Civil Action No. 16-153-WCB
FILED UNDER SEAL
MEMORANDUM OPINION AND ORDER
Before the Court is a submission from defendants Sprint Corporation and Sprint Spectrum, L.P. (collectively, "Sprint") styled Sprint's Bench Memorandum on Sword-and-Shield Privilege Waiver Concerning TC Tech's Impressions of the '488 Patent, Dkt. No. 474. Plaintiff TC Technology LLC ("TC Tech") has filed an opposition, Dkt. No. 485, and Sprint has filed a reply, Dkt. No. 492. Treating Sprint's "Bench Memorandum" as a motion, the Court DENIES Sprint's request for relief.
1. During discovery, TC Tech designated Andy Block as its corporate witness for various topics served by Sprint. See Fed. R. Civ. P. 30(b)(6). Two of those topics were "Time Warner, Cox Communications, and/or TC Technology's reason(s) for purchasing the '488 patent," and "Valuations of the '488 Patent and documents used to formulate those valuations." During Mr. Block's Rule 30(b)(6) deposition, TC Tech's counsel advised Mr. Block, an attorney, not to answer a number of questions directed to those topics based on the attorney-client privilege.
Although Sprint now complains that Mr. Block took an unduly broad view of what was protected by the attorney-client privilege, Sprint did not at the time, and has not now, formally challenged Mr. Block's assertion of the attorney-client privilege in response to Sprint's counsel's questions at the deposition. Instead, the issue before me arose in the following manner:
Shortly before trial was scheduled to begin before Judge Andrews, the parties exchanged deposition designations. After Sprint served its designations on TC Tech, TC Tech served counter-designations on Sprint, which included several excerpts from the testimony given by Mr. Block at his deposition relating to TC Tech's acquisition of the '488 patent. Sprint now objects that TC Tech should not be permitted to introduce those excerpts from Mr. Block's testimony, because Mr. Block invoked the attorney-client privilege with respect to a number of other questions relating to the same subject matter. In Sprint's view, it would be unfair to permit TC Tech to introduce Mr. Block's responses to questions that he answered, without Sprint having the benefit of the answers to the questions that Mr. Block refused to answer based on the attorney-client privilege. According to Sprint, admitting Mr. Block's testimony on those issues on which he invoked the attorney-client privilege in response to some questions would impermissibly permit TC Tech to use the privilege as both "a sword and a shield."
2. This issue arose when Sprint's counsel asked Mr. Block, "[D]id the '488 patent stand out to you among the other patents [in an attachment containing a group of patents]?" Dkt. No. 493-1, Exh. D, at 108:11-13. Mr. Block answered, "I remember the '488 patent standing out. I don't remember comparing it to the other patents in here." Id. at 108:14-16. Counsel then asked, "What made the '488 patent stand out to you?" Id. at 108:17-18.
At that point, counsel for TC Tech interjected and said that the question raised an attorney-client privilege issue; he explained that "there is a privileged issue . . . but I think there is a non- privileged portion which he can give so I will allow him to give the non-privileged portion." Id. at 110:13-18. Mr. Block then answered the question as follows: "So just a lay person's reading of—or someone who has some background in physics or communication makes clear that this relates to the ability to efficiently communicate upstream in a communication network. Just based on that, it would have stood out." Id. at 110:19-111:2. Sprint's counsel asked, "Why is that?" to which the witness replied, "Well, you have my long answer before as to why upstream communications was going to be important in the future. Because of that. And potentially used in other industries and for that reason it would have stood out." Id. at 111:4-10. Sprint's counsel then asked, "So it would have stood out because of your understanding that upstream communication was important in the cable industry?" Id. at 111:11-14. The witness replied, "Yes. Not just the cable industry but—and not just based on what I just said in terms of, you know, the parent subject matter but a deeper understanding that would require me to divulge privileged information which I have been instructed not to do." Id. at 111:17-24.
Sprint's counsel continued, "Did the inclusion of OFDM in the title of this patent cause that patent to stand out to you?" Id. at 112:5-7. Mr. Block answered, "I mean, it was the whole thing that stood out. It wasn't just the title." Id. at 111:8-9. In response to the question, "Do you recall OFDM technology having any special significance to you in 2012 as far as the value it might add to a patent?" Mr. Block responded, "Yes. I am not sure that answer—I don't—I am not sure I understand the question. What do you mean?" Sprint's counsel followed up by asking, "Was it your understanding at that time that OFDM was being used in wireless telephony standards?" TC Tech's counsel then instructed the witness not to answer the question on the ground that it called for privileged information. Id. at 112:19-25. TC Tech's counsel later explained that because Mr. Block is a patent attorney, any response that was the product of his own legal analysis that he would have conveyed to his client, or analysis that was conveyed to him from other attorneys would be privileged. Id. at 115:10-116:2. After a further exchange with Sprint's counsel, TC Tech's counsel said that if the question was seeking to have Mr. Block divulge his legal analysis of what the patent covered after reading it, he would not be permitted to answer the question because that information would have been conveyed to his client. Id. at 117:2-20.
When Sprint's counsel asked whether reading the '488 patent caused Mr. Block "to draw any connection between the '488 patent and LTE technology," counsel for TC Tech objected that the question appeared to ask for privileged information, because it asked Mr. Block "to divulge . . . his legal analysis of what the patent covered after reading it." Id. at 118:13-119:16. Sprint's counsel then asked if there was "anything else unprivileged you can tell me about what drew you to the '488 patent as opposed to some other patent before buying it." Id. at 120:2-6. TC Tech's counsel advised the witness he could respond to the question if he could do so without revealing any privileged information. The witness replied, "I think . . . that could be applicable to lots of different communication systems, for example, you said it was just cable TV. I said, no, it is not just cable TV, it could be wired, wireless, so based on that we would have recognized or I would have said—I would have paid attention to it in terms of its potential import." Id. at 120:2-23.
Later in the deposition, TC Tech's counsel invoked the attorney-client privilege with respect to questions whether there were any claim charts created for the '488 patent before TC Tech purchased it, id. at 193:22-194:6; whether Mr. Block had analyzed the applicability of the '488 patent to Spirit before TC Tech purchased it, id. at 194:7-195:9; whether Mr. Block had analyzed the potential damages against Sprint in a lawsuit under the '488 patent before TC Tech purchased it, id. at 195:10-17; whether Mr. Block was aware of any prior art search conducted for the '488 patent before TC Tech purchased it, id. at 195:18-197:14; when the first privileged valuations of the '488 patent occurred, id. 241:3-242:4; and when TC Tech first became aware that Sprint was making, using, selling, and/or offering to sell the accused services, id. at 248:25-249:24.
Immediately before trial before Judge Andrews was set to begin, and after the parties had exchanged their deposition designations, Sprint filed the present motion seeking to bar TC Tech from introducing evidence, in the form of its counter-designations, regarding what Sprint refers to as "favorable impressions" of the '488 patent. Sprint identified examples of those counter designations that indicated Mr. Block's belief that the use of orthogonal functions in interactive services with upstream communications for purposes such as video on demand was important to the future of interactive communications. See id. at 102:5-24, 103:12-106:20, 214:6-215:16. Sprint argues in its motion that it is unfair for TC Tech to introduce evidence regarding the value of the '488 patent after having blocked some of Sprint's counsel's questions at the deposition on the basis of the attorney-client privilege.
At the outset, I infer from the briefs that the parties have not identified the entire text of the deposition counter-designations in dispute. From the excerpts that have been provided, however, it seems that the evidence relates to whether anything about the '488 patent stood out to Mr. Block, a witness who was involved in the purchase of the patent and who may testify through deposition at trial.
TC Tech argues that Sprint's motion should be denied because it is, in substance, an untimely motion in limine that exceeded the number of motions in limine Sprint was entitled to file under Judge Andrews' scheduling order. However, the issue that is the subject of Sprint's motion arose immediately before the scheduled December 2019 trial date, so it could not have been briefed at the time the motions in limine were filed. In any event, if I do not act on the motion now, I will have to deal with it at trial. Therefore, I will not disregard Sprint's motion on the ground that it is an improper motion in limine.
The question before me now is whether TC Tech should be barred from using certain portions of Mr. Block's deposition testimony as to which the attorney-client privilege was not invoked, because TC Tech asserted the privilege with regard to other related matters. Sprint draws on cases holding that a party's selective waiver of the privilege can result in unfairness to the opposing party, and that in such a situation, the privilege will be deemed waived as to all matters related to the issue on which the party made a selective waiver. That is a familiar and well-settled rule. See Paul R. Rice, Attorney-Client Privilege in the United States § 9:30 (2019). The problem is that this case does not present an issue falling within that rule.
Sprint did not challenge TC Tech's invocation of the attorney-client privilege at the time of Mr. Block's deposition and has not done so in its motion. Nor has Sprint argued that the matters on which Mr. Block gave substantive answers during his deposition were privileged, and that TC Tech has selectively waived the privilege with respect to those answers. Indeed, the counter-designations that Sprint has presented the court do not appear to be privileged. See Dkt. No. 474, at 3; Dkt. No. 474-1, Exh. A, at 102:5-24, 103:12-106:20, 214:6-215:16. Therefore, I will treat the substantive testimony Mr. Block gave during his deposition as unprivileged and assume that the privilege was validly invoked with regard to the questions he was instructed not to answer.
While a party may not selectively waive the attorney-client privilege if doing so deprives the opposing party of the use of evidence that is important to presenting a complete picture on an issue, that principle does not apply when there has been no selective waiver of the privilege. A party is ordinarily free to use unprivileged evidence even though the party may have invoked the privilege as to related matters. In that setting, the use of unprivileged evidence neither results in a waiver of the privilege with respect to all related matters, nor does it justify prohibiting the party from using the unprivileged evidence to which the opposing party objects. See In re Chevron Corp., 650 F.3d 276, 289 (3d Cir. 2011) ("[T]he waiver argument advanced by the Chevron applicants is unavailing because, inasmuch as the communications were not protected by the attorney-client privilege, there was no risk of a litigant using the privilege as both a sword and a shield in an effort to gain an advantage in litigation, and thus there is no role for a court to play as an arbiter of notions of 'fairness.'").
Sprint argues that the situation in this case presents an instance in which TC Tech is attempting to use the privilege as both "a sword and a shield." However, the principal case on which Sprint relies in its brief in support of the motion refers to the "sword and shield" doctrine in the context of a selective waiver of the privilege. The issue in that case, Johns Hopkins University v. Alcon Laboratories, Inc., Civ. No. 15-525, 2017 WL 3013249 (D. Del. July 14, 2017), was whether a party who produced opinions of counsel as part of an "advice of counsel" defense had waived the attorney-client privilege with respect to other privileged materials relating to the same subject matter. Applying Fed. R. Evid. 502(a), the court held that the waiver of the privilege with respect to the opinions of counsel extended to other information concerning the same subject matter. Id. at *2 (quoting the advisory committee notes to the 2008 amendment to Rule 502, which stated that "subject matter waiver is limited to situations in which a party intentionally puts protected information into the litigation in a selective, misleading and unfair manner."). The cases Sprint cites in its reply also deal with the extension of a privilege waiver to other related but not disclosed communications. See In re Teleglobe Commc'ns Corp., 493 F.3d 345, 361 (3d Cir. 2007); Sprint Commc'ns Co., L.P. v. Comcast Cable Commc'ns, LLC, Case No. 11-2684, 2017 WL 712773, at *3 (D. Kan. Feb. 23, 2017). In Teleglobe, the court discussed the question "whether the waiver [of the attorney-client privilege] also ends the privilege as to any related but not disclosed communications." Teleglobe, 493 F.3d at 361. The court explained that when "one party takes advantage of another by selectively disclosing otherwise privileged communications, courts broaden the waiver as necessary to eliminate the advantage." Id. The principle addressed in those cases and many others like them is inapplicable to this case, in which TC Tech is seeking to introduce unprivileged evidence, and therefore is not selectively waiving the privilege.
In other cases, courts have stated that a party that "raises a claim that will necessarily require proof by way of a privileged communication cannot insist that the communication is privileged." Kearney Partners Fund, LLC ex rel. Lincoln Partners Fund, LLC v. United States, 946 F. Supp. 2d 1302, 1317 (M.D. Fla. 2013) (quoting Allstate Ins. Co. v. Levesque, 263 F.R.D. 663, 637 (M.D. Fla. 2010)). On occasion, courts have extended that doctrine to find a waiver of the privilege when the privilege holder raises certain factual or legal issues, even if the privilege holder did not affirmatively disclose privileged material. See 8 Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice & Procedure § 2016.6, at 420-27 (citing cases). Broad application of that approach, however, has been disfavored by the Third Circuit. See Rhone-Poulenc Rorer Inc. v. Home Indem. Co., 32 F.3d 851 (3d Cir. 1994). In that case, the Third Circuit noted that it is consistent with the attorney-client privilege to find a waiver of the privilege when the client puts his attorney's advice in issue in the case. Id. at 863-64. The court, however disapproved of decisions in which the privilege was deemed waived simply because "the client's state of mind may be in issue in the litigation." Id. at 864. Those decisions, the court wrote,
The law of the regional circuit, not the law of the Federal Circuit, applies to issues of attorney-client privilege and the waiver of attorney-client privilege that arise in patent cases and do not implicate substantive patent law. See Regeneron Pharms., Inc. v. Merus N.V., 864 F.3d 1343, 1363 n.6 (Fed. Cir. 2017); Fort James Corp. v. Solo Cup Co., 412 F.3d 1340, 1346 (Fed. Cir. 2005); GFI, Inc. v. Franklin Corp., 265 F.3d 1268, 1272 (Fed. Cir. 2001). Third Circuit law therefore governs the issue presented in this motion. --------
appear to rest on a conclusion that the information sought is relevant and should in fairness be disclosed. Relevance is not the standard for determining whether or not evidence should be protected from disclosure as privileged, and that remains the
case even if one might conclude the facts to be disclosed are vital, highly probative, directly relevant, or even go to the heart of the case.Id. Because the petitioners in the Rhone-Poulenc case had not "interjected the advice of counsel as an essential element of a claim in this case," the court held that they were not required to disclose the privileged communications at issue. Id.; see also, e.g., United States ex rel. Derrick v. Roche Diagnostics Corp., No. 14 CV 4601, 2019 WL 1789883, at *2 (N.D. Ill. Apr. 4, 2019) ("Merely asserting a claim or defense to which attorney-client communications are relevant, without more, does not constitute a waiver of attorney-client privilege. The privileged party must affirmatively put at issue the specific communication to which the privilege attaches before the privilege will be deemed waived.").
Likewise, although in a different context, the Supreme Court has made the same point succinctly: "[p]arties may forfeit a privilege by exposing privileged evidence, but do not forfeit one merely by taking a position that the evidence might contradict." United States v. Salerno, 505 U.S. 317, 323 (1992).
It is possible that a party's use of non-privileged material can be so misleading or unfair in light of the evidence that party has shielded by invoking the privilege that some remedy would be appropriate, such as barring the party from introducing evidence on the same subject. This does not appear to be such a case. In the course of questioning Mr. Block at his deposition, Sprint's counsel elicited responses regarding Mr. Block's assessment of the '488 patent before its purchase. Several of those questions called for answers that were not privileged, and Mr. Block answered those questions. As to other questions that TC Tech's counsel regarded as calling for privileged responses, counsel objected and the witness declined to answer. Sprint did not challenge the invocation of the privilege, and it does not now contend that the privilege was improperly invoked.
From the materials Sprint has furnished to me, this case does not appear to involve TC Tech's manipulation of the attorney-client privilege to ensure that only favorable evidence would be available for use at trial. To begin with, the evidence in question was not elicited by TC Tech, but was the product of the questioning of Mr. Block by Sprint's counsel at a deposition conducted by Sprint. See New Jersey Manufacturers Ins. Co. v. Brady, Civil Action No. 3:15-CV-2236, 2017 WL 264457, at *13 (M.D. Pa. Jan. 20, 2017) ("The mere fact that a party states that it relied on the advice of counsel in making a decision, standing alone, does not show that the party took an 'affirmative step' to place that advice in issue. . . . This is especially true when the deposition testimony on which an alleged waiver is based was elicited in response to questions posed by defense counsel.").
Second, on the face of the record presented to me, there is no indication that the privilege was being selectively invoked to produce a misleading picture of the subject matter of the questioning. Judging from the excerpts of the deposition cross-designations that Sprint has provided to me, it is not at all clear that answers to the questions as to which the privilege was invoked would be likely to be necessary to correct a misimpression left by the deposition excerpts proffered by TC Tech. And the evidence in question appears to be of only marginal importance, so its admission is not likely to be significantly harmful to Sprint.
In sum, because the invocation of the privilege as to some subjects does not normally bar the party that invoked the privilege from introducing relevant, unprivileged evidence on the same subject matter, and because there is no indication that the attorney-client privilege was used in this case to create an unfair picture of the evidence to be admitted at trial, there is no reason to bar TC Tech from introducing the unprivileged evidence that Sprint's counsel elicited at Mr. Block's deposition. The motion is denied.
This memorandum opinion and order is being filed under seal in light of the parties' decision to file their pleadings on this issue under seal. Within seven days of the filing of this order, the parties should each advise the court whether they believe any portions of the order should remain under seal. As to any portions of the order that a party believes should remain under seal, that party should explain why sealing those portions of the order is necessary and justified.
IT IS SO ORDERED.
SIGNED this 3d day of February, 2020.
WILLIAM C. BRYSON
UNITED STATES CIRCUIT JUDGE