosure is necessary to assist the client in obtaining informed legal advice.
Co-Client or Joinh-Client Privilege
As in the single-client representation, the joint-client relationship begins when the “co-clients convey their desire for representation, and the lawyer accepts.”
Common Interest (Joint Defense) Privilege
The common interest privilege protects communications between individuals and entities and counsel for another person or company when the communications are “part of an on-going and joint effort to set up a common defense strategy.”
Crime-Fraud, Exception
A proper assertion of the attorney-client privilege or work product immunity will be vitiated by a showing that the documents claimed to be protected were prepared in furtherance of a crime or fraud.
One may waive the attorney-client privilege by asserting claims or defenses that places its counsel’s advice in issue in the litigation. The most common example of such waiver in a patent infringement matter is when a party, in defense of willfulness, argues that it relied on the advice of counsel. As a result, all communications with an attorney relevant to the subject matter of that advice is waived.
With these legal standards in mind, the following rulings are made.
Bosch Documents:
Redacted Documents:
Document Nos. 298, 299, 305, 324, 342, 350 and 939 were produced in redacted form. They appear to be what they have been represented to be, that is, either internal Bosch presentations or notes and summaries of internal meetings. The redacted portions reflect discussions regarding advice of counsel, as well as, memorialize further requests for attorney advice. There is no evidence in the remaining unredacted portions of the documents to suggest that any waiver occurred. Further, they do not tangentially relate to nor are they relevant any crime-fraud exception. Therefore, they are not subject to production.
Privileged Documents:
Pylon primarily relies on the crime-fraud exception to support the discovery of document Nos. 468, 484, 506, 520 and 512 which were withheld in their entirety on the basis of attorney-client privilege. Pylon’s argument for application of the crime-fraud exception is that two other individuals, Fehrsen and Swanepoel, rather than the inventors listed, conceived of the invention claimed in the '974 patent, including the use of a spoiler on a beam blade. Fehrsen allegedly revealed to Robert Bosch GmgH (parent corporation to Bosch) a spoiler design mounted on the top of a beam surface as evidenced by his notes dated September 17, 1992, which included a wedge shaped rubber backing strip making the beam operate as an aerofoil. Pylon argues that Figure 3 of the '974 patent is the same as Fehrsen’s sketch.
Pylon further claims that the use of a plastic end clip or cap on a beam blade was invented by Fehrsen and Swanepoel, rather than just the listed inventors on the '434 patent. It claims that as a result of disclosures made by Fehrsen during meetings which occurred with Robert Bosch GmbH on September 17, 1992, he purportedly recommended that a plastic end clip would be required to comply with safety standards. A proposed drawing was provided during those meetings which Pylon claims is the same as figure 3 in the '434 patent, and shows the use of an end clip on a beam blade. Because the '974 and '434 patents were obtained without revealing to the PTO either the inventorship or contributions of Fehrsen or Swanepoel, Pylon argues that the patents are unenforceable due to inequitable conduct, and therefore, the crime-fraud exception to the alleged privileged documents applies.
A comparison of document no. 506 to the '974 and '434 patents suggests that the subject matter of the document and the patents differ and does not intimate application of the crime-fraud exception. Document 506 is an invention record provided to the patent department of the parent company, and seeks legal advice. Therefore, it is not discoverable.
Pylon Documents:
Bosch contends that Pylon has waived attorney-client privilege because of its disclosure of certain documents listed as exhibit nos. Cl through C12.
Regarding those documents which contained exchanges between Unipoint and Pylon, Pylon represents that such documents are protected by attorney-client privilege, attorney work product, and joint-client and/or common interest privilege shared with Uni-point pursuant to a supply agreement which required attorney advice to be shared.
Documents No. Cl-ClZ Allegedly Constituting Waiver
The exchanges between Chin Pech and Pylon merely reference, in general, infringement issues, Bosch patent issues or Bosch patent infringement matters without any description of the particular issue or patent of concern, and contain very brief comments by Chin Pech to Pylon regarding the opinion of its counsel on those matters. Specifically, the letter found at exhibit C6 in Bosch’s submission, is an opinion from Chin Pech’s attorney which it shared with Pylon. The produced documents evidence that any patent clearance analysis was being done for Chin Pech by counsel whom it retained. Notably in exhibit C8, Chin Pech references that a patent clearance opinion had been obtained by it for each part of the beam blade from its patent attorney and offered Pylon the option to communicate directly with Chin Pech’s counsel regarding those opinions. The fact that Pylon may have required such clearance information from Chin Pech does not make the opinions provided those of counsel retained by Pylon, even if Pylon relied on that information. Therefore, if any opinion of counsel was waived, it was Chin Pech’s attorney-client privilege and not Pylon’s privilege in that regard.
In other documents regarding communications between Unipoint and Pylon, one document upon which Bosch relies, contains a general, overview by Unipoint to Toyota that the “Toyota MVP Beam did not pose any material risk of infringing the issued USA patents.” As acknowledged by Bosch, the letter was not authored by Pylon or its counsel. Rather, the letter was prepared by Unipoint. The letter contains a general statement, without any specifics regarding which patents it references, and no analysis of why there is no material risk of infringement. Again, if any waiver occurred, it was by Unipoint and not by Pylon. Further, as evidenced by the deposition testimony of David Frauman (a Pylon employee),
Therefore, documents C1-C12 involve possible disclosure of attorney advice obtained by a third party and related to Pylon, rather than Pylon disclosing advice from its counsel. Certain documents involve patents other than Bosch patents, or relate to patents that are not part of the present dispute. No analysis is provided as to why the proposed beam blades do not infringe a patent, and no reference is made to a particular patent: rather, the comments are very general, broad and nonspecific. Therefore, the production by Pylon of documents C1-C12 do not constitute a waiver by it of attorney-client privilege on infringement or invalidity.
Redacted or Withheld Documents
Bosch primarily argues that because of waiver through the production of documents nos. C1-C12, the redaeted/withheld documents produced for in camera review are also subject to waiver. Bosch also generally contends that those documents are not subject to attorney-client privilege independent of any waiver.
The documents in question mainly involve a series of email exchanges between Pylon and Unipoint and Pylon and it counsel during 2006 or 2008. From those documents, an understanding existed between Pylon and Unipoint with Pylon’s counsel for his advice to address certain legal issues, to identify patents which either party may be accused of infringing and to evaluate potential risks. The understanding evident in those documents was that attorney advice was to be shared. Those documents indicate that the same counsel was employed to address their joint concerns regarding possible patent liability which could arise from their business relationship. The fact that this arrangement was not memorialized in written
IT IS ORDERED that:
1. Bosch’s motion to compel (D.I.114) is DENIED.
2. Pylon’s oral motion to compel raised during hearing on October 19, 2009 is DENIED.
3. Since the court considered everything filed by the parties in relation to the discovery issues addressed herein, including the letters filed by the parties on October 23, 2009, Pylon’s motion for leave to file a reply (D.I.124) is GRANTED.
. D.I. 114-115.
. D.I. 117-118.
. The end result is that the parties extended their briefing of the issue. See D.I. 124, 132, 142, and dueling letters dated October 23, 2009.
. The court required the parties to produce those documents for in camera review to allow it to compare what had been previously produced to what had not been produced to determine whether a waiver occurred and if so, the subject matter on which it occurred.
. D.I. 150 and 151.
. D.I. 152. On October 27, 2009, the Honorable Sue Robinson also referred all discovery issues remaining as a result of the conference of October 19, 2009. See D.I. 153. On October 28, 2009, Bosch advised the Magistrate Judge by email that it was no longer pursuing the issues identified in items 2 and 3 of the Order of October 27, 2009.
. Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S.Ct. 677, 66 L.Ed.2d 584 (1981).
. 89 F.Supp. 357, 358-359 (D.Mass. 1950).
. Helman v. Murry's Steaks, Inc., 728 F.Supp.1099, 1102 (D.Del. 1990); Hercules, Inc. v. Exxon Corp., 434 F.Supp. 136, 144 (D.Del. 1977).
. Helman, 728 F.Supp. at 1102.
. Lemelson v. Bendix Corp., 104 F.R.D. 13, 16 (D.Del. 1984).
. Hercules, 434 F.Supp. at 156.
. IBM v. Sperry Rand Corp., 44 F.R.D. 10, 13 (D.Del. 1968).
. In re Teleglobe Communications Corp. v. BCE, 493 F.3d 345, 361 (3d Cir. 2007).
. Id.
. Id.
. Id.
. Id.
. Id.
. Id. at 362. Joint representation may also arise by implication. Id.
. Id.
. Id. at 363.
. In the Matter of Bevill, Bresler & Schulman Asset Mgmt. Corp., 805 F.2d 120, 126 (3d Cir. 986), quoting Eisenberg v. Gagnon, 766 F.2d 770, 787 (3d Cir. 1985).
. Teleglobe Communications, 493 F.3d at 365.
. In the Matter of Bevill, 805 F.2d at 126, citing In re Grand Jury Subpoena Duces Tecum Dated November 16, 1974, 406 F.Supp. 381 (S.D.N.Y. 1975); see also Grand Jury Empanelled February 14, 1978, 603 F.2d 469, 474 (3d Cir. 1979).
. Teleglobe Communications, 493 F.3d at 365.
. Id.
. Union Carbide Corp. v. Dow Chemical Co., 619 F.Supp. 1036, 1051 (D.Del. 1985) (which found that a patent holder’s fraud precluded assertion of the attorney-client privilege or work product doctrine relating to documents prepared in furtherance of the alleged fraud and that in camera review of such documents was unnecessary to make such determination); Hercules Inc. v. Exxon Corp., 434 F.Supp. 136, 145 (D.Del. 1977).
. Union Carbide Corp., 619 F.Supp. at 1051; Hercules Inc., 434 F.Supp. at 155.
. Hercules Inc., 434 F.Supp. at 155 (relying on Duplan Corp. v. Deering Milliken, Inc., 540 F.2d 1215 (4th Cir. 1976)).
. Id. at 155 (citing W.R. Grace & Co. v. P. Ballantine & Sons, Inc., 175 U.S.P.Q. 464 (D.N.J. 1970)).
. Id. (noting that in W.R. Grace & Co., the court recognized that any documents dated later than the issuance of the patent in suit remain protected under the attorney-client privilege because such documents were prepared after completion of the fraud).
. Rhone-Poulenc Rorer Inc. v. Home Indemnity Co., 32 F.3d 851, 863 (3d Cir. 1994).
. Id.
. Pylon also claims in its second amended answer that '905 patent is unenforceable due to inequitable conduct, again because the inventor-ship and contributions of Fehrsen and Swanepoel were not disclosed to the PTO during prosecution of that patent. The apparent basis is that the "claimed subject matter is derived from one or both of the invention(s) described and/or claimed in the '974 and '434 patents.” See D.I. 56 ¶¶ 48-50. No other specifics are provided. It, therefore, appears that the claim of inequitable conduct, and thus the application of the crime-fraud exception, is limited to those alleged misrepresentations made in relation to the '974 and '434 patents. Since inequitable conduct is a claim sounding in fraud, Fed. R. Civ. P 9(b) applies. Under that rule, the elements of inequitable conduct must be pled with particularity.
. Those exhibits are attached to D.I. 150.
. The twelve documents selected by Bosch for in camera review are 1, 10, 77, 98, 109, 131, 148-149, 152-153, 243 and 244 which have been produced to the court by Pylon.
. See also C7 (dated in November 2008) where Chin Pech is advising Pylon (rather than the reverse) that the beam blade may not "overcome ... the unexpected challenge from unknown companies.” No other information or any analysis is furnished or explained. Moreover, Chin Pech suggests that a joint legal team maybe helpful, but its position is supported by advice obtained from its counsel. Therefore, as late as November 2008, any opinion expressed by Chin Pech regarding infringement was based on its counsel's advice and not on any joint arrangement between Pylon and Chin Pech.
. Both Bosch and Pylon provided limited portions of Frauman's deposition testimony. Review of both submissions was required to discern the import of his testimony.
. As noted in the Frauman deposition, references to patent issues regarding the Toyota product, as in exhibit CIO, concerned patents other than those owned by Bosch. D.I. 132.
Reference
- Full Case Name
- ROBERT BOSCH LLC v. PYLON MANUFACTURING CORP.
- Cited By
- 1 case
- Status
- Published