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«DAVID HRICIK Associate Professor of Law Mercer University School of Law 1021 Georgia Ave. Macon, GA 31201 hricik_d State Bar of Texas 20TH ...»

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Moreover, the reasonableness of Dot Hill's reliance on the opinions will necessarily raise other factual questions, such as what relevant, non-privileged facts (besides those contained in the opinion letters) were communicated between Dot Hill and its opinion counsel. Since both the credibility and legal acumen of Morgan & Finnegan attorneys will be in issue at the trial, if other Morgan & Finnegan attorneys were permitted to serve as trial counsel, they would be placed in the awkward and unseemly position of having to advocate for the credibility and reliability of the testimony of their law partners. Even worse, if the testifying Morgan & Finnegan attorneys were to give testimony that was adverse to Dot Hill's interests, the attorneys serving as trial counsel would be squarely confronted with a conflict of interest in grappling with competing duties to the client and to the firm.

–  –  –

numerous extraneous issues would likely be injected into the case if a Morgan & Finnegan witness is permitted to testify. Efforts at impeaching the Morgan & Finnegan witnesses may inquire into potential sources of bias, including the amount of fees that were generated in the production of the opinion letters and the amounts Morgan & Finnegan earned before the production of the letters and continues to earn to this day based on its work for Dot Hill. If Morgan & Finnegan were to continue to serve as trial counsel, these questions could potentially serve to impeach the credibility of Dot Hill's trial counsel at the same time as they affect the credibility of the witnesses. The credibility of a party's trial counsel, however, clearly should not be an issue in the case.

Furthermore, so long as Morgan & Finnegan serves as trial counsel, the motivations behind the potential for a decision not to call the Morgan & Finnegan opinion attorneys as witnesses on behalf of Dot Hill becomes immediately suspect. So long as the Morgan & Finnegan trial attorneys are grappling with divided loyalties to their firm and to their client, there can be no assurance that their representation of Dot Hill would not be different if the credibility and competence of their partners were not in issue. Other issues that Morgan & Finnegan's service as trial counsel would tend to implicate include knowledge on the part of the Morgan & Finnegan attorneys concerning: (1) the reasons for the Chaparral purchase;

(2) the development of products designed to defeat infringement; and (3) the economic benefit to Dot Hill with respect to the sale of potentially infringing products. In sum, there are simply too many potential rabbit trails and invitations to jury confusion if Morgan & Finnegan attorneys were permitted to serve as trial counsel when their partners will be taking the stand as witnesses.

2006 WL 1544621 at *10-11 (citations and footnote omitted). Some federal courts could continue to disqualify a firm from appearing at trial where other lawyers in the firm had given an opinion.

In some courts, bifurcation or stay of the issue of willfulness may be the means to delay the need for disqualification.17 On the question of whether or not to bifurcate, a lawyer’s interests may conflict with the client. A lawyer may want to obtain bifurcation so that he can litigate at least part of the case, while bifurcation may not be in the best interest of the client, who may be better served by presentation of all issues in suit in a single proceeding before one fact finder. In such cases, a concurrent conflict of interest could develop, requiring the informed consent of the client. This possible conflict, and needs for efficiency, led the Crossroads court to deny bifurcation.18 17.

See generally Edward Poplawski, Effective Preparation of Patent Related Exculpatory Legal Opinions, 29 AM. INTELL. PROP.

ASS’N Q.J. 269, 288-91 (2001) (discussing means to reduce need for lawyer’s testimony or otherwise stave off disqualification of opining-litigator); George M. Sirilla et al., Advice of Counsel: Defense or Dilemma? Friend or Foe?, 81 J. PAT. & TRADEMARK OFF. SOC’Y 376 (1999) (discussing lawyer-witness rule and ability to bifurcate to avoid it).

2006 WL 1544621 at *11.

Ethical Issues in Opinions of Counsel and in Working with Patent Agents Chapter 17

During patent litigation, rules such as Model Rule 1.7(a)(2) or other applicable standards may require the lawyer to discuss the issue of disqualification with the client, and seek the client’s informed consent on how to proceed. Lawyer and client should discuss whether to seek bifurcation, in order to keep the lawyer in the case, or try the case in one phase and obtain new trial counsel, and the advantages and disadvantages of each course.

–  –  –

To show that it acted reasonably and so did not infringe willfully, an alleged infringer can choose to waive privilege over the opinion.19 When it does so, that raises the issue of the breadth of the waiver: we know it’s subject matter that is waived, 20 but how does “subject matter waiver” apply in the context of willfulness, and does the combination of the roles of trial and opinion counsel increase the risk that broader waiver will be found than if separate firms are used? That is the issue this section addresses.

The starting point is a seminal May 2006 Federal Circuit case that addressed a petition for writ of mandamus challenging a district court’s ruling on the scope of both the waiver of attorney-client privilege and work product immunity where the waiver resulted from the defendant’s election to rely on the advice of counsel to rebut a charge of willful infringement.21 For reasons that will become clear, the context of the observations made by the judges in deciding EchoStar is critically important, since the court used broad language, but was actually deciding a narrow issue. The meaning of the case is being debated among litigants and the district courts, as we will see.

In EchoStar, in defense of TiVo’s infringement suit, EchoStar asserted the defense of reliance on the advice of two opinions of counsel: one from its in-house counsel, and obtained before the suit had been 19.

See, e.g., Carl Zeiss Jena GmgH v. Bio-Rad Labs. Inc., No. 98 CIV. 8012 RCC DFE, 2000 WL 1006371, at *1 (S.D.N.Y. July 19, 2000); Saint-Gobain/Norton Indus. Ceramics Corp. v. Gen’l Elec. Co., 884 F. Supp. 31, 33 (D. Mass. 1995).


See, e.g., Oxyn Telecomm., Inc. v. Onse Telecom, No. 01 Civ. 1012(JSM), 2003 WL 660848, at *6 (S.D.N.Y. Feb. 27, 2003) (if privileged communications are placed “in issue” by defenses in litigation, then a “broad[] subject matter waiver [of privilege] is effected.”).

In re EchoStar Communications Corp., 448 F.3d 1294 (Fed. Cir. 2006).

Ethical Issues in Opinions of Counsel and in Working with Patent Agents Chapter 17

filed; the other obtained from its outside counsel, Merchant & Gould, after the suit had been filed.22 Both opinions addressed only non-infringement, not invalidity or unenforceability. 23 TiVo argued that the assertion of this defense triggered a broad subject matter waiver, and ultimately the district court largely agreed, ordering the production of privileged material and even work product created by Merchant & Gould that had not been communicated to EchoStar, excepting only “trial preparation material unrelated to infringement.”24 EchoStar sought review in the Federal Circuit by way of a petition for mandamus, and Merchant & Gould intervened.25 Questions concerning the scope of waiver caused by reliance on both opinions were raised on appeal.

Concerning in-house counsel, the court quickly rejected EchoStar’s attempt to characterize its reliance on its in-house counsel as not constituting reliance on advice of counsel. The court instead held that “[w]hether counsel is employed by the client or hired by outside contract, the offered advice or opinion is advice of counsel or an opinion of counsel.”26 The court stated that, as a result, there was a waiver of “the attorney-client privilege with regard to any attorney-client communications relating to the same subject matter, including communications with counsel other than in-house counsel, which would include communications with Merchant & Gould.”27 That sentence bears examination. On appeal, there was no dispute concerning any in-house counsel documents.28 Thus, the court’s statement as to the scope of waiver was dicta as to in-house counsel, since there was nothing to decide. In addition, the fact that nothing was in dispute also means that there was nothing at issue in the case with respect to what “subject matter” was: in other words, the court did not decide whether by relying on a noninfringement opinion, the “subject matter” waived includes invalidity or Id. at 1297.



Id. In granting the petition, the court first held that Federal Circuit and not regional circuit law governs the extent to which a party waives attorney client privilege and work product by relying on advice of counsel to defend against enhanced damages. Id.

at 1298.

Id. at 1299.


Id. at 1297 n. 2.

Ethical Issues in Opinions of Counsel and in Working with Patent Agents Chapter 17

unenforceability opinions. The sentence also bears examination with respect to the comment concerning Merchant & Gould. With respect to waiver with respect to privileged communications with Merchant & Gould, the statement is also dicta. Further, the court did not decide whether communications made after suit was filed were waived, since that issue was not presented in the case. As will be seen, the context of the case has become a battleground for district courts and litigants.29 The court then turned to the scope of waiver concerning advice from Merchant & Gould, received after the suit had been filed, holding that the district court had abused its discretion in ordering production of work product documents, whether they had been communicated to EchoStar, or not.30 Noting that work product applied only to written or tangible communications, the court emphasized that the purpose of work product differed from privilege and was designed to afford a “zone of privacy” around litigation to permit lawyers to commit thought to paper in order to prepare for trial.31 As a result, there is no subject matter waiver of work product by reliance upon work product: instead, protection only over factual, not opinion, work product is waived by reliance upon work product.32 In applying these principles to the context of reliance on an opinion of counsel to defend against a charge of willful infringement, the court explained that the purpose of requiring subject matter waiver was to “prevent a party from using the advice he received as both a sword, by waiving privilege to favorable advice, and a shield, by asserting privilege to unfavorable advice.”33 To further that policy, the court reasoned that work product protection was waived to the extent it “could have such an effect.”34 To guide courts in applying these principles, the court noted that there would generally be “three categories of work product that are potentially relevant to the advice-of-counsel defense…: (1) documents that embody a communication between the attorney and client concerning the subject matter of the case, The Federal Circuit did clarify matters by citing Akeva LLC v. Mizuno Corp., 243 F. Supp.2d 418, 423 (M.D.N.C. 2003). In that case, the district court held that privilege and work product were waived over an opinion obtained from trial counsel. That fact pattern was simply not present in EchoStar, and the policy issues implicated in that case were not considered by the Federal Circuit. Why the court cited the decision is unclear, but the fact that it did so is causing confusion, as shown below.

Id. at 1300.

Id. at 1301.

Id. at 1302.

Id. at 1303.

Id. at 1303.

Ethical Issues in Opinions of Counsel and in Working with Patent Agents Chapter 17

such as a traditional opinion letter; (2) documents analyzing the law, facts, trial strategy, and so forth that reflect the attorney’s mental impressions but were not given to the client; and (3) documents that discuss a communication between attorney and client concerning the subject matter of the case but are not themselves communications to or from the client.”35 With respect to the first category, the court reasoned that because privilege is waived when reliance on counsel is asserted waiver extends to “any documentary communications such as opinion letters and memoranda.”36 Thus, in the court’s view, work product is no different than privileged information: if either is communicated to the client, protection is waived. That view is at odds with general principles governing work product: A lawyer does not waive work product protection by providing work product to a client, and a client cannot unilaterally choose to waive the lawyer’s interest in the protection of work product. 37 Nonetheless, the court reasoned that when the privilege is waived by reliance on advice of counsel, disclosure of even opinion "become[s] evidence of a non-privileged, relevant fact, namely what was communicated to the client,..." If that were true, then any disclosure of work product to a client becomes evidence of a nonprivileged fact if privilege is otherwise waived. That proposition is startling.

With respect to the third category (the court put it last, but recognized that it “falls admittedly somewhere interstitially between the first and second” and so logically ought to be examined second),38 the court stated that work product documents that in effect memorialize or reflect a communication with the client are not protected.39 “Though it is not a communication to the client directly nor does it contain a substantive reference to what was communicated, it will aid the parties in determining what communications were made to the client and protect against intentional or unintentional withholding of Id. at 1302.

Id. at 1302.

Among other things, the work product privilege also belongs to the attorney, not the client, and the client cannot waive the lawyer’s interest in work product protection. Hobley v. Burge, 433 F.3d 946, 949 (7th Cir. 2006) (“An attorney has an independent interest in privacy, even when the client has waived its own claim, as long as invoking the privilege would not harm the client's interests.”), citing Restatement (Third) of the Law Governing Lawyers § 90 cmt. c (2000).

448 F.3d at 1304.


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