Patent marking
 |
 The Maintenance of Privilege in Intellectual Property Litigation - an Australian Perspective |
22 February 2010 |
| This article by Chris Schlicht and Adrian Crooks first appeared in the January/February 2010 edition of US magazine, IP Litigator. |
Introduction |
| “[Legal professional privilege] is of great importance to the protection and preservation of the rights, dignity and freedom of the ordinary citizen under the law and to the administration of justice and law in that it advances and safeguards the availability of full and unreserved communication between the citizen and his or her lawyer and in that it is a pre-condition of the informed and competent representation of the interest of the ordinary person before the courts and tribunals of the land. Its efficacy as a bulwark against tyranny and oppression depends upon the confidence of the community that it will, in fact, be enforced. That being so, it is not to be sacrificed, even to promote the search for justice and truth in the individual case or matter”. 1 |
| The importance of privilege in communications between a client and adviser in relation to intellectual property matters, as in all areas of the law, is axiomatic. However two aspects of intellectually property practice present uncommon if not unique issues regarding the maintenance of that privilege. Firstly, intellectual property rights are sought in multiple jurisdictions and accordingly intellectual property disputes may arise in multiple jurisdictions. Consequently, in addition to communicating with lawyers, patent attorneys and patent agents in their own country, clients must also communicate, either directly or indirectly, with overseas advisers. Often, communications or other documents recording highly sensitive information come into existence in one jurisdiction while litigation in relation to the subject matter of those communications or documents is taking place in another. Secondly, clients are frequently provided with advice in relation to intellectual property matters by professionals who are not legal practitioners. In many jurisdictions, legal qualification is not required in order to practice in the area of intellectual property and while some practitioners may be dually qualified, many are not. These two factors can lead to problems in relation to the protection of confidential communications between adviser and client. In Australia, there have been a number of recent decisions of the Federal Court which highlight the difficulties that can arise when seeking to prevent the disclosure of confidential communications on the basis that they are covered by privilege where the communications have occurred outside of Australia and with a non Australian adviser. Whilst this paper elaborates upon these issues from the Australian perspective, many of the principles discussed in the Australian decisions have relevance to these problems as they arise in other jurisdictions. Furthermore, such decisions are of direct relevance to any non Australian party seeking to litigate in Australia as part of a multi-jurisdictional enforcement action. |
Legal Professional Privilege |
| In common law countries such as Australia, the United Kingdom and the United States of America, the courts have power to compel parties to litigation to provide all documents relevant to the subject matter of the proceedings to the opposing party and to the court in the exercise of “discovery”. In Australian, legal proceedings in relation to intellectual property matters are most commonly commenced in the Federal Court. Order 15 rule 5 of the Federal Court Rules provides that “[t]he Court may, at any stage of the proceeding, order any party to give discovery”, while order 15 rule 2(3) provides that: |
| the documents required to be disclosed are any of the following documents of which the party giving discovery is, after a reasonable search, aware at the time discovery is given: (a) documents on which the party relies; and (b) documents that adversely affect the party’s own case; and (c) documents that adversely affect another party’s case; and (d) documents that support another party’s case. |
| However, in Australia, as in many other common law countries, the obligation to provide discovery is moderated by the right to refuse to provide certain relevant documents on the basis that they are subject to a claim to privilege, one branch of which is legal professional privilege. The doctrine of legal professional privilege is recognised as being in the interests of justice2. It is necessary to facilitate open and frank communications between client and legal adviser. Without it, clients would be hesitant in providing all relevant information to the adviser and the adviser would most likely be reluctant to record any adverse advice in writing. It can be envisaged that without a right of legal professional privilege the process of advising a client would be severely hindered leading to an increase in client dissatisfaction and unwarranted litigation. Of course recognition of privilege enables a party to keep certain relevant communications hidden from other parties and the Court and therefore works against “a more general public interest, that which requires that in the interests of a fair trial litigation should be conducted on the footing that all relevant documentary evidence is available” 3. Hence, the recognition of legal professional privilege involves the weighing of competing public interests. In Australia, as elsewhere, the courts have sought to confine the boundaries of legal professional privilege to only what is necessary to meet the first of these two competing interests4. |
| In Australia, legal professional privilege arises under common law5 and attaches to two types of communications: |
| i) confidential communications passing between a client, the client’s legal adviser and third parties, for the dominant purpose of use in or in relation to litigation which is either pending or contemplated (litigation privilege); and ii) confidential communications passing between the client, the client’s legal adviser and third parties, for the dominant purpose of obtaining or giving legal advice (legal advice privilege). Traditionally, communications between a client’s legal adviser and third parties were not considered to be privileged unless those communications were properly the subject of litigation privilege. However following the decision of the Full Federal Court in Pratt Holdings v Commissioner of Taxation6, such communications may be the subject of legal advice privilege provided they satisfy the other requirements, including the “dominant purpose” test. While the dominant purpose test is a relaxation of the “sole purpose” test previously applied by Australian Courts, it is nevertheless an important requirement in the establishment of legal professional privilege. Courts will often give careful consideration to the purpose of a communication, the relevant purpose being that for which the communication was brought into existence rather than any purpose to which it might subsequently have been put7. |
Functions of a Patent Attorney and the need for Privilege |
| In Australia, a “patent attorney” need not be a qualified lawyer but must hold specific academic qualifications (usually an engineering or science degree), have passed various registration examinations and satisfied prescribed employment requirements. This is similar to the situation in the United Kingdom with regard to Patent Agents who are also knows as “patent attorneys” (although in the UK a significant difference is that a solicitor can use the term “patent attorney” even though he or she is not recorded on the Register of Patent Agents). The situation in Australia and the United Kingdom is unlike that in the United States where a patent attorney must be a qualified lawyer in addition to having scientific and technical qualifications and having passed registration examinations. The different meaning that attaches to the phrase “patent attorney” in the United States and Australia can give rise to confusion when considering whether communications with such persons are privileged. In Australia, the preparation and amendment of a patent specification is almost always carried out by a patent attorney (who, as above, need not be legally qualified). Whilst a patent attorney cannot represent a client in court, he or she can conduct opposition proceedings before the Australian Patent Office and be responsible for the preparation of all evidence in that forum as well as make written and verbal submissions at an opposition hearing. Typically, a patent attorney provides advice on the validity of patent, design and trade mark rights and whether such rights are infringed. When doing so, a patent attorney must often consider and advise on related areas of law such as the common law tort of passing off and copyright. A patent attorney frequently prepares letters of demand and conducts negotiations to resolve a dispute following the sending of such a letter. In light of nature of the work undertaken by patent attorneys, there are compelling reasons for the concept of privilege to extend to communications between a client and a patent attorney in Australia. The roles performed by both patent attorneys and lawyers are in many ways similar. When a client communicates with his or her patent attorney in relation to the securing of intellectual property rights or in relation to the enforcement or infringement of such rights, the client will almost certainly need to disclose confidential information to the patent attorney. If the client and patent attorney are fearful that any instructions or advice are likely to end up in the hands of an opposing party in subsequent litigation, communications between the client and patent attorney will be hampered. This may lead to clients being improperly advised and may affect the quality of any intellectual property rights granted. The parallels between this situation and that which arises when a client communicates with a lawyer and seeks advice from that lawyer in respect of other areas of law are clear. In Australia, it has been recognised that there is sufficient public interest in maintaining the confidentiality of communications between a client and their patent attorney to justify the creation of privilege in respect of such communications. Importantly however, this privilege does not arise under common law, but under statute. |
Patent Attorney Privilege in Australia |
| Patent attorney privilege in Australia is governed by sections 200 (2) and (4) of the Patents Act 1990 (Cth), which provide: (2) A communication between a registered patent attorney and the attorney’s client in intellectual property matters, and any record or document made for the purposes of such a communication, are privileged to the same extent as a communication between a solicitor and his or her client. (4) In this section: Intellectual property matters means: a) matters relating to patents; or b) matters relating to trade marks; or c) matters relating to designs; or d) any related matters9 |
| In Wundowie Foundry v Milson10 Justice French (as he then was) considering the ambit of the protection afforded by this privilege noted: In Australia, the privilege extends to communications passing between a patent attorney in his capacity as such and the patent attorney’s client which would be privileged if the attorney were a solicitor. It is not limited to communications made in the course of conduct of activities under the Patents Act but covers the legitimate professional activities of a patent attorney. However, the scope of the privilege created by the Australian Patents Act is limited and this has given rise to difficulties. In particular, the privilege is expressed as being restricted to communications between a registered patent attorney and the attorney’s client, and therefore does not extend to communications that the patent attorney might have with third parties on behalf of the client. There may however be exceptions to this where it can be demonstrated that the third party was acting as an agent for the client. A further difficulty is that the privilege is limited to communications with a “registered patent attorney”. The term “registered patent attorney” is defined as meaning a person registered as a patent attorney under the Australian Patents Act.11In Wundowie Foundry v Milson10 This begs the question as to what if any application section 200(2) has to patent attorneys or agents overseas and therefore not registered under the Australian Act. |
Eli Lilly v Pfizer |
| The scope of the privilege conferred by Section 200 (2) of the Australian Patents Act and whether it extends to communications between a client and a foreign patent agent was considered by the Federal Court of Australia in Eli Lilly v Pfizer Ireland Pharmaceuticals12. This was an interlocutory decision in proceedings in which Pfizer had alleged that Eli Lilly had infringed claim 10 of its Australian Patent No 676571 through its dealings in an anti impotence drug named Cialis. Pfizer’s patent covered its drug Viagra, which had huge commercial success worldwide with sales in 2002 alone of US $1.78 billion. The infringement/revocation proceedings in Australia were part of litigation that was conducted in numerous jurisdictions. Eli Lilly sought production of two documents which were provided by the inventor to Pfizer’s in-house patent agent in the United Kingdom. It was acknowledged that the documents were brought into existence for the dominant purpose of obtaining advice from the in-house UK advisers. Both documents would have been considered communications covered by privilege pursuant to section 280 of the Copyright Design and Patents Act 1988 (UK) in proceedings conducted in the United Kingdom between the same parties. Justice Heerey cited with approval the UK decision of Wilden Pump v Fusfield13, finding that communications between clients and patent attorneys are not protected by any privilege analogous to legal professional privilege arising under common law. Accordingly, Justice Heerey went on to consider whether privilege was afforded by section 200 (2) of the Australian Patents Act. At paragraph 8 of the decision, Justice Heerey stated: |
| “The privilege (under the Patents Act 1990) is confined to communications with patent attorneys registered as such in Australia. Further, there is no apparent policy reason why Parliament is to be taken to have intended that privilege to extend to communications with any patent attorney anywhere in the world. The requirements for registration in Australia set out in section 198(4) includes residence in Australia, qualification as prescribed by regulations (which would presumably stipulate knowledge of relevant Australian law and practice), employment for a prescribed period and good fame, integrity and character. The drafters must be taken to have had such person in mind when they used the expression ‘registered patent attorney’. In Kennedy v Wallace 2004 (208 ALR 424) Gyles J thought it was “far from axiomatic” that legal professional privilege extended to foreign lawyers. There is even less justification for extending privilege to foreign patent attorneys when the privilege for Australian patent attorneys rests solely on circumscribed statutory footing”. |
| Because the privilege conferred to communications between patent attorneys and clients did not arise under the common law, notions of comity were irrelevant to the Court’s consideration of the issue. Further, it did not matter that the communication was privileged under UK law. The only way the communication might be privileged was if section 200 of the Australian Patents Act was construed to cover communications between a client and an overseas patent agent. The Court found that it was clear that the provision only related to communications with Australian registered patent attorneys. Accordingly, Pfizer was ordered to produce the documents to Eli Lilly in the Australian proceedings. |
| Similar proceedings in Canada, a jurisdiction in which there is no recognition of privilege in communications between client and non-legally qualified patent agent resulted in an identical outcome. As in Australia, the Federal Court of Canada held that despite the statutory privilege existing in respect of the communication in the UK, the communication was not the subject of privileged in Canada and was required to be produced14. |
Arrow v Merck |
| In the decision of Arrow Pharmaceuticals v Merck15, privilege was found to exist in respect of a communication between Merck and its in-house US patent attorney. The document in question was a Confidential Memorandum of Invention (CMI), being an internal Merck document setting out information in relation to a new invention. The CMI was sent by one of the inventors to Mr Sabatelli, a patent attorney in Merck’s patent department, to enable a decision to be made as to whether the invention was capable of being patented. Having noted that as a US patent attorney, Sabatelli was also a qualified lawyer, Justice Gyles went on to consider whether the CMI was the subject of legal professional privilege. The key issue for determination was whether the CMI was produced or brought into existence for the dominant purpose of obtaining legal advice. Justice Gyles noted that, having regard to the decision in Re Spaulding |
| 16the United States Court of Appeals for the Federal Circuit would have answered this question in the affirmative.17 His Honour also considered that had such a factual circumstance occurred in Australia, he would have conclude that the CMI was the subject of legal professional privilege on the basis that it had been prepared for the dominant purpose of obtaining legal advice. That there was an ultimate purpose of obtaining a patent in respect of the invention disclosed in the CMI did not detract from the immediate purpose which was to obtain legal advice as to the patentability of the invention disclosed in the CMI and the provision of legal services by the filing of an application for a patent in respect of that invention.18Accordingly, Justice Gyles held that the CMI in question was the subject of legal professional privilege and was therefore not discoverable in the Australian proceedings. The decision in Arrow v Merck has been followed by the Australian Patent Office in Aristocrat Technologies v IGT19In this matter, determined by a hearing officer, IGT had applied for an extension of time to oppose Aristocrat’s patent application. The application for the extension of time was supported by a statutory declaration of Mr Keith Moore, IGT’s in-house patent attorney in the United States, explaining why IGT had failed to oppose in time. Aristocrat requested the Commissioner of Patents issue a notice to IGT requiring it to produce documents including communications between IGT and its US patent attorneys. IGT claimed privilege over such documents. Following the decision in Arrow v Merck, the hearing officer concluded that legal professional privilege applied to communications of that nature and accordingly, such documents did not have to be produced in Australia. |
Kennedy v Wallace |
| Whilst Arrow v Merck illustrates that a communication between a client and a foreign adviser who is a lawyer, such as a US patent attorney, may be the subject of legal professional privilege in Australia, it is also clear that privilege will only arise if the communication meets the dominant purpose test. The applicability of this requirement to communications involving a foreign (that is non Australian) lawyer has recently been considered by Justice Gyles of the Federal Court of Australia in the decision of Kennedy v Wallace20 and in the appeal of that decision to the Full Federal Court21. The decision in Kennedy v Wallace arose in circumstances where the Australian Securities and Investments Commission had been investigating possible breaches of the Australian Corporations Law concerning share holdings in a publicly listed company. Kennedy had been linked to the matter and had been under investigation in relation to a network of Swiss bank accounts used to secretly trade on the Australian share market. Kennedy had denied holding any beneficial interest in the relevant shares, however an Australian newspaper published a report to the contrary. Kennedy made an appointment to meet his Swiss lawyer, Benno Hafner, in Zurich and in preparation for that meeting, made handwritten notes which he took to the meeting. The notes were subsequently seized in the execution of a search warrant at Kennedy’s residence. Legal professional privilege was claimed over these notes. In the course of the decision at first instance, Justice Gyles made comments casting doubt on the recognition in Australia of privilege over foreign legal advice. His Honour stated: |
| It is far from axiomatic that the administration of justice and the proper functioning of the legal system in Australia is served by granting privilege from production to all (or perhaps any) foreign legal advice |
| His Honour noted that there was no authority binding on him to extend legal professional privilege to cover advice given by a foreign lawyer but that a refusal to do so would be controversial. He therefore proceeded to assume for the purposes of the case before him that legal professional privilege could be afforded to some foreign communications. Nevertheless, Justice Gyles concluded that the notes made by Kennedy were not the subject of legal professional privilege, in part because Kennedy had not satisfied the requirement that the dominant purpose in meeting with his Swiss lawyer and in making the notes in question was the seeking of legal advice. His Honour found that Hafner was the repository of information in relation to the relevant Swiss entities he had established and was a de facto trustee or manager of those entities and therefore had a role beyond that of legal adviser. On appeal, the Full Federal Court upheld the trial Judge’s finding that the notes were not created for the dominant purpose of obtaining legal advice. This was sufficient to dispose of the appeal. However Justice Allsop went on to consider the issue of whether privilege could attach to communications involving a foreign lawyer. His honour noted: |
| A refusal to recognise foreign lawyer’s advice privilege … would undermine the rationale of the privilege. It would also undermine the administration of justice by enlivening a threat in this jurisdiction to the confidentiality of communications which would otherwise be protected in other places.22 |
The Position in Australia after Eli Lilly, Arrow and Kennedy |
| From the decisions in Eli Lilly v Pfizer, Arrow v Merck and Kennedy v Wallace, three broad principles may be drawn. Firstly, if a communication takes place between a client and a patent agent who is not a registered Australian patent attorney, then it appears clear following the reasoning in Eli Lilly v Pfizer that such a communication will not enjoy the statutory privilege conferred by the Australian Patents Act and will not be covered by legal professional privilege at common law.23 Hence, it is likely that any such communication, provided it is relevant to an issue in dispute, will be discoverable in legal proceedings in Australia and therefore accessible by an opponent in such proceedings. The potential implications of this position for clients conducting litigation in Australia based on intellectual property rights originating in the UK are illustrated by statistics produced for a report of the Intellectual Property Research Institute of Australia (“IPRIA”) dated December 2007.24 The report noted that at the end of 2006 there were 1633 registered patent agents in the UK. A comparison of a sample of those patent agents with the UK Law Society Register of Solicitors holding a practicing certificate and being licensed to practice by that body as at 24 August 2007, showed that only 1% of patent agents were also registered to practice as solicitors.25 |
| The reasoning applied in Eli Lilly v Pfizer would be equally applicable to communications between a client and a non-legally qualified US patent agent. According to the IPRIA report, as at 7 August 2007, it was recorded at the United States Patent and Trade Mark Office that there were 8,313 active patent agents and 26,297 active patent attorneys in the US.26This suggests that a significant proportion of US originating communications between client and adviser in relation to intellectual property matters will not be covered by any form of privilege in Australia. Secondly, following Arrow v Merck, it appears that communications between a client and a legally qualified patent attorney may be the subject of privilege in Australia, even where the communications relate to work typically engaged in by a patent attorney rather than a lawyer, provided the communications can be characterised as being for the dominant purpose of obtaining legal advice. However, despite the ultimate finding in Arrow v Merck, it is interesting to note that Justice Gyles was not entirely comfortable with the outcome. At paragraph 21 His Honour stated: |
| In cases such as this there can be an uncomfortable feeling that a system may have been devised in order to grant secrecy to a document by exploitation of the immunity conferred by legal professional privilege. |
| Thirdly, Kennedy v Wallace highlights that communications or other documents made or produced by a client, legal practitioner or third party will only be the subject of legal professional privilege in Australia if the communication or other document is made or produced for the dominant purpose of the client obtaining of being provided with legal advice. Australian courts will closely scrutinise the intent and purpose of a communication when determining if privilege will arise and the mere fact that the communication involves a legal adviser will not be sufficient. In Kennedy v Wallace, it was not enough that Kennedy’s communication was for the purpose of a meeting with a Swiss lawyer. Kennedy needed to, but could not, establish that the communication was for the dominant purpose of obtaining legal advice. In conclusion, where a client is engaged in legal proceedings in Australia and that client has had communications with foreign patent agents, there is a real possibility that such communications may have to be discovered and produced to opposing parties, notwithstanding that those communications may be the subject of privilege in the jurisdiction in which they arose. It would therefore be prudent for a review of such overseas communications to be made before proceedings are commenced in Australia, to assess both the likelihood that the communications will be accessible to opposing parties and, if so, the extent to which the documents might be prejudicial to the client’s case. |
A resolution? |
| The Patent Attorney profession in Australia has for some time recognised the impact on its client’s arising from the limited scope of the statutory privilege afforded under the Australian Patents Act. In February 2009, various associations representing the Patent Attorney and legal profession in Australia and overseas made submissions to the Australian Government highlighting the perceived inadequacies of this statutory privilege, in particular having regard to the international nature of intellectual property matters. The submissions proposed that section 200(2) of the Patents Act be amended to extend the privilege: a) to communications between a client and a patent attorney or agent of another country; and b) to communications between an Australian patent attorney or a patent attorney or agent of another country and third parties. Section 200(2) has been proposed to be amended as follows: |
| A communication to or from, or for the purposes of providing information to, a registered patent attorney or a patent attorney or patent agent of another country in intellectual property matters, and any record or document made for the purposes of such a communication, are privileged as at the date at which privilege is claimed in the same way and to the same extent as a communication to or from, or for the purposes of providing information to, a legal practitioner. |
| The purpose of the proposed amendment is to ensure that in respect of communications regarding intellectual property matters, the statutory privilege is equivalent to legal professional privilege arising under common law. The submissions and proposed amendments to the Australian Patents Act have received some positive response and it is hoped that reforms may be implemented during 2010. Internationally, representative bodies such as FICPI and AIPPI as well as WIPO are engaged in a process of considering how issues surrounding the recognition of patent attorney privilege might be addressed on a global scale, with one possibility being an international treaty on privilege governing all intellectual property practitioners. |
| Footnotes 1 - Attorney General for the NT v Maurice (1986) 161 CLR 475 at 490 per Steen J 2 - see for example Grant v Downs (1976) 135 CLR 674 per Barwick J “it is necessary in the public interest that professional privilege should be recognized and enforced. That there is occasion for excluding from inspection documents which fall within that privilege cannot, in my opinion, be denied.” 3 - ibid at 685 per Stephen, Mason and Murphy JJ 4 - ibid at 685 per Stephen, Mason and Murphy JJ “As a head of privilege legal professional privilege is so firmly entrenched in the law that it is not to be exorcised by judicial decision. None the less there are powerful considerations which suggest that the privilege should be confined within strict limits.” 5 - In addition to legal professional privilege arising at common law in Australia, such privilege is also recognised by the Evidence Act 1995 (Cth) and equivalent State legislation. However the provisions of the Evidence Act are restricted in their effect to the conduct of litigation in Court. 6 - Pratt Holdings Pty Ltd v Commissioner of Taxation (2004) 136 FCR 357. 7 - Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501 8 - Patents Act 1990 (Cth) section 198(4), reg 20.3 and Schedule 5 to the Patent Regulations 1991 (Cth) 9 - A similar privilege is created by statute in relation to United Kingdom patent agents by section 280 of the Copyright, Designs and Patents Act 1988 (UK) which provides: 1) This section applies to communications as to any matter relating to the protection of any invention, design, technical information or trade mark, or as to any matter involving passing off. 2) Any such communication – a) between a person and his patent agent, or b) for the purpose of obtaining, or in response to a request for, information which a person is seeking for the purpose of instructing his patent agent, is privileged from disclosure in legal proceedings in England, Wales or Northern Ireland in the same way as a communication between a person and his solicitor or, as the case may be, a communication for the purpose of obtaining, or in response to a request for, information which a person seeks for the purpose of instructing his solicitor. 10 - Wundowie Foundry Pty Ltd v Milson (1993) 44 FCR 474 11 - Schedule 1 to the Patents Act 1990 (Cth). 12 - Eli Lilly and Co & Another v Pfizer Ireland Pharmaceuticals & Another (No 2) (2004) 137 FCR 573 13 - Wilden Pump and Engineering Co v Fusfield [1985] FSR 159 14 - Lilly Icos LLC v Pfizer Ireland Pharmaceuticals (2006) 55 CPR (4th) 457 15 - Arrow Pharmaceuticals Ltd v Merck & Co, Inc (2004) 210 ALR 593 16 - Re Spaulding Sports Worldwide Inc 203 F.3d 800 (Fed. Cir. 2000) 17 - ibid at [15] 18 - ibid at [17] to [19] 19 - Aristocrat Technologies Australia Pty Ltd v IGT (2008) 75 IPR 409 20 - Kennedy v Wallace (2004) 213 ALR 108 21 - Kennedy v Wallace (2004) 142 FCR 185 22 - ibid at [202] 23 - A possible exception to this is if the overseas patent agent acts as agent for an overseas lawyer. 24 - Patent Attorney Privilege in Australia: Rationale, Current Concerns and Avenues for Reform. IPRIA Report December 2007 paragraph 4.19. 25 - Patent Attorney Privilege in Australia: Rationale, Current Concerns and Avenues for Reform. IPRIA Report December 2007 paragraph 4.19. 26 - Footnote IPRIA Report, para 4.27. |
