Uncommunicated Law Firm Work Product Protected When In-House Privilige is Waived

In In re EchoStar Communications Corporation (Fed. Cir. May 3, 2006) EchoStar had relied on the advice of its in-house counsel prior to the filing of the patent infringement action by Tivo. After the action was filed, EchoStar obtained additional legal advice from Merchant & Gould but elected not to rely on it. TiVo sought production of documents in the possession of EchoStar and Merchant & Gould in order to explore further EchoStar’s state of mind in determining that it did not infringe the patent.

The district court held that by relying on advice of in-house counsel EchoStar
waived its attorney-client privilege and attorney work-product immunity relating
to advice of any counsel regarding infringement, including Merchant & Gould.
The district court indicated that the scope of the waiver included
communications made either before or after the filing of the complaint and any
work product, whether or not the product was communicated to EchoStar. The
district court also held that EchoStar could redact information related only to
trial preparation or information unrelated to infringement.

Circuit Judge Gajarsa agreed that "when EchoStar chose to rely on the advice of in-house counsel, it waived 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." However, "Merchant & Gould work product that was not communicated to EchoStar or does not reflect a communication is not within the scope of EchoStar’s waiver because it obviously played no part in EchoStar’s belief as to infringement."

Here, Merchant & Gould work product that was not communicated to EchoStar or does not reflect a communication is not within the scope of EchoStar’s waiver because it obviously played no part in EchoStar’s belief as to infringement of the ’389 patent. See Steelcase, 954 F. Supp. at 1198-99. It may very well be true, as TiVo suggests, that at times some parties would communicate draft opinion letters or the contents thereof to the client confidentially in order to avoid disclosing that communication during potential discovery if and when the attorney-client privilege is waived, but we cannot eviscerate the legitimate policies of the work-product doctrine and chill the principles of our adversary system as a whole on account of the possibility that, from time to time, there may be occurrences of ethical ransgressions.
In sum, the advice-of-counsel defense to willfulness requires the court to decide, inter alia, whether counsel’s opinion was thorough enough to "instill a belief in the infringer that a court might reasonably hold the patent is invalid, not infringed, or unenforceable." Ortho Pharm., 959 F.2d at 944. If a Merchant & Gould document was not communicated to EchoStar or if a Merchant & Gould document does not reference a communication between Merchant & Gould and EchoStar, its relevant value is outweighed by the policies of the work-product doctrine. Thus, it was an abuse of discretion for the district court to determine that the scope of the waiver of privilege extended to such documents.