Communication That Was Business Communication Could Not Be Protected by Attorney-Client Privilege But Could be Protected by Spousal Privilege

December 30, 2013

Flatworld Interactives ("Flatworld") filed a patent infringement action against Apple Inc. ("Apple"). During the litigation, Apple sought the production of several documents that Flatworld claimed were protected by the attorney-client privilege and the spousal privilege.

In particular, Flatworld asserted the attorney-client privilege and the spousal privilege for certain documents. In analyzing the issue, the district court noted that "[c]ommunications that would have been made for a business purpose are not protected by the attorney-client privilege." See McCaugherty v. Sifferman, 132 F.R.D. 234, 238 (N.D. Cal. 1990) ("No privilege can attach to any communication as to which a business purpose would have served as a sufficient cause, i.e., any communication that would have been made because of a business purpose, even if there had been no perceived additional interest in securing legal advice. Fisher et al. v. United States et al., 425 U.S. 391, 403, 96 S.Ct. 1569, 1577, 48 L.Ed.2d 39 (1975)."). The district court then concluded that one of the email chains at issue constituted a business communication and therefore, was not protected by the attorney-client privilege.

Nonetheless, the district court determined that the spousal privilege was applicable and did protect the communication at issue. The district court explained that the spousal privilege "protects from disclosure private communications between spouses." United States v. Griffin, 440 F.3d 1138, 1143-44 (9th Cir.2006). The privilege exists "to protect the integrity of marriages and ensure that spouses freely communicate with Griffin, 440 F.3d at 1143. The Ninth Circuit has held that "[t]he privilege (1) extends to words and acts intended to be a communication; (2) requires a valid marriage; and (3) applies only to confidential communications, i.e., those not made in the presence of, or likely to be overheard by, third parties." United States v. Montgomery, 384 F.3d 1050, 1056 (9th Cir. 2004) (citing United States v. Marashi, 913 F.2d 724, 729-30 (9th Cir.1990)). Further, the Ninth Circuit construes the spousal privilege narrowly, to promote marriage without thwarting the administration of justice. Id.; Marashi, 913 F.2d at 730.

The district court explained that Defendant had argued that there was no expectation of privacy in communications sent or received through a law firm email account, and so the communications were not protected by the spousal privilege. The district court then noted that "[i]n determining whether an employee's communications transmitted or stored on a work computer are privileged, courts typically consider four factors as set forth in In re Asia Global, 322 B.R. 247, 257 (Bankr.S.D.N.Y.2005): (1) does the company maintain a policy banning personal or other objectionable use, (2) does the company monitor the use of the employee's computer or email, (3) do third parties have a right of access to the computer or emails, and (4) did the corporation notify the employee, or was the employee aware, of the policy. Asia Global, 322 B.R. at 257."

The district court concluded that "[t]he factors in this case weigh in favor of the application of the spousal privilege. Most significantly, even if there is a policy banning personal use of the firm email system and the firm had the right to access Mr. McAleese's email, there has been no showing under the second factor that the firm actually monitored the email system or Mr. McAleese's email in particular. The importance of the spousal privilege and the lack of evidence showing that the firm actually monitored the email system supports the application of privilege here. See In re High Tech Employee Antitrust Litig., 2013 WL 772668, *7 (N.D. Cal. Feb. 28. 2013). Therefore, the document is protected by the spousal privilege."

The district court then addressed the scope of any subject matter waiver resulting from Plaintiff's disclosure of privileged documents. "Disclosure of the content of privileged communications constitutes a waiver of the privilege as to all other communications on the same subject matter. See Weil v. Inv./Indicators, Research & Mgmt, Inc., 647 F.2d 18, 25 (9th Cir. 1981). The Ninth Circuit uses a three-pronged test to determine whether a waiver has been effected. First, the court considers whether the party is asserting the "privilege as the result of some affirmative act, such as filing suit." Home Indem. Co. v. Lane Powell Moss & Miller, 43 F.3d 1322, 1326 (9th Cir.1995) (citing Hearn v. Rhay, 68 F.R.D. 574, 581 (E.D.Wash.1975)). Second, the court examines whether "through this affirmative act, the asserting party puts the privileged information at issue." Id. Finally, the court evaluates whether "allowing the privilege would deny the opposing party access to information vital to its defense." Id. In addition, under the Federal Rules, waiver "extends to an undisclosed communication or information in a federal or state proceeding only if: (1) the waiver is intentional; (2) the disclosed and undisclosed communications or information concern the same subject matter; and (3) they ought in fairness to be considered together." Fed. R. Evid. 502(A).

After reciting the standard, the district court concluded that " the subject matter waiver extends only to topics that were the subject of disclosed communications. For example, Plaintiff produced a document regarding its valuation of the patent-in-suit. Blake Decl. Ex. 22. While Defendant argued that in producing exhibit 22, Plaintiff has waived the attorney-client privilege as to all communications regarding the valuation of the patent-in-suit, Plaintiff argued that no waiver occurred, and even if there was waiver, it was limited to exhibit 22 itself. The subject matter waiver in this example extends to communications between Plaintiff and its attorneys regarding the value of the patent-in-suit without reissue prior to the March 8, 2010 date of Ms. McAleese's email contained in Exhibit 22."

The district court also addressed an additional example. "In another example, Plaintiff's patent prosecution attorney, Mr. Nelson, sent an email to Plaintiff's co-founders regarding the outcome of Plaintiff's reissue application. Blake Decl. Ex. 21. Ms. McAleese forwarded that email to a representative of a patent monetization company, Ocean Tomo ICAP. Plaintiff disclosed Mr. Nelson's email and produced exhibit 21. Thus, Plaintiff has waived the attorney-client privilege with respect to communications between Plaintiff and Mr. Nelson regarding the outcome of Plaintiff's reissue application."

The district court also noted that "[i]n addition, Plaintiff produced communications between Mr. McAleese and Ms. McAleese regarding Plaintiff's attempts to license or sell the patent-in-suit to Nokia."

Accordingly the district court concluded that the Plaintiff had "waived the spousal privilege as to communications between Mr. McAleese and Ms. McAleese regarding Plaintiff's attempts to license or sell the patent-in-suit to Nokia."


Flatworld Interactives v. Apple Inc., Case No. C-12-01956 JSW (EDL) (N.D. Cal. Dec. 24, 2013)

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