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The Twilight Zone of Privacy A Lively Discussion of Privilege Trent Horne – Bennett The Twilight Zone of Privacy A Lively Discussion of Privilege Trent Horne – Bennett Jones LLP (Toronto) Joseph Palys – Paul Hastings LLP (Washington D. C. ) Moderator - Douglas Thompson – Thompson Cooper LLP (Victoria)

Privilege A fundamental principle of litigation is that all relevant evidence should be made Privilege A fundamental principle of litigation is that all relevant evidence should be made available to the parties and the trier of fact If privilege is properly claimed, the evidence is not made available There will always be a tension between providing all relevant evidence and providing protection for certain communications 2014 © Intellectual Property Institute of Canada 2

Privilege vs. Confidentiality What is confidential is not necessarily privileged It has been long Privilege vs. Confidentiality What is confidential is not necessarily privileged It has been long established that confidentiality alone, no matter how earnestly desired and clearly expressed, does not make a communication privileged from disclosure. Straka v. Humber River Regional Hospital (2000), 193 D. L. R. (4 th) 680 at 698 Federal Open Market Committee v. Merrill, 443 U. S. 340, 362 (1979). 2014 © Intellectual Property Institute of Canada 3

Categories of Privilege Class Privilege Solicitor-client privilege/Attorney-client privilege Waiver Redaction Litigation Privilege Experts Settlement Categories of Privilege Class Privilege Solicitor-client privilege/Attorney-client privilege Waiver Redaction Litigation Privilege Experts Settlement Privilege Mediation Privilege Common Interest Privilege Joint Defense Agreements 2014 © Intellectual Property Institute of Canada 4

Categories of Privilege Case-By-Case Privilege Wigmore Test 2014 © Intellectual Property Institute of Canada Categories of Privilege Case-By-Case Privilege Wigmore Test 2014 © Intellectual Property Institute of Canada 5

Attorney-Client Privilege Attorney-client/Solicitor-Client privilege protects • • • Confidential communications Between a client and Attorney-Client Privilege Attorney-client/Solicitor-Client privilege protects • • • Confidential communications Between a client and the client’s lawyer Made for the purpose of obtaining legal advice Genentech, Inc. v. ITC, 122 F. 3 d 1409, 1415 (Fed. Cir. 1997) Descôteaux et al. v. Mierzwinski, [1982] 1 S. C. R. 860 2014 © Intellectual Property Institute of Canada 6

Solicitor-Client Privilege/Attorney-Client Privilege Solicitor-client privilege rests on the assumption that effective legal assistance can Solicitor-Client Privilege/Attorney-Client Privilege Solicitor-client privilege rests on the assumption that effective legal assistance can only be provided if clients can frankly and candidly disclose all material facts to their solicitors Upjohn Co. v. US, 449 U. S. 383, 389 (1981) 2014 © Intellectual Property Institute of Canada 7

Attorney-Client Privilege Upjohn Co. v. United States, 449 U. S. 383, 393 (1981) “An Attorney-Client Privilege Upjohn Co. v. United States, 449 U. S. 383, 393 (1981) “An uncertain privilege, or one which purports to be certain but results in widely varying applications by the courts, is little better than no privilege at all. ” 2014 © Intellectual Property Institute of Canada 8

Solicitor-Client Privilege R. v. Mc. Clure, [2001] 1 S. C. R. 445, 2001 SCC Solicitor-Client Privilege R. v. Mc. Clure, [2001] 1 S. C. R. 445, 2001 SCC 14 However, solicitor-client privilege must be as close to absolute as possible to ensure public confidence and retain relevance. As such, it will only yield in certain clearly defined circumstances, and does not involve a balancing of interests on a case-by-case basis. 2014 © Intellectual Property Institute of Canada 9

Solicitor-Client Privilege/Attorney-Client Privilege When will the privilege be waived or deemed to be waived? Solicitor-Client Privilege/Attorney-Client Privilege When will the privilege be waived or deemed to be waived? e. g. Grand Rapids First Nation v. Canada 2014 FCA 201 Use of opinion letters to avoid punitive damages claims. Will cc'ing a lawyer, particularly in-house counsel, on routine emails cloak the communications with privilege? 2014 © Intellectual Property Institute of Canada 10

Solicitor-Client Privilege No patent agent privilege in Canada Lilly Icos LLC v. Pfizer Ireland Solicitor-Client Privilege No patent agent privilege in Canada Lilly Icos LLC v. Pfizer Ireland Pharmaceuticals 2006 FC 1465 SNF Inc. v. CIBA Specialty Chemicals 2014 FC 616 2014 © Intellectual Property Institute of Canada 11

Attorney-Client Privilege Existence of patent agent privilege in the U. S. is uncertain • Attorney-Client Privilege Existence of patent agent privilege in the U. S. is uncertain • If the patent agent is supervised by an attorney, then the agent’s communications likely are encompassed by the attorney-client privilege. • However, courts are split on whether patent agents enjoy a privilege in their own right. • The privilege, if recognized, is narrowly construed as limited to communications related to prosecution (e. g. , communications after patent issuance are not covered). See Buyer's Direct, Inc. v. Belk, Inc. , 2012 U. S. Dist. LEXIS 57543 (C. D. Cal. Apr. 24, 2012) 2014 © Intellectual Property Institute of Canada 12

Redacting Privileged Information Redacting Privileged Information "All or nothing" doesn’t work. That would either disclose the whole document (breaching solicitor client privilege) or none of it (depriving the opposing party of the balance of the document). The proper solution is to produce the portion of the document that is not privileged, delete the portion that is privileged, and show the deletion on the face of the document to alert the opposing party that privileged material has been removed. Guelph(City) v. Super Blue Box Recycling Corp. , 2004 Can. LII 34954, [2004] O. J. No. 4468 Routine practice in Federal Court litigation Bank of Montreal v. Gianni Sasso 2013 FC 584 2014 © Intellectual Property Institute of Canada 13

Redacting Privileged Information Paul Slansky v. Canada (Attorney General) 2013 FCA 199 Illustrates the Redacting Privileged Information Paul Slansky v. Canada (Attorney General) 2013 FCA 199 Illustrates the difficulty where the privileged material is intertwined with material that is not Much more difficult to balance the competing interests of both sides 2014 © Intellectual Property Institute of Canada 14

Redacting Privileged Information Redaction only works where: the resulting document is not meaningless or Redacting Privileged Information Redaction only works where: the resulting document is not meaningless or misleading the remaining information does not provide clues to the redactions solicitor-client privilege is not 'frittered away' 2014 © Intellectual Property Institute of Canada 15

Solicitor-Client/Attorney Client Privilege Involvement of third parties Communications with agents of the lawyer or Solicitor-Client/Attorney Client Privilege Involvement of third parties Communications with agents of the lawyer or client may attract the privilege, depending on the nature of the work See General Accident Assurance Co. v. Chrusz, (1999) 45 O. R. (3 d) 321 (C. A. ) If solicitor-client privilege does not apply, litigation privilege may apply 2014 © Intellectual Property Institute of Canada 16

Litigation Privilege (Canada) Solicitor-client privilege applies only to confidential communications between a client and Litigation Privilege (Canada) Solicitor-client privilege applies only to confidential communications between a client and his solicitor. Litigation privilege applies to communications of a non-confidential nature between the solicitor and third parties. Solicitor-client privilege exists at any time a client seeks legal advice whether or not litigation is involved. Litigation privilege applies only in the context of the litigation itself. The rationale underlying solicitor-client privilege is very different than litigation privilege. The basis for solicitor-client privilege is for individuals to have full and candid advice. Litigation privilege is related to the adversarial trial process. Litigation privilege is based on the need for a zone of privacy to facilitate investigation and preparation of a case for trial. 2014 © Intellectual Property Institute of Canada 17

Litigation Privilege Blank v. Canada (Minister of Justice), 2006 SCC 39 Litigation privilege attaches Litigation Privilege Blank v. Canada (Minister of Justice), 2006 SCC 39 Litigation privilege attaches to documents created for the dominant purpose of litigation. (e. g. a realistic anticipation of litigation, not just a hope, desire or suspicion) Litigation privilege does not protect from disclosure evidence of the claimant party's abuse of process or similar blameworthy conduct. Absent closely related proceedings, litigation privilege comes to an end upon the termination of the litigation that gave rise to the privilege. Unlike solicitor-client privilege, it is neither absolute in scope nor permanent in duration. 2014 © Intellectual Property Institute of Canada 18

Litigation Privilege Should the 'zone of privacy' extend to communications directly between clients and Litigation Privilege Should the 'zone of privacy' extend to communications directly between clients and third parties? 2014 © Intellectual Property Institute of Canada 19

Litigation Privilege – Expert Witnesses Bodum USA, Inc. c. Meyer Housewares Canada Inc. , Litigation Privilege – Expert Witnesses Bodum USA, Inc. c. Meyer Housewares Canada Inc. , 2012 FC 1450 Testifying experts were required to produce their preliminary working papers and draft reports at trial. Correspondence between counsel and the experts was presumed to be subject to litigation privilege and was not requested by the opposite party. Contrast to Jesionowski v. Wa-Yas (The) [1992] F. C. J. No. 816 Moore v. Getahun 2014 ONSC 237 controversy 2014 © Intellectual Property Institute of Canada 20

Litigation Privilege (Attorney Work Product) Documents and Tangible Things. Ordinarily, a party may not Litigation Privilege (Attorney Work Product) Documents and Tangible Things. Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative … Federal Rules of Civil Procedure 26(b)(3) 2014 © Intellectual Property Institute of Canada 21

Litigation Privilege (Attorney Work Product) Attorney-client privilege applies only to confidential communications between an Litigation Privilege (Attorney Work Product) Attorney-client privilege applies only to confidential communications between an attorney and the client. Work Product privilege applies to communications and materials prepared by persons other than the attorney as long as they were prepared with an eye towards the realistic possibility of impending litigation or for trial. The rationale underlying attorney-client privilege is very different than the work product privilege. • The basis for attorney-client privilege is for individuals to have full and candid advice. • The work product privilege is related to the adversarial trial process, and is based on the need for a protected area to facilitate investigation and preparation of a case for trial. 2014 © Intellectual Property Institute of Canada 22

Litigation Privilege (Attorney Work Product) The mental impressions, conclusions, opinions and legal theories of Litigation Privilege (Attorney Work Product) The mental impressions, conclusions, opinions and legal theories of an attorney are absolutely privileged and never discoverable. See, e. g. , Nguyen v. Excel Corp. , 197 F. 3 d 200, 210 (5 th Cir. 1999) (citing Hickman v. Taylor, 329 U. S. 495, 510 (1947)). Documents and other tangible things prepared in anticipation of litigation are subject to a qualified privilege that may be overcome by a showing of necessity: the seeking party must shows that it has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means. FRCP 26(b)(3)(A)(ii). 2014 © Intellectual Property Institute of Canada 23

Litigation Privilege – Expert Witnesses Trial-Preparation Protection for Draft Reports or Disclosures. Drafts of Litigation Privilege – Expert Witnesses Trial-Preparation Protection for Draft Reports or Disclosures. Drafts of any expert report or expert disclosure are protected regardless of the form in which the draft is recorded. Federal Rules of Civil Procedure 26(b)(4)(B) Trial-Preparation Protection for Communications Between a Party's Attorney and Expert Witnesses. Communications between the party's attorney and any expert witness are protected, regardless of the form of the communications, except to the extent that the communications: (i) relate to compensation for the expert's study or testimony; (ii) identify facts or data that the party's attorney provided and that the expert considered in forming the opinions to be expressed; or (iii) identify assumptions that the party's attorney provided and that the expert relied on in forming the opinions to be expressed. Federal Rules of Civil Procedure 26(b)(4)(C) 2014 © Intellectual Property Institute of Canada 24

Litigation Privilege – Foreign Counsel When foreign companies and attorneys are involved in litigation, Litigation Privilege – Foreign Counsel When foreign companies and attorneys are involved in litigation, U. S. courts often, but not always, apply U. S. privilege law to determine whether disclosure is required. Courts apply a “touch base” analysis to determine whether to apply U. S. or foreign privilege law – that is which country has the predominant or the most direct and compelling interest in whether the challenged communications should remain confidential, unless that foreign law is contrary to the public policy of the forum. See, e. g. , Cadence Pharms. , Inc. v. Fresenius Kabi USA, LLC, 2014 WL 370132, at *2 (S. D. Cal. Feb. 3, 2014). Though the rule is generally described as an unbiased balancing of interests, there is some language in the case law suggesting that courts will lean towards applying U. S. law. See, e. g. , Golden Trade, S. r. L. v. Lee Apparel Co. , 143 F. R. D. 514, 519 (S. D. N. Y. 1992). 2014 © Intellectual Property Institute of Canada 25

Settlement Privilege There is a policy interest that parties should be encouraged to resolve Settlement Privilege There is a policy interest that parties should be encouraged to resolve their private disputes without resort to litigation, or if an action has been commenced, without resort to a trial. In the absence of such protection, few parties would initiate settlement negotiations for fear that any concession they would be prepared to offer could be used to their detriment if no settlement was reached. Settlement offers may be removed from the merits of a case as they can be motivated by the desire for resolution rather than any true concession regarding the strength or weakness of a party’s position. A joint privilege that belongs to both parties. 2014 © Intellectual Property Institute of Canada 26

Settlement Privilege (Canada) Rule 422 – no communication respecting an offer to settle may Settlement Privilege (Canada) Rule 422 – no communication respecting an offer to settle may be made to the Court (excepting case managers and at pre-trial conferences) until all questions of liability, other than costs, have been determined. 2014 © Intellectual Property Institute of Canada 27

Settlement Privilege (Canada) Bodum USA, Inc. v. Trudeau Corporation (1889) Inc. , 2012 FC Settlement Privilege (Canada) Bodum USA, Inc. v. Trudeau Corporation (1889) Inc. , 2012 FC 240 A defendant relied on its outstanding offer to settle to increase its entitlement to security for costs. Query whether offers should be disclosed for this purpose. 2014 © Intellectual Property Institute of Canada 28

Settlement Privilege (US) Rule 408 - (a) Prohibited Uses. Evidence of the following is Settlement Privilege (US) Rule 408 - (a) Prohibited Uses. Evidence of the following is not admissible — on behalf of any party — either to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction: (1) furnishing, promising, or offering — or accepting, promising to accept, or offering to accept — a valuable consideration in compromising or attempting to compromise the claim; and (2) conduct or a statement made during compromise negotiations about the claim — except when offered in a criminal case and when the negotiations related to a claim by a public office in the exercise of its regulatory, investigative, or enforcement authority. (b) Exceptions. The court may admit this evidence for another purpose, such as proving a witness’s bias or prejudice, negating a contention of undue delay, or proving an effort to obstruct a criminal investigation or prosecution. 2014 © Intellectual Property Institute of Canada 29

Settlement Evidence and Patent Damages Settlement Agreements and Negotiations Discoverable To Establish Reasonable Royalty Settlement Evidence and Patent Damages Settlement Agreements and Negotiations Discoverable To Establish Reasonable Royalty Agreements discoverable only when they are the most reliable evidence on the record. See Laser. Dynamics, Inc. v. Quanta Computer, Inc. , 694 F. 3 d 51 (Fed. Cir. 2012); Res. QNet. com, Inc. v. Lansa, Inc. , 594 F. 3 d 860 (Fed. Cir. 2010) Settlement negotiations related to a reasonable royalty are not protected by “settlement negotiation” privilege. However, Federal Circuit has not clearly delineated to extent to which discovery of settlement negotiation materials is permitted. See In re MSTG, Inc. , 675 F. 3 d 1337 (Fed. Cir. 2012). Some District Courts have required a heightened, more particularized showing of relevance before allowing discovery. Others have not. See Barnes & Noble, Inc. v. LSI Corp. , 2013 U. S. Dist. LEXIS 31098 (N. D. Cal. Mar. 6, 2013) 2014 © Intellectual Property Institute of Canada 30

Settlement Privilege Stamping documents Without Prejudice For Settlement Purposes Only Subject to F. R. Settlement Privilege Stamping documents Without Prejudice For Settlement Purposes Only Subject to F. R. E. Rule 408 2014 © Intellectual Property Institute of Canada 31

Mediation Privilege Rudd v. Trossacs Investments Inc. (2006) 79 O. R. (3 d) 687 Mediation Privilege Rudd v. Trossacs Investments Inc. (2006) 79 O. R. (3 d) 687 Case-by-case application of mediation privilege where a party sought to have a mediator give evidence on a motion to enforce a settlement agreement 2014 © Intellectual Property Institute of Canada 32

Common Interest Privilege Allows multiple parties and their counsel to exchange information with each Common Interest Privilege Allows multiple parties and their counsel to exchange information with each other about common concerns while maintaining the solicitor-client (attorney-client) or litigation privilege (work product) that otherwise attaches to the communication. Essentially an extension of the attorney-client privilege or work product doctrine. Also known as the “joint defense” or “community of interest” privilege. 2014 © Intellectual Property Institute of Canada 33

Common Interest Privilege Applies when: 1) The originating communication is privileged in the first Common Interest Privilege Applies when: 1) The originating communication is privileged in the first place; and 2) There is a common (or "selfsame") interest between the parties seeking the privilege 2014 © Intellectual Property Institute of Canada 34

Common Interest Privilege The possibility of adversity between the parties will not deny the Common Interest Privilege The possibility of adversity between the parties will not deny the existence of common interest privilege A cross-claim is likely sufficient to 'pit the parties against each other' and will bring the common interest privilege to an end 2014 © Intellectual Property Institute of Canada 35

Common Interest Privilege There is no bright-line rule regarding the existence of a common Common Interest Privilege There is no bright-line rule regarding the existence of a common interest. Must focus on whether the communication or document furthers a common interest. • Synopsys, Inc. v. Ricoh Co. , Ltd. , 2006 WL 2479109 (N. D. Cal. 2006): documents related to drafts of patent assignment agreement shared by assignor with assignee not subject to common interest privilege because they did not relate to the enforcement of patent and merely reflected the assignment and related negotiations. • William F. Shea, LLC v. Bonutti Research, Inc. , 2013 WL 1386005 (S. D. Ohio 2013): documents exchanged between patentee and assignee were subject to common interest privilege because the documents related to potential infringement by third-party products. 2014 © Intellectual Property Institute of Canada 36

Common Interest Privilege Other examples where common interest privilege was granted • In re Common Interest Privilege Other examples where common interest privilege was granted • In re Regents of Univ. of Cal. , 101 F. 3 d 1386 (Fed. Cir. 1996): common interest applied to communications between patent applicant and attorneys of its licensee. • General Elec. Co. v. Prince, 2006 WL 3741114 (S. D. N. Y. 2006): common interest applied to documents shared by defendant with non-party co-inventor. 2014 © Intellectual Property Institute of Canada 37

Common Interest Privilege Must the joint defense agreement be in writing? Is the joint Common Interest Privilege Must the joint defense agreement be in writing? Is the joint defense agreement producible on discovery? 2014 © Intellectual Property Institute of Canada 38

Case-by-Case Privilege Wigmore Test 1. The communications must originate in a confidence that they Case-by-Case Privilege Wigmore Test 1. The communications must originate in a confidence that they will not be disclosed 2. The element of confidentiality must be essential to the full and satisfactory maintenance of the relationship between the parties 3. The relation must be one which, in the opinion of the community, ought to be sedulously fostered. 4. The injury that would enure to the relation by the disclosure of the communications must be greater than the benefit thereby gained for the correct disposal of the litigation. 2014 © Intellectual Property Institute of Canada 39

Thank You Trent Horne – Bennett Jones LLP hornet@bennettjones. com Joseph Palys – Paul Thank You Trent Horne – Bennett Jones LLP [email protected] com Joseph Palys – Paul Hastings LLP [email protected] com Douglas Thompson – Thompson Cooper LLP [email protected] ca 2014 © Intellectual Property Institute of Canada 40