Tuesday, 14 September 2010

Yesterday's answers today: Court of Justice nails Akzo privilege claim

Akzo Nobel NV, the world’s largest manufacturer of paints, lost an appeal today over its assertion that it was entitled to attorney-client privilege in a case that could have curtailed the investigative powers of European Union antitrust regulators.  In Case 550/07 P Akzo Nobel Chemicals Ltd. and Akcros Chemicals Ltd. v the Commission of the European Communities, the Court of Justice of the European Union rejected Akzo’s bid to have legal privilege extended to in-house company lawyers during antitrust raids. The crucial statement of the Court appears in paras 47 to 49 of today's ruling:
"47 Notwithstanding the professional regime applicable in the present case in accordance with the specific provisions of Dutch law, an in-house lawyer cannot, whatever guarantees he has in the exercise of his profession, be treated in the same way as an external lawyer, because he occupies the position of an employee which, by its very nature, does not allow him to ignore the commercial strategies pursued by his employer, and thereby affects his ability to exercise professional independence.

48 It must be added that, under the terms of his contract of employment, an in-house lawyer may be required to carry out other tasks, namely, as in the present case, the task of competition law coordinator, which may have an effect on the commercial policy of the undertaking. Such functions cannot but reinforce the close ties between the lawyer and his employer.

49 It follows, both from the in-house lawyer’s economic dependence and the close ties with his employer, that he does not enjoy a level of professional independence comparable to that of an external lawyer".(emphases added)
This actions was triggered after Commission officials, back in 2003, seized documents, including emails, notes and memos, which Akzo said were privileged communications. While this action did not specifically relate to patents, the ruling will affect the client-attorney relationship which had been presumed to exist between employers and in-house patent attorneys who, by the very nature of the patent grant, are in a position to affect the scope of their employer's market position and conduct in respect of it.

The Confederation of British Industry has swiftly condemned the ruling, which has predictably been welcomed by the competition authorities.

Thanks are due to David Kuper (Forsyth Simpson) and Stephanie Bodoni (Bloomberg) for information provided.

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