Tempting Fate: Two Recent Federal Decisions Apply Fairness Test To Protect Attorney-Client Privilege in Face of Extrajudicial Disclosures

On February 25 and March 26, 2013, two federal district courts refused to find a broad waiver of the attorney-client privilege in the face of extrajudicial disclosures of privileged communications. In both decisions, the courts reasoned that extrajudicial disclosures of privileged communications should result in a waiver of the attorney-client privilege only where fairness compels such a result. A fairness inquiry, however, is highly fact-specific and subjective, and there is no guarantee that a court will find an absence of waiver. (In each case, the courts ultimately concluded that fairness did not warrant a waiver beyond the materials that actually were disclosed because they were not offered in the underlying actions.) The lesson learned, of course, is that companies should avoid the issue altogether by guarding against extrajudicial, or other, disclosures of their privileged communications in the first instance.

1. Two Recent Federal Decisions Apply Fairness Test To Protect Privilege

   1. LG Electronics

      On February 25, 2013, in Wi-LAN, Inc. v. LG Electronics, Inc.,1 a federal district court in the Northern District of California granted a motion to quash LG Electronics' ("LG") subpoena seeking materials related to a letter Wi-LAN received from its outside counsel concerning its patent rights (the "Letter") against LG Electronics and which Wi-LAN deliberately transmitted to LG during the licensing negotiations which preceded the initiation of litigation.

      Wi-LAN had filed a patent infringement suit in the Southern District of New York claiming, among other things, that LG owed it royalties in connection with a Wi-LAN patent. Before Wi-LAN filed suit against LG, Wi-LAN's general counsel received the Letter from Wi-LAN's outside counsel (which also was Wi-LAN's litigation counsel). The Letter, addressed only to Wi-LAN's general counsel, was marked "CONFIDENTIAL" on every page, and contained an analysis of the relevant patent and other information related to Wi-LAN's patent assertion. In an attempt to convince SG to pay Wi-LAN royalties, Wi-LAN's general counsel emailed the Letter to LG without placing any qualifications on its use.

      The Letter failed to convince LG of Wi-LAN's position. Accordingly, Wi-LAN filed its patent infringement suit in the Southern District of New York. Shortly before the close of discovery, LG served a subpoena on Wi-LAN's counsel in the Northern District of California for documents and testimony relating to the...