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When Is Pre-Acquisition Analysis of Patents Protected from Discovery During Litigation?

A Discovery Master in Limestone Memory Systems LLC v. Micron Tech., Inc. pending in the Central District of California recently provided additional guidance to practitioners and patent owners on this important question.  The report, issued on February 19, 2019, sustained in part the plaintiff Limestone’s privilege and work product assertions related to pre-acquisition analysis of the asserted patents conducted by Acacia, Limestone’s parent company.  In doing so, the report emphasized that courts have long held that attorney-client privilege may arise when a company obtains legal advice, while seeking to acquire patents, protecting from discovery communications between the acquiring company and inventors.  

Here, Limestone refused to produce business documents created prior to its acquisition of the asserted patents when Acacia had an exclusive option to acquire the patents.  These documents were generated before Limestone enforced the acquired patents against Micron and were concurrently prepared with Limestone’s Complaint.

The Discovery Master reiterated the legal standard for attorney-client privilege and attorney work product under Ninth Circuit precedent.  With respect to attorney-client privilege, where communication involves in-house counsel performing a mix of business and legal analysis, if the “primary purpose” for the communication is to obtain or provide legal advice, it may be shielded from discovery.  The attorney work product doctrine shields materials from discovery where they are “prepared or obtained because of the prospect of litigation.”  It is irrelevant whether litigation was the primary or secondary motive—it is the “circumstances surrounding the document’s preparation” that guides the work product analysis.

Under these standards, Limestone successfully claimed privilege and work product protection with respect to certain communications and documents evaluating the enforceability and strength of the patents that were created on or before the acquisition of the asserted patents.  First, the Discovery Master concluded that the allegedly privileged communications were shielded from discovery because they were generated for the primary purpose of obtaining legal advice, even though a business evaluation occurred concurrently with the preparation of the Complaint.  The substance, participants involved, and form of the communications were more than an “ordinary and usual” business evaluation, most of which occurred just three weeks prior to the filing of the Complaint.

Second, with respect to work product, the Discovery Master concluded that the categories of documents at issue were created in anticipation of this litigation.  The first type of documents, comprising communications from outside counsel, related to the business purpose of pre-acquisition evaluation of the patents which was “inextricably intertwined” with the communication’s legal purpose.  Since Acacia intended to enforce the acquired patents in this suit and the communications occurred within a few weeks prior to filing the complaint, the legal analysis performed in this evaluation process “permeated the subjected communications and therefore gave rise to work product protection.”  The other type of documents, communications among counsel and consultants, their context and content made it clear that the parties were acting under the direction and oversight of counsel to achieve a litigation purpose—despite also having a related business purpose.  As a result, the work product doctrine attached to internal communications and drafts, protecting them from disclosure.

It is important to note that Limestone is in the business of acquiring and enforcing patents as a non-practicing entity and thus the line between litigation versus business objectives, in this case, is necessarily closer than in cases involving practicing entities attempting to withhold patent evaluation materials during discovery.  Nonetheless, this case serves as a reminder to practitioners and patent owners to timely enforce patents, as the Discovery Master repeatedly noted the temporal proximity of the evaluation communications to the filing of the complaint.  Conducting an evaluation and waiting several months to initiate litigation will likely make it much harder to shield from discovery documents reflecting patent evaluation.  As to substance, even where business objectives may be the overarching impetus for communications, emphasizing their legal purpose will increase the likelihood that they will be protected from discovery.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume IX, Number 88


About this Author

 Andrew H. DeVoogd Member Boston Mintz Patent Litigation Licensing & Technology Transactions International Trade Commission Strategic IP Monetization & Licensing Federal District Court IP Due Diligence

Drew is an experienced patent litigator and trial attorney whose work encompasses a broad range of technologies. He regularly represents clients in high stakes International Trade Commission investigations involving some of the world's largest technology companies. He also litigates patent matters and other business disputes in federal district courts around the country, and advises clients in complex IP licensing and related transactions. Drew excels at helping clients make sense of nuanced legal issues while developing effective strategies to protect and leverage their intellectual...

Daniel B. Weinger Patent Litigation Attorney Mintz Law Firm

Daniel's practice in intellectual property focuses on patent litigation, both at the International Trade Commission and the Federal District Courts. Daniel has participated in all phases of patent litigation, including active engagement in multiple evidentiary hearings at the International Trade Commission. He has done work in a variety of technology areas, including computer software, software architecture, GPS, network devices, semiconductors, converged devices, and LED lighting.

Prior to joining Mintz Levin, Daniel worked as a database programmer with InterSystems, Corp., where he specialized in programming solutions for database development with a focus primarily on integration engines.

While on leave from Mintz Levin, from 2014 - 2015, Daniel practiced as a Special Assistant District Attorney in the Middlesex County (MA) District Attorney's Office, based in the Framingham, MA, district court.  During that time, Daniel prosecuted and tried numerous drug, larceny, breaking and entering, and motor vehicle cases in bench and jury sessions.  He also argued bail hearings, motions to suppress, and motions to dismiss.

Rithika Kulathila, Mintz Levin Law Firm, Litigation Law Attorney, Boston

Rithika is a litigator with a technical background in biochemistry and molecular biology. Rithika uses her technical and legal experiences when working with companies in the life sciences, biotechnology, health care, and technology sectors.

Rithika earned her JD from UC Berkeley Law School, while also serving as a judicial extern to the Hon. Susan Y. Illston of United States District Court for the Northern District of California and a legal intern for the medical-legal partnership at the East Bay Community Law Center in Berkeley, California....