Corporate Invention Records and the Attorney-Client Privilege

I. INTRODUCTION In In re Spalding Sports Worldwide, Inc.,1 the Federal Circuit addressed an important matter of first impression: whether the attorney-client privilege applies to an invention record submitted to a corporate department.2 Based in part on the Supreme Court's decision in Upjohn Co. v. United States? which favored a broad application of the privilege,4 the Federal Circuit extended the privilege to invention disclosures made by corporate employees when employees submit them for the purpose of securing legal from counsel.5 Although the advice requirement may appear on its face to provide an adequate check on potential corporate abuse and unnecessary breadth in the applicability of the attorney-client privilege, this is not the case. In actuality, it does not go far enough to prevent channeling of documents through corporate counsel to prevent discovery. Such discovery is particularly important in patent infringement suits. In suits for infringement, issues as to the validity of an asserted patent, as well as issues of inequitable conduct,6 typically arise, and the validity or enforcement of a patent7 can turn on documents exchanged between corporate employees and counsel.8 Part II of this Note briefly explores the background of the attorney-client privilege as applied to individual clients and its subsequent extension to corporate entities. Part II describes four pre-Upjohn tests used to determine the applicability of the attorney-client privilege to a corporate client: the control group test, the subject matter test, the modified subject matter test, and the Ampicillin test. Part II also discusses the Supreme Court's Upjohn opinion and summarizes the Federal Circuit's opinion in Spalding. Part III of this Note analyzes the weaknesses of the Spalding decision. Part III further discusses two standards of applicability that have been previously proposed by other authors in the wake of Upjohn. Part III analyzes these proposed tests, but dismisses them in favor of the proposal in Part IV. Part IV proposes a much stricter standard, which the Federal Circuit should adopt when determining the applicability of the attorney-client privilege to patent-related corporate communications. Under this proposed standard, courts would only extend the attorney-client privilege to patent-related documents when corporate employees prepare such documents and submit them to counsel in anticipation of litigation.9 This proposal eliminates the privilege with regard to corporate invention disclosures, but provides the best solution to the problem of channeling documents through corporate counsel to prevent discovery in patent infringement suits. II. BACKGROUND A. Scope of the Attorney-Client Privilege 1. The Attorney-Client Privilege and Individual Clients The attorney-client privilege is considered the oldest form of common law protection for confidential communications between attorneys and their clients.10 The primary purpose of the attorney-client privilege is to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.11 While the privilege protects those communications that take place between attorneys and their clients, it does not extend to the underlying facts contained in the protected communications.12 In addition, courts often strike a balance between the interest of privileged disclosure from individual clients and the need for discovery through the application of Wigmore's test for applicability of the attorney-client privilege.13 2. Extension of the Attorney-Client Privilege to Corporations Although originally devised to further the interests of the individual client, courts have extended the attorney-client privilege to corporations.14 However, when courts extend the privilege to corporations, one recognized danger is the potential for corporations to create zones of silence over internal corporate affairs. …