note a guide to waiver after echostar and seagate - UW Law School

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BELDEN - FINAL 11/29/2007 4:08 PM 948 WISCONSIN LAW REVIEW Furthermore, Folsom held that the scope of waiver did not depend on whether the opinions or materials were communicated to EchoStar. 124 So long as they pertained to the issue of infringement, they were discoverable. 125 Folsom therefore ordered EchoStar to produce the two opinions drafted by Merchant & Gould as well as any other documents or communications related to the infringement analysis performed by Merchant & Gould for EchoStar. 126 EchoStar responded by filing a petition for a writ of mandamus with the Federal Circuit requesting that the court vacate Folsom’s order to compel discovery. 127 B. EchoStar’s Petition for a Writ of Mandamus In its petition for a writ of mandamus, 128 EchoStar argued that the district court made several errors in its construction of the scope of waiver of attorney-client privilege and work-product protection. 129 First, EchoStar argued that the court erred in holding that EchoStar’s reliance on the opinion of its in-house counsel caused a waiver of the attorney-client privilege protecting communications with outside counsel at Merchant & Gould. 130 EchoStar argued that an alleged infringer must rely on the advice of outside counsel in order to raise the traditional advice-of-counsel defense. 131 Accordingly, EchoStar maintained it had not raised the advice-of-counsel defense because it merely relied on an internal investigation by its in-house counsel. 132 The district court’s holding undermined an earlier Federal Circuit decision in Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 133 124. Id. at *23–24. 125. Id. 126. Id. at *25–26. 127. In re EchoStar Commc’ns Corp., 448 F.3d 1294, 1296 (Fed. Cir. 2006). After the Federal Circuit granted Merchant & Gould leave to intervene, Merchant & Gould also filed a petition for a writ of mandamus. Id. 128. Petition for Writ of Mandamus, EchoStar, 448 F.3d 1294, Misc. No. 803 (Fed. Cir. Oct. 11, 2005). 129. Id. at 1–3. 130. Id. at 13–15. 131. Id. 132. Id. 133. 383 F.3d 1337 (Fed. Cir. 2004). Knorr-Bremse is well known in the patent realm because it eliminated the “adverse inference,” which had been long upheld by the Federal Circuit. Id. at 1344. Prior to Knorr-Bremse, the court held that an adverse inference could be drawn when a defendant failed to produce an opinion of counsel or invoked attorney-client privilege and work-product protection in response to an allegation of willful infringement. Id. at 1343–44. In other words, if a defendant failed to produce an opinion of counsel or invoked privilege, the finder of fact was free to infer that the defendant either chose not to obtain an opinion of counsel regarding its
BELDEN - FINAL 11/29/2007 4:08 PM 2007:933 A Guide to Waiver After EchoStar and Seagate 949 which stated that an alleged infringer has no duty to consult outside counsel. 134 Second, EchoStar argued that the district court misconstrued the scope of waiver of work-product protection. 135 The court erred by holding that the waiver extended to documents of Merchant & Gould that it never actually communicated to EchoStar. 136 Noting the absence of any governing Federal Circuit precedent on the issue, 137 EchoStar contended that the appropriate scope of waiver should not include documents never conveyed to the client because such documents are not relevant to the client’s state of mind. 138 Therefore, they shed no light on the issue of willfulness. 139 Furthermore, EchoStar maintained that the district court misconstrued the temporal scope of waiver of workproduct protection as well. 140 If the waiver extends to uncommunicated work product at all, it should only extend to uncommunicated work product created prior to the beginning of the case; it should never extend to uncommunicated work product created after the case was filed. 141 C. In re EchoStar Communications Corp.: The Federal Circuit Opinion The Federal Circuit granted EchoStar and Merchant & Gould’s petitions for a writ of mandamus, 142 and for the first time the court directly addressed the scope of waiver of work-product protection when an alleged infringer raises the advice-of-counsel defense. 143 In its opinion, the court drew a sharp distinction between the attorney-client privilege and the work-product doctrine, addressing the waiver of each potential infringement or the defendant obtained unfavorable advice. Id. at 1343. An alleged infringer has an affirmative duty to avoid infringing others’ known patent rights. Id. at 1345–46. Therefore, the adverse inference was strong evidence that the alleged infringer failed to meet this affirmative duty and therefore its infringement was willful. Id. The court found that this adverse inference impeded too harshly on the attorney-client relationship, and, thus, it was no longer appropriate. Id. 134. Petition for Writ of Mandamus, EchoStar, 448 F.3d 1294, Misc. No. 803 (Fed. Cir. Oct. 11, 2005). 135. Id. at 16–26. 136. Id. at 16. 137. Id. at 18. 138. Id. at 18–21. 139. Id. 140. Id. at 24–26. 141. Id. 142. 448 F.3d 1294 (Fed. Cir. 2006). The opinion of the court was written by Gajarsa for a panel that also included Schall and Prost. Id. at 1296. 143. See id. at 1296–1305.
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