Plaintiff moved to compel the production of documents that were listed on the defendants' privilege logs. The district court explained the disputed documents as follows: "The disputed documents at issue were either authored by Ablation Frontiers, Inc.'s ("AFI") outside counsel for AFI, or Medtronic's outside counsel for Medtronic. The documents were subsequently turned over to each respective party by the other during Medtronic's negotiations to acquire all of AFI's products and related intellectual property."
The plaintiff asserted that the documents were not privileged because they pertained to business advice and not legal advice.
The district court noted that the Ninth Circuit normally applies an eight part test to determine attorney-client privilege: (1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) unless the protection be waived.
In re Grand Jury Investigation, 974 F.2d 1068, 1071 n. 2 (9th Cir. 1992) (quoting United States v. Margolis (In re Fischer), 557 F.2d 209, 211 (9th Cir. 1977)).
After reviewing the documents in camera, the district court determined that they met the eight factor test. Nonetheless, the plaintiff contended that disclosure of the documents to an unrelated third party in a business transaction waived the privilege. Defendants contended that the privilege was not waived because the communications fit within the common legal interest doctrine. "The common interest privilege . . . applies where the (1) communication is made by separate parties in the course of a matter of common [legal] interest; (2) the communication is designed to further that effort; and (3) the privilege has not been waived." Id. at 495 (citation omitted)."
The plaintiff contended that the doctrine did not apply because the communications were in furtherance of a business interest. Defendant countered by asserting that the disclosures were subject to strict confidentiality agreements and constituted a shared legal analysis of the scope of certain patent.
The district court noted that "[j]oint anticipated litigation has been held to be a common legal interest among buyer and seller of IP." The district court then concluded that these documents fit within the common legal interest because both defendants were committed toward the successful completion of a transaction. "Medtronic and AFI were contemplating the wholesale acquisition of AFI by Medtronic. The legal interests of AFI and Medtronic in evaluating these legal interests were aligned as both parties were committed to the transaction and working towards its successful completion. (Doc. No. 63 at 7.) AFI and Medtronic shared common legal interests in whether the products that AFI and Medtronic would market infringed third party IP, and the communications addressing the scope of the IP certainly were designed to further that interest. (See id. at 9.) The Court finds that this mutual interest in valid and enforceable patents fits with the confines of the common legal interests doctrine."
Accordingly, the district court denied the motion to compel.
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