'; Patent agent privilege heads into uncertain waters after ruling

Patent agent privilege heads into uncertain waters after ruling

September 22, 2016 Chicago Daily Law Bulletin

A recent Texas state appellate court decision found that communications between a registered patent agent and his client are not privileged and therefore subject to discovery. At first blush, this ruling may seem unsurprising. A registered patent agent is not an attorney, so it logically follows that communications between the patent agent and his client should not be subject to attorney-client privilege (ACP). In fact, however, there are some situations in which communications between a patent agent and a client are likely protected by ACP, but as demonstrated by the Texas decision, the limits of this protection are still in dispute. So, in addition to more detailed discussion of the Texas decision, we outline steps below that could help ensure that clients’ confidential information remains out of the reach of discovery.

In 1963, the U.S. Supreme Court held in Sperry v. Florida that patent agents are practicing law when they are preparing and prosecuting patents for their clients before the U.S. Patent and Trademark Office (USPTO). Thus, patent agents have long been recognized to be attorney-like in certain capacities. However, it was not until March of this year that the Federal Circuit found in In re Queen’s University that under some circumstances communications between registered patent agents and their clients were privileged.

The Federal Circuit reasoned in In re Queen’s University that because Congress authorized non-attorney patent agents to engage in the practice of law before the USPTO, a patent-agent privilege should be recognized that is coextensive with those rights granted by Congress. According to In re Queen’s University, the scope of this privilege includes communications that are in furtherance of, for instance, preparing and prosecuting any patent application, consulting or giving advice to a client in contemplation of filing any document with the Patent Office, drafting an amendment or reply to a communication from the Office that may require written argument, and drafting a communication for a public use, interference, reexamination proceeding, petition, appeal or any other proceeding before the Patent Trial and Appeal Board. The Federal Circuit explicitly excluded from this privilege “communications with a patent agent who is offering an opinion on the validity of another party’s patent in contemplation of litigation or for the sale or purchase of a patent, or on infringement.” Given this background on the scope of the nascent patent agent-client privilege, the possible ramifications of the Texas decision can be more easily reviewed.

The case involves an invention, namely a pay-at-the-table standalone electronic tablet for convenient ordering, paying and entertainment while dining. Silver, an inventor, entered into a purchasing deal with TableTop Media, LLC (“TableTop”), after which Silver eventually disputed the terms of the contract and began litigation. During discovery, TableTop requested communications between Silver and his business partner, who also acted as Silver’s patent agent during the prosecution of the patents at the USPTO related to the purchasing deal. Silver refused to produce the communications, asserting ACP. The district court granted TableTop’s motion to compel Silver to produce the communications; however, it also stayed the case and allowed Silver to file an interlocutory appeal of its order.

Dallas’ Fifth Court of Appeals, an intermediate state appellate court, held in a 2-1 decision that no communications between Silver and his patent agent were privileged. It explained that Federal Circuit law does not apply because a breach of contract claim involving a patent purchase agreement is a state (not federal) issue. Further, according to the court, the Texas Rules of Evidence do not protect communications under ACP between clients and patent agents who are not working under an attorney’s supervision (as was the case here).

The dissent opined that emails between Silver and his patent agent relating to prosecution of the relevant patent applications are privileged, because the Supreme Court has held that patent agents are authorized to practice law. The dissent explained that the Texas Rules of Evidence define a lawyer as a person authorized to practice law in a state or nation. Accordingly, a patent agent practicing law before the USPTO is a “lawyer” under the Texas Rules, and communications pursuant to the patent agent’s practice of law should be protected. Quoting In re Queen’s University, the dissent also pointed out that patent agent-client privilege is needed based on the public policy considerations of clients needing to be frank and forthright with their representatives in legal matters, and representatives needing to provide effective advice.

Although the decision is likely to be appealed to the Texas Supreme Court, it illustrates the untested nature of the patent agent-client privilege. Until the scope of the privilege is clear—for instance, if the U.S. Supreme Court opines on the matter in the future—patent agents who are not working under an attorney’s supervision may wish to consider seeking out attorney supervision, particularly when dealing with confidential client information. Also, in terms of litigation, if the Texas decisions stands or is affirmed, selection of venue could be crucial as the information not subject to ACP in a state court case could impact issues that are under federal jurisdiction, such as the validity or enforceability of the underlying patents.