Attorney-Client Privilege — Subject Matter Waiver & In-House Counsel — How Far Does Seagate Go?

Our post of August 27, 2007, reported the Federal Circuit’s holding in In re Seagate Tech., LLC, 2007 U.S. App. LEXIS 19768 (Fed. Cir. Aug. 20, 2007), that — in a case charging willful infringement — the subject matter waiver effected by asserting the defense of advice of counsel was limited to the advice of opinion counsel (the pre-litigation counsel on whom the client relied in allegedly infringing) and did not extend to trial counsel. But Seagate explicitly did not address whether the waiver extended to in-house counsel and remanded on that issue.

On remand, in Convolve, Inc. v. Compaq Computer Corp., 2007 U.S. Dist. LEXIS 87454 (S.D.N.Y. Nov. 26, 2007), Magistrate Judge James C. Francis IV held that the privilege and work product protections attaching to communications of in-house counsel, on the facts before him, were not waived, except to the limited extent there may have been any “prelitigation communications relating to the opinions of in-house counsel upon which the defendants now rely in connection with their advice of counsel defense.” He reasoned as follows:

Under Seagate, two sets of considerations are relevant. First, it is important to identify whose opinion the defendants seek to rely on, that is, whether it is the advice of outside opinion counsel or that of in-house counsel themselves, or both... Second, it may be necessary to separate the communications made and work product created before litigation was commenced from what was generated after the case began....

To the extent in-house counsel themselves issued opinions upon which the defendants rely as a defense to the claim of willful infringement, "asserting the advice of counsel defense waives work product protection and the attorney-client privilege for all communications on the same subject, as well as any documents memorializing attorney-client communications," though this waiver does "not extend to work product that was not communicated to the alleged infringer." ... Whether the waiver applies to postlitigation communications by in-house counsel concerning their opinions is a closer question. From one perspective, in-house counsel more closely resemble opinion counsel than trial counsel because they offer what the defendants treat as objective assessments for making business decisions. See id. at 1373. However, in Seagate, the court found that postlitigation opinions even of outside opinion counsel are of "marginal value" because the willfulness analysis focuses on prelitigation conduct. Id. at 1374. Given that reasoning, there is no basis here for taking discovery of in-house counsel's communications after the litigation was commenced.

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