But My Lawyer Said So: A Recent Court Case on Waiving Attorney-Client Privilege before the United States Patent and Trademark Office
The American Bar Association recently described the attorney-client privilege as being “essential to maintaining the confidential relationship between client and attorney, which ultimately benefits our entire society.”[1] Nevertheless, the attorney-client privilege does not provide unlimited protection to any and every communication between a client and their attorney. This privilege may only protect communications where the primary purpose of the conversation is based on a request for legal advice. In contrast, business or personal discussions between a client and a lawyer do not receive this legal protection. Even when the attorney-client privilege applies, it can still be waived by the client. A brief mention by the client to another party about their lawyer’s advice may be sufficient to waive the privilege, even if this other party is the United States Patent and Trademark Office. A recent district court case in Texas is an important reminder of this fact.
In SB IP Holdings LLC v. Vivint, Inc.,[2] a district court judge decided that the patent owner had waived any attorney-client, common interest privilege, and work-product privilege over all communications regarding U.S. Patent Application 14/338,525 (“the ’525 Application”). However, this is merely how the story ends – it is necessary and helpful to review the facts of this cautionary tale from its beginning.
On October 9, 2003, a single inventor filed U.S. Patent Application 10/682,185 (“the ’185 Application”) for an audio-video communication and answering system. This application issued as U.S. Patent No. 7,193,644 (“the ’644 Patent”). After assigning the ’185 Application to a company called Revolutionary Concepts, Inc., the applicant would file four more patent applications based on the disclosure in the audio-video communication and answering system before eventually filing the ‘525 Application. After filing the ‘525 Application, the patent applicant filed another 18 patent applications before the current owner of this patent family filed a lawsuit for infringement against Vivint, Inc., in December 2020. In the patent infringement case, the patent owner sought to enforce several patents that were granted on applications filed after the ’525 Application. In the priority chain, the ‘525 Application is the knot that binds the patents-in-suit to the benefit of the ’644 Patent’s priority date. There is one problem, though: the ’525 Application went abandoned less than three months after it was filed.
On July 23, 2014, the patent owner’s previous law firm filed the ’525 Application without paying the filing fees or submitting the inventor’s declaration. The USPTO subsequently issued a notice to file missing parts indicating that the ’525 Application would go abandoned on October 4, 2014, unless the patent applicant paid the required fees and supplied the missing documents. As with many USPTO deadlines, this deadline could be extended by payment of extension fees. On November 23, 2014, the previous law firm filed an application data sheet, but without paying any fees or supplying any other missing documents. The USPTO again issued a notice indicating that the Applicant’s reply was incomplete, but without any change to the deadline for abandonment. The patent applicant would file a new patent application on March 26, 2015, but without satisfying the missing parts requirement, such as paying the required extensions of time. Accordingly, the ’525 Application had gone abandoned several months before upon expiration of the last possible date for paying extension fees. The newest member to the patent family and its seventeen later patent siblings, cousins, and other relatives thus would not be co-pending with the earlier patent applications. The priority chain was now broken, and these later patent applications would be invalid over ’644 Patent without the valid priority claim.
Sometimes, the USPTO gives second chances to patent applicants. The patent owner filed several petitions with the USPTO to revive the ’525 Application. If the ’525 Application was deemed to never have gone abandoned, then the later patents would get their priority claim restored back to the priority date of the ’644 Patent. However, the USPTO places a few requirements on patent applicants seeking to revive a lost patent application. The patent applicant must prove that the abandonment was unintentional. In appropriate fashion, the patent owner blamed their previous law firm for part of the delay, while claiming reliance on their next law firm’s advice for misunderstanding the actual date of abandonment. Here are some excerpts from the affidavits submitted with the patent owner’s request to revive the ’525 Application:
· “I was informed by counsel that the ’525 Application would not go abandoned until April 6, 2015”;
· “After consulting with counsel, [the patent owner] determined the best path forward was to file a continuation of the ’525 Application”;
· “Each time an [allegation regarding the abandonment of the ’525 Application] is made, [the patent owners] have reviewed the specific allegations in coordination with counsel and concluded that the ’525 Application was not abandoned until April 6, 2015, at the earliest”; and
· “Of note, I am not an attorney. In 2014 and 2015, [the patent owner] was very new to the patent prosecution process, and while [the patent owner] understood the general concept of a priority chain, [the patent owner] was unfamiliar with the nuances of patent prosecution and relied heavily (and continues to rely heavily) on counsel. [The patent owner] was not aware of what fees, if any, should have been paid when the ’525 Application was filed nor was it aware that those fees had not been paid.” [Emphasis added.]
The patent owner succeeded in reviving the ’525 Application at the USPTO, but as a result of the statements quoted above, waived the attorney-client privilege in district court. The Vivint court found that once the patent owner disclosed the advice of counsel, any privilege over that legal advice was waived. The court noted that waivers of privilege typically arise when advice of counsel defenses are asserted by accused infringers to avoid liability for willful infringement. However, waiver of the privilege is not limited to the willful infringement context. In explicitly relying on the advice of counsel – and disclosing that advice – to establish an unintentional delay in reviving the ’525 Application, the patent owner was disclosing both the legal advice and opinions of their patent counsel. Thus, the district court determined that the patent owner had waived all claims of privilege regarding attorney communications regarding the ’525 Application. As a result, disclosure of all communications regarding the subject of abandonment of the ’525 Application and its subsequent revival was ordered by the district court.
The Vivint case provides a reminder of the need for patent prosecution diligence as well as a clear warning regarding the risk of describing any conversation with legal counsel in papers submitted to the USPTO. If the patent owner had filed its continuation application before October 4, 2014, the patent owner would have saved substantial legal fees fighting over the revival of the ’525 Application. On the other hand, the patent owner may still have preserved their attorney-client privilege by choosing their words more carefully in the affidavits submitted to the USPTO, if at all possible.
