United States: Scope of Privilege Waiver May Include Non-Communicated Subject Matter

The U.S. Court of Appeals for the Federal Circuit has further clarified the cost of relying on advice of counsel as a defense to a claim of willfulness. Announcing that the waiver of the attorney work-product privilege extends to work product that discusses a communication between the attorney and the client even if the document itself was not communicated to the client. Also, the accused cannot draw a distinction between advice upon which it relies and upon which it doesn’t rely. In re Echostar Communications Corp., Misc. Dkt. Nos. 803, 805 (Fed. Cir. May 1, 2006) (Gajarsa, J.).

Echostar had asserted the defense of reliance on advice of counsel, relying on a pre-suit investigation performed by its in-house counsel. After the action was filed, Echostar obtained additional legal advice from outside counsel but elected not to rely on it. The district court rejected the distinction between Echostar’s in-house counsel and its law firm and held that Echostar had waived its privilege with both. The district court took an expansive view of the waiver and indicated that it included communication made either before or after the filing of the complaint, whether communicated to Echostar or not.
On appeal the Federal Circuit rejected Echostar’s attempted distinction between its internal investigation and that of its outside counsel. A waiver of the attorney-client privilege applies to all communications relating to the same subject matter.

The Court then identified at least three types of documents that are subject to the privilege: (i) documents that embody a communication between the attorney and client concerning the subject matter of the case, such as a traditional opinion letter; (ii) documents analyzing the law, facts and trial strategy that reflect the attorney’s mental impressions but were not given to the client; and (iii) documents that discuss a communication between the attorney and client concerning the subject matter of the case but that are not themselves communications with the client, such as a communication referring to a phone call with the client. An advice of counsel defense waives the client’s privilege to all of the first category and none of the second category of documents. The Court held that the privilege is also waived with regard to the third category of documents because the documents reference a specific communication with the client. Disclosure of such documents "will aid the parties in determining what communications were made to the client and protect against intentional or unintentional withholding of attorney-client communications from the court."

Still, the Court curtailed the wholesale disclosure of the documents in the third group, advising that documents that fall into the category should be carefully redacted to remove any legal analysis that was not communicated to the client.

When defending against a claim of willful infringement, there is no distinction between the analysis performed by in-house counsel and outside counsel. A waiver to one is a waiver to both.

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