Wednesday, 5 October 2011

PCC Page 40: IPOff in privileged company

Providentially proffered by the Chartered Institute of Patent Attorneys (CIPA), the PCC Pages seek to explain how litigation works in the recently-revamped Patents County Court (PCC) for England and Wales, taking as its theme a dispute between Cautious Co and IPOff Ltd as to whether IPOff has infringed the IP rights of Cautious in its robotic octopus. In this episode, the 40th, former CIPA President Alasdair Poore continues his review of the seemingly endless issues caused by privilege ...
Last week Cautious was considering an application for disclosure of IPOff’s instructions to their “independent” design agency, Fishy Designs.  No punches were going to be pulled on the application.  However, before putting pen to paper, IPOff’s solicitor sent a revised list with a bunch of documents.  These include IPOff’s instructions to the design agency.  Frustratingly these have large parts redacted, with heavy black lines crossing through the relevant text.  The accompanying letter explains that the missing passages reflect legal advice provided to IPOff by its solicitor and have therefore been redacted as they are privileged.  The rest of the document says nothing of any interest at all. 
 Cautious’ patent attorney is considering his options. 
 As noted last week, the antiquated world of privilege was thrown into disarray by Three Rivers (No 5) [2003] EWCA Civ 474.  This case arose from the BCCI litigation in the following way.  As part of the process of preparing for the inquiry into the collapse of BCCI, the Bank of England had set up a special team to coordinate.  This team instructed and obtained advice from the Bank of England’s lawyers.  So far so good.  The instructions provided to the lawyers and advice from them to members of the team was privileged as legal advice (Legal Advice Privilege).  Note that the documents did not benefit from litigation privilege, which is potentially wider, as the enquiry did not qualify as “litigation”. 
 In order to instruct their lawyers, members of the special team in the Bank requested and collected information from other employees of the Bank.  It was argued that the information, documents recording it etc., that the other employees provided was for the purpose of the Bank obtaining legal advice and, being thus privileged, did not have to be disclosed.  The claimants did not agree, and made an application to the Court.  Somewhat to the surprise of many observers, the Court of Appeal held that legal advice privilege only applied to information provided by and advice given to the select team whose job it was to coordinate and take advice from the outside lawyers.  In particular a communication from an employee of the Bank who was not a member of the select team, to a member of the team, in order to enable a member of the team to send that information on to the outside lawyers, and so to enable the lawyers to give advice was not privileged.  Nor was a communication of legal advice from the outside lawyers to someone in the Bank who was not a member of the team (para 31). 
 Leave to appeal to the House of Lords was refused.  When a later opportunity arose for the Lords to express a view, all that some of them said was that it would have to be reviewed in the future -- not a very convenient outcome, and one which has lead to a flurry of concerned arrangements being put in place for ensuring that, when necessary, legal advice benefits from privilege, such as house rules on who should seek and receive advice.  Sticking to the rules,
 Cautious’ patent attorney rather naturally thought that that must mean that advice originating with IPOff’s solicitor and ending up in the hands of a third party – not even an employee of IPOff – must surely not be privileged.  After a bit of research he has found he is wrong, although wrong in the good company of Anthony Watson QC. 
This argument was tested in USP Strategies Plc v Unicorn Strategies LLC [2004] EWHC 373 (Ch), an interesting case shortly after Three Rivers (No 5), showing that copyright really can be used to commercial advantage to protect business schemes, in this case a warranty scheme.  The argument was over advice which had been provided by Isle of Man lawyers and which had been incorporated into documents passed on to the party to whom this warranty scheme was being offered.  Mr Justice Mann dismissed Watson QC’s argument (see paras 16– 26).  Three Rivers was not only consistent with, but supported the position that, since the original advice (from the Isle of Man lawyers to their client) was privileged as legal advice, so too was anything which evidenced it.  So a copy of the advice sent on to the third party, or a summary of it, or indeed oral testimony, would not be admissible or discoverable.  This would not apply if privilege was waived, or the document had ceased to be confidential as might be the case if it were just passed to any third party.  And if a subsequent document which was disclosed included the advice or evidence of it, it could be redacted in a manner which excluded the advice.  This was summarised in Style & Hollander on Documentary Evidence (now Hollander (Sweet & Maxwell)): 
"If A shows a privileged document to his six best friends, he will not be able to assert privilege if one of the friends sues him because the document is not confidential as between him and the friend. But the fact six other people have seen it does not prevent him claiming privilege as against the rest of the world." 
 So Cautious will be disappointed in its desire to see exactly what instructions IPOff gave to its design agency. 
 In passing, it is interesting to look at this in the context of patent attorney advice on patent filing and prosecution.  One might be concerned that an effect of Three Rivers (No 5) is that certain communications between a patent attorney and his client might not be privileged.  Is the inventor the person within a company who is seeking and receiving legal advice?  Where there is one, might this not be the in-house IP coordinator rather than the inventor, or at least the person who initially instructs the patent attorney?  Fortunately, at least where the issue is about filing and prosecuting UK, EPC and PCT applications this issue is not relevant.  The reason is that privilege for patent attorneys arises in two ways: under s.190 of the Legal Services Act (for advocacy and the conduct of litigation), and s.280 of the Copyright Designs and Patents Act (equating a patent attorney to a solicitor in relation to the provision of advice relating to the protection of inventions etc. (the equivalent provision for trade mark attorneys is s.87, Trade Marks Act 1994).  In the latter case, s.103 Patents Act 1977 equates “patent proceedings” to litigation and so the form of privilege which is given in relation to prosecuting patent applications is (also) litigation privilege.  It therefore covers communications with “third parties” for the purpose of collecting information for the litigation.  The same may not be true of materials prepared for prosecution, say, in the USA.

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