July 2012 Vol. 9, No. 2


Patenting Ethics: Four Lessons in the Rules of Ethics from Patent Decisions

Daniel E. Eaton1

Four of the 14 decisions abstracted in this edition of Ethics Quarterly, about 30 percent,are in patent disputes.  Each order answers a distinct question of ethics:  Can the attorney-client privilege apply to communications with non-clients?  Can the attorney-client privilege apply to communications by non-attorneys?  Can a party’s expert remain in a case where he had a prior confidential relationship with the opposing party, even though in the same situation the party’s attorney would be disqualified?  Can an attorney the client considers important to its litigation team be precluded from representing a client at trial, yet not be disqualified from continuing to work on the client’s case outside the courtroom?    

The answer to all of these questions is yes.  The rulings have important lessons for attorneys who do not litigate intellectual property cases2

Lesson 1:  The Attorney-Client Privilege Sometimes Covers Communications Between Attorneys and Non-Clients.

In Gen-Probe Incorporated v. Becton, Dickinson and Company (S.D. Cal. 2012) 2012 WL 1155709 (EQ, 9.2.2), the question before the Court was whether the attorney-client privilege covered communications between a party-corporation’s outside patent counsel and an engineer who formerly had been an independent contractor for another corporation (“contracted corporation”) with whom the party-corporation had contracted to help develop a medical system the party-corporation later patented.  The communications concerned outside counsel’s investigation of the patentability of various aspects of the project on which the engineer had worked.  The communications did not relate to the patents at issue, but the Court assumed the communications were relevant to the case.  (Id. at *1, note 1.)   The contracted corporation was not a client of the party-corporation’s outside counsel and the engineer was an independent contractor, not an employee, of the contracted corporation.  In this setting, were the communications between the party-corporation’s outside counsel and the engineer privileged?

The Court held that they were.  The Court observed that the Ninth Circuit had ruled that the privilege covered communications between a party-corporation’s outside counsel and an outside consultant that was a “functional employee” of the party-corporation.  (Id. at *3, discussing United States v. Graf (9th Cir. 2010) 610 F.3d 1148, 1159.)  Under the rule announced in Graf, communications related to the patentability investigation between party-corporation’s outside counsel and employees of the contracted corporation were privileged.  The Court slightly extended that rule to include communications with the independent contractor-engineer who, while not a true employee of the contracted corporation, was the functional equivalent of an employee of the contracted corporation.  The engineer, due to his relationship to the party-corporation, therefore was among those with whom outside counsel needed to be able to communicate with the openness that the attorney-client privilege affords.  (2012 WL 1155709  at *4.)  Since employees of the contracted corporation were treated as the functional equivalent of the party-corporation’s own employees for purposes of the privilege, and the independent contractor-engineer in turn was the functional equivalent of an employee of the contracted corporation, the independent contractor-engineer was deemed to be a functional employee of the party-corporation as to communications regarding outside counsel’s patentability investigation.  That made such communications privileged.   The Court found that there was “no plausible reason” for it to treat the engineer any other way.  (Ibid.)  This issue was distinct from whether the engineer could somehow be considered a client of party-corporation’s outside counsel.  (Id. at *5.)

How would this analysis work in settings beyond patent litigation?  In handling an entity client’s litigation or transaction, counsel necessarily will communicate with those not directly employed by the entity.  Under the reasoning of Gen-Probe, counsel may be able to protect those communications as privileged if counsel can establish that those contacted are or were the functional equivalent of the client-entity’s employees and that the communications were designed to assist counsel in doing the work for which he had been retained.  This is distinct from work product protection that may provide an alternative or additional shield for such communications.

Lesson 2:  The Attorney-Client Privilege Sometimes Covers Communications Between Non-Attorneys and Clients.

The question before the Court in Buyer’s Direct Inc. v. Belk, Inc.  (C.D.Cal. 2012) 2012 WL 1416639 (EQ, 9.2.5) was whether the attorney-client privilege applied to communications between plaintiff and its non-attorney patent agent who was registered with the U.S. Patent and Trademark Office where the agent did not work for an attorney.  The Court held that, to a limited extent, the privilege did cover such communications.

The Court recognized the split in authority on this question.  For example, the Southern District of California has held that the attorney-client privilege does not cover communications with patent agents not working under the supervision of an attorney.  (Parks v. CAS Enter., Inc. (S.D.Cal. 2009) 2009 WL 3565293.)  That is because, according to that court, the attorney-client privilege applies to attorneys by virtue of “the special role that lawyers have, by dint of their qualifications and license, to give legal advice.”  (Id. at *2, quoting Agfa Corp. v. Creo Prods. Inc. (D.Mass. 2002) 2002 WL 1787534, *2.)

The Court in Buyer’s Direct Inc. followed those cases that extended the privilege to non-attorney patent agents.  Congress authorized such agents to represent clients in the patent prosecution process.  Not extending the privilege to these agents would place them at a competitive disadvantage to patent attorneys thereby undermining the congressionally authorized choice in representation.  (2012 WL 1416639, *3.)

The Court limited the scope of the privilege as to non-attorney patent agents to “communications related to presenting and prosecuting patent applications before the USPTO, as this is the extent to which Congress has granted patent agents the same stature as an attorney representative.  Accordingly, communications subsequent to the issuance of a patent are not covered by the attorney-client privilege.”  (Id. at *3, citation omitted.)  Moreover, a communication between the patent agent and his client is not privileged unless it contains material indicating that it was made to secure primarily legal advice on patentability and legal services in preparing a patent application.  (Id. at *4.)

The general rule remains that “the attorney-client privilege does not cover non-lawyer representatives engaged in legal work.” (Id. at *2.)  No privilege would appear to be available unless at the very least a federal or state law expressly authorizes the use of lay representatives in the particular proceeding.  (See e.g., McCoy v. Southwest Airlines, Inc. (C.D.Cal. 2002) 211 F.R.D. 381, 387, declining to extend privilege to communications between union representative and union grievant in connection with preparation for hearing mandated by Railway Labor Act absent statute specifically authorizing representation by laypersons at such proceedings; People v. Velasquez (1987) 192 Cal.App.3d 319, 328-329, declining to extend privilege to communications between inmate and “jailhouse lawyer” given that the use of jailhouse lawyers is neither prohibited nor promoted by state law.)

Yet there are limited instances in which courts have extended a confidentiality privilege to non-attorneys other than registered patent agents.  (See generally, “Privilege as to communications between lay representative in judicial or administrative proceedings and client.”  31 A.L.R.4th 1226.)  In Welfare Rights Organization v. Crisan, (1983) 33 Cal.3d 766, the California Supreme Court held that “a privilege comparable to the attorney-client” privilege was impliedly provided by a state statute authorizing the use of lay representatives in administrative hearings over welfare claims.  The California Supreme Court declined to define the scope of this layperson-client privilege, noting only that the scope of the privilege would depend heavily on the “severely limited” function of the lay representative under the Welfare and Institutions Code.  (Id. at 772, note 4.)  The Court also declined to hold that its ruling automatically extended such a privilege to communications with lay representatives authorized to represent clients before other state tribunals.  (Id. at 772.)  Knowledge of where a kind of attorney-client privilege may apply to non-attorneys, and limitations on the scope of the application of the privilege in such settings, will inform strategy in matters in which an attorney faces a non-attorney opposing “counsel.”

Lesson 3:  Disqualifying an Expert Based on a Prior Confidential Relationship Is Harder than Disqualifying an Attorney on the Same Ground.

Life Technologies Corp. v. Biosearch Technologies, Inc. (N.D.Cal. 2012) 2012 WL 1604710 (EQ, 9.2.8) addressed whether disqualification of an expert was warranted because the expert had had a limited, though confidential, consultation with the opposing party in another matter about assertedly related technology.  The Court held that it was not.

Disqualification of an expert is proper only if:  (1) the opposing party had a confidential relationship with the expert and (2) the opposing party disclosed confidential information to the expert relevant to the current action.  (2012 WL 1604710, *5, citing Hewlett-Packard Co. v. EMC Corp. (N.D.Cal. 2004) 330 F.Supp.2d 1087, 1092).

The Court in Life Technologies Corp. found that the plaintiff, which was seeking disqualification, had had a confidential relationship with the expert, even though the expert had billed for only 11 hours in the consultation, received only $4400, and had signed no protective order or submitted any written expert report.  It was enough that the substance of the interaction gave the plaintiff a reasonable belief that it had a confidential relationship with the expert.  (Id. at *6.)

But the plaintiff was unable to show that the expert actually had received confidential information relevant to the current matter, which involved “different parties, litigating different patents, and claiming different technologies.”  (Id. at *7, citation omitted.)  A party seeking disqualification of an attorney need only show that it had an attorney-client relationship in a substantially related matter that went beyond a preliminary consultation.  Once that showing is made, the attorney’s receipt of confidential information material to the current representation is presumed.  (See e.g., H.F. Ahmanson & Co. v. Salomon Bros. (1991) 229 Cal.App.3d 1445, 1452.)

The framework for the disqualification of experts applies to patent and non-patent disputes alike and there is no meaningful difference between the test applied in California federal courts and California state court.  (Compare Life Technologies Corp. with Collins v. State of California (2004) 121 Cal.App.4th 1112.)  In all contexts, dislodging an opposing expert with whom a party has had a confidential relationship is more challenging than dislodging an opposing counsel with whom a party has had a confidential relationship.

Lesson 4:  An Attorney May Be Barred from Representing a Client at Trial Yet Continue to Work for the Client Behind the Scenes. 

In Calouri v. One World Technologies, Inc. (C.D.Cal. 2012) 2012 WL 2004173 (EQ, 9.2.13), the Court analyzed whether patent prosecution counsel who had worked on a matter since its inception could be precluded from representing his client at trial because he would be a necessary witness at trial, even though the client had given his informed written consent to counsel’s participation as counsel at trial.  The Court found that counsel would likely be a trial witness on the issues of inventorship and enforceability of the patent.  The Court found that precluding patent prosecution counsel from serving as trial counsel was warranted under the circumstances.

California Rule of Professional Conduct 5-210 prohibits an attorney from “act[ing] as an advocate before a jury which will hear testimony” from the attorney unless:  (1) the testimony relates to an uncontested matter; or (2) the testimony relates to the nature and value of legal services rendered; or (3) the attorney obtains “the informed, written consent of the client.”   ABA Model Rule 3.7 is a more restrictive version of the advocate-witness rule.  The ABA Rule prohibits an attorney from “act[ing] as advocate at a trial in which the lawyer is likely to be a witness” unless:  (1) the testimony relates to an uncontested issue; (2) the testimony relates to the nature and value of the attorney’s legal services; or (3) the client would suffer undue hardship.  The critical difference in the rules is in the third basis under which an attorney is allowed to participate at trial.  The ABA requirement that the prospective attorney-witness demonstrate to a court that the client will suffer undue hardship if the attorney is prohibited from participating as trial counsel is harder to meet since the client consent required by the California rule requires no showing to a court beyond a client signature.

The Court in this case declined to apply the more permissive California advocate-witness rule and applied the more restrictive ABA advocate-witness rule instead.   The Court cited among other cases Kennedy v. Eldridge (2011) 201 Cal.App.4th 1197 for the proposition that “recent decisions regarding the [advocate-witness] rule demonstrate that the California courts are increasingly looking to and relying upon the ABA Model Rules for guidance in its application.”  (2012 WL 2004173, *5.)  The Court also noted that if a client’s consent were enough to avoid disqualification of trial counsel likely to serve as a witness, a motion to disqualify would have to be denied “any time a client consents regardless of the prejudice to the moving party or the damage to the integrity of [the] judiciary.”  (Ibid. at note 4.)

The Court did not, however, wholly disqualify patent prosecution counsel from further representing his client in this matter, nor did the opposing party seek such complete disqualification by moving in limine to bar only patent prosecution counsel’s participation at trial.  The Court limited its holding to precluding patent prosecution from appearing before the Court or the jury at trial in the matter, specifically allowing counsel to continue to “serve as an adviser to plaintiff and to” trial counsel.  (Id. at *6.)  Such a holding is consistent with the language of both the California and ABA advocate-witness rules, both of which bar an attorney only from acting as a trial advocate in a case in which he will be a witness.

It is not unique to patent litigation regularly to have more than one lawyer representing each side of a case, even if it is only a matter of multiple attorneys at a single firm representing each side.  Both the California and the ABA advocate-witness rules permit an attorney from a firm to serve as trial counsel even where one of his firm colleagues is likely to be a witness.  (See Discussion Note to CRPC 5-210 and ABA Model Rule 3.7(b).) The rule announced in Calouri, in which the more demanding ABA advocate-witness rule was applied, will come into play only where a client finds it highly desirable to have a particular lawyer who is likely to be a witness present its case to the trier of fact, but where the client cannot show undue hardship from that lawyer’s absence from trial.  Regardless of whether a court applies the California or ABA advocate-witness rule, even an attorney-witness may participate in advising the client outside of the courtroom about the matter being tried.  


Patent litigation is governed by a number of special substantive and procedural rules.  It turns out that lessons learned in patent litigation about the rules of attorney ethics are applicable to a wide spectrum of attorney practice, from the rules of who is and who is not entitled to claim the protection of the attorney-client privilege to the circumstances under which an opposing expert may be disqualified to restrictions on the trial participation of an attorney likely to be called as a witness.  That is a reminder that, while the resolution of a particular ethical question is shaped by the particular area of practice in which the question is presented, application of the resolution is almost never limited to the field in which the question is presented.

1 Daniel E. Eaton, the Editor-in-Chief of Ethics Quarterly, is a partner in the law firm of Seltzer Caplan McMahon Vitek, and a member and former Chairman of the San Diego County Bar Association’s Legal Ethics Committee.  The views expressed here are his own.

2 Using the shorter descriptor “non-intellectual property litigators” seemed wrong.

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