A California federal court rejected a company’s privilege assertion over its consultant’s report analyzing patents for potential purchase. This rejection came even though the company’s General Counsel requested the report and the consultant sent it under the terms of a confidentiality agreement. MediaTek Inc. v. Freescale Semiconductor, Inc., 2013 WL 5594474 (N.D. Cal. Oct. 10, 2013). You may access the opinion here.
MediaTek Inc.’s General Counsel requested that a third-party consultant issue a technical report concerning various patents that MediaTek considered acquiring. MediaTek and the consultant entered into a confidentiality agreement, signed by MediaTek’s General Counsel, requiring strict confidentiality of the consultant’s work.
In subsequent patent-infringement litigation against Freescale Semiconductors, Inc., Freescale moved to compel production of the consultant’s report. MediaTek argued that the attorney–client privilege protected the report because the GC requested it and because the consultant prepared the report to “enable the legal team to render legal advice to MediaTek in connection with its acquisition” of the patents.
An Affidavit and a Ruling
The court rejected the privilege claim because MediaTek failed to show that the consultant created the report primarily to facilitate legal advice. Although MediaTek’s submitted its IP Division Manager’s affidavit and a privilege log, the court reviewed the report in camera and determined that it did not concern legal advice. The court found that MediaTek’s in-house lawyers did not review the report and the text of the report did not mention lawyers or legal advice.
The court rejected the IP Division Manager’s “conclusory testimony” that the “report was necessary to enable MediaTek’s attorneys to render effective legal advice” and that MediaTek’s “legal team” evaluated the patents. The “naked allegation” that the consultant created the report for a legal purpose was simply insufficient. And the fact that GC requested the report was equally insufficient, with the court refusing to presume that reports made to in-house lawyers are for legal purposes because in-house lawyers “are often extensively involved in business matters.”
And the confidentiality agreement provided no assistance because nothing in the agreement itself “even hints that it is intended to be relied upon by counsel to render legal advice.” The court stated that, “[i]f MediaTek intended for the reports to be privileged attorney–client communications, the confidentiality agreement would likely reflect such, or, at a minimum, make some reference to the purportedly privileged purpose of the report.”
The MediaTek decision provides an important lesson. In-house attorneys must meet a heightened standard to prove that the corporate attorney–client privilege protects communications from employees or consultants. And conclusory, ipse dixit statements are insufficient to meet this standard. The legal purpose must be readily ascertainable within the four corners of the communication.
Here, the court would have likely ruled differently had the consultant sent his report to the GC, and the report and the accompanying confidentiality agreement specifically stated that he prepared it predominantly to enable the GC to render legal advice.