System Evergreen v. Concrete Systems

• Court: District Court, D. New Hampshire
• Decided: June 10, 1996
• Docket: CV-94-484-M
• Status: Published

Opinion

System Evergreen v. Concrete Systems CV-94-484-M 06/10/96 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

System Evergreen, A.G.; and Michie Corporation, Plaintiffs and Counter-Defendants,

v. Civil No. 94-484-M

Concrete Systems, Inc.; Cleco Corporation; and Methuen Construction, Defendants and Counter-Claimants.

O R D E R

System Evergreen, A.G. and Michie Corporation (collectively,

"System Evergreen") seek a permanent injunction against Concrete

Systems, Inc., Cleco Corporation, and Methuen Construction Co.,

enjoining them from infringing U.S. Patent No. 4,293,245 (the

"'245 patent"). Concrete Systems manufactures and sells an

earth-filled wall system known as the Eco-Wal. It sold two Eco-

Wal systems to Methuen Construction which, in turn, sold them to

the State of New Hampshire. System Evergreen claims that the

Eco-Wal infringes the '245 patent. Pending before the court is

System Evergreen's motion to continue trial date, extend

discovery, and compel production. System Evergreen seeks, among other things, an order

compelling Leonard Worden (sole shareholder of Concrete Systems

and Cleco Corp, but not a named defendant) to produce a written

waiver of the attorney-client privilege with regard to

discussions he had with his attorney, James Kayden. Attorney

Kayden is a patent attorney who has represented both Concrete

Systems and Mr. Worden individually. As counsel to Concrete

Systems, he issued an opinion letter stating his belief that the

Eco-Wal did not infringe the '245 patent. Attorney Kayden also

represented Mr. Worden individually, counselling him on matters

apparently related to patenting the Eco-Wal.

System Evergreen deposed Attorney Kayden, who discussed the

non-infringement opinion letter he issued to Concrete Systems.

Citing the attorney-client privilege, however. Attorney Kayden

refused to discuss matters related to advice provided to, or

discussions with, Mr. Worden in his individual capacity. System

Evergreen claims that Mr. Worden has waived the attorney-client

privilege. Accordingly, it seeks an order reguiring Mr. Worden

to confirm that waiver in writing and compelling Attorney Kayden

to respond to a number of guestions ostensibly protected by that

privilege.

2 Background

System Evergreen is the assignee of the '245 patent, which

was originally issued to Felix Jaecklin on October 6, 1981. The

'245 patent contains 27 claims, essentially describing a

structural system filled with soil which can be used as a

retaining wall or sound barrier. That structure is also

apparently designed to support the growth of vegetation, thereby

making it both functional and aesthetically pleasing. System

Evergreen alleges that defendants have manufactured and sold a

product (the Eco-Wal) which infringes the '245 patent. It seeks

a permanent injunction and an award of attorneys' fees. Concrete

Systems claims that it has not infringed the '245 patent. It

also argues that the '245 patent is invalid.

System Evergreen alleges that Concrete Systems' infringement

of the '245 patent was not merely inadvertent, but willful. As

part of its defense. Concrete Systems relies upon the non­

infringement opinion letter issued by Attorney Kayden. Concrete

Systems produced that letter and did not object to System

Evergreen's inguiries of Attorney Kayden with regard to that

letter. Attorney Kayden did, however, refuse to answer any

guestions relating to his representation of Mr. Worden

3 individually, invoking the attorney-client privilege and noting

that, to his knowledge, his client had not waived that privilege.

Accordingly, Attorney Kayden felt constrained to refuse to answer

any guestions which delved into that area.

At Mr. Worden's deposition, he too was asked several

guestions concerning matters he discussed with Attorney Kayden in

the context of exploring the patentability of the Eco-Wal. Mr.

Worden's counsel objected, asserting that his responses were

protected by the attorney-client privilege. After having

repeatedly raised the objection, however, counsel permitted Mr.

Worden to answer the offending guestions. System Evergreen seems

to claim that despite having asserted the privilege in a timely

fashion, because Mr. Worden then answered the guestions, he has

waived the privilege. It also claims that Mr. Worden should not

be permitted to invoke the attorney-client privilege under the

"crime-fraud" exception, alleging that Mr. Worden (apparently

with the knowledge and assistance of his counsel) intended to

commit a fraud on the Patent Office in connection with obtaining

a patent on the Eco-Wal system.

4 Discussion

A. The "Crime-Fraud" Exception.

System Evergreen's arguments are not persuasive. First, the

"crime-fraud" exception to the attorney-client privilege is not

applicable to this case. Other than conclusory allegations.

System Evergreen has provided no support whatsoever for its

assertion that Mr. Worden was "less than candid with the Patent

Office." System Evergreen's motion to continue trial date, at

15. See, e.g.. Research Institute for Medicine and Chemistry,

Inc. v. Wisconsin Alumni Research Foundation, 114 F.R.D. 672, 679

(W.D.Wis. 1987) ("[A] prima facie showing of fraud must be made

out before the [crime-fraud] exception may be invoked. While I

agree that evidence of fraud may be derived from the privileged

communications themselves, it would be of dubious propriety to

consider so grave a charge without reguiring a preliminary

showing of the factual basis for plaintiff's fraud claims and

giving [defendant] an opportunity to respond.") (citation

omitted).

B. Waiver by Asserting an "Advice of Counsel" Defense.

Typically, the assertion of an "advice of counsel" defense

in a patent case acts as a full waiver of the attorney-client

5 privilege with respect to the subject matter of the advice.

Micron Separations, Inc. v. Pall Corp., 159 F.R.D. 361, 362-63

(D. Mass. 1995); Abbott Lab. v. Baxter Travenol Lab., Inc., 676

F.Supp. 831, 832-22 (N.D. 111. 1987). As noted by the District

Court for the Northern District of California:

The use of the advice of counsel defense is not without its implications. By relying on the advice of counsel defense, the defendants have injected their counsel's advice as an issue in this litigation. "The deliberate injection of the advice of counsel in a case waives the attorney-client privilege as to the communications and documents relating to the advice."

Mushroom Associates v. Monterey Mushrooms, Inc., 24 U.S.P.Q.2d

1767, 1770 (N.D. Cal. 1992) (citation omitted).

Here, however. Concrete Systems claims to have produced not

only Attorney Kayden's non-infringement letter, but also all

relevant materials upon which he relied in reaching that opinion.

Concrete Systems (and Mr. Worden) claim that the attorney-client

privilege has not been waived with regard to advice rendered by

Attorney Kayden to Mr. Worden and related to the patentability of

the Eco-Wal. Based upon the record presently before it, the

court is inclined to agree.

6 In Saint-Gobain/Norton Indus, v. General Elec. Co., 884

F.Supp. 31 (D. Mass. 1995), the court was presented with a

similar issue. In that patent suit, Saint-Gobain/Norton raised

an advice of counsel defense to a charge of willful infringement,

claiming that it justifiably relied upon two opinions of counsel

which stated that the patent in issue was invalid. General

Electric responded by asserting that Norton had waived the

attorney-client privilege with regard to all communications with

their patent counsel. The court disagreed and held that Norton

was not reguired to disclose privileged documents relating to

enforceability or infringement of the patent.

In the present case, the opinions offered as a defense to the charge of willful infringement discuss only the validity, or the invalidity, of G E 's patents. Conseguently, Norton has waived the attorney client privilege with respect to the issue of validity [only].

Id. at 34.

Similarly, in this case it is clear that Concrete Systems

has waived the attorney-client privilege with regard to

confidential communications to and from Attorney Kayden and

relating to his opinion that the Eco-Wal does not infringe System

Evergreen's patent. However, system Evergreen has failed to

7 demonstrate that Concrete Systems (or, more accurately, Mr.

Worden) has waived the attorney-client privilege with regard to

issues concerning the patentability of the Eco-Wal.

C. Waiver by Responding to Questions at Deposition.

Next, System Evergreen has failed to provide any legal

support for its claim that, despite having asserted the privilege

in a timely fashion at his deposition, Mr. Worden nonetheless

waived that privilege when he subseguently responded to the very

guestions which prompted his counsel's objections. Rule 30 of

the Federal Rules of Civil Procedure provides, in part, that with

regard to depositions:

All objections made at the time of the examination to the gualifications of the officer taking the deposition, to the manner of taking it, to the evidence presented, to the conduct of any party, or to any other aspect of the proceedings shall be noted by the officer upon the record of the deposition; but the examination shall proceed, with the testimony being taken subject to the objections.

Fed.R.Civ.P. 30(c) (emphasis added). System Evergreen's position

is add odds with the plain language of Rule 30 and it has failed

to submit any legal support for that position. Nor has it

described the understanding (if any) between counsel regarding

the effect of raising objections to guestions posed at deposition but then permitting the deponent to respond. Without more, the

court is not inclined to find that Mr. Worden has waived the

attorney-client privilege.1

Moreover, even assuming that Mr. Worden has waived the

attorney-client privilege. System Evergreen has failed to

demonstrate that Attorney Kayden's testimony is either relevant

or reasonably calculated to lead to the discovery of relevant

materials. See Fed.R.Civ.P. 26(b)(1). The testimony sought from

Attorney Kayden relates to his representation of Mr. Worden in

connection with Worden's efforts to obtain a patent on his

invention: the Eco-Wal. However, Mr. Worden is not a party to

this litigation, nor has System Evergreen demonstrated how his

confidential communications could possibly be relevant to this

proceeding. System Evergreen seeks an injunction against

Concrete Systems, not Mr. Worden. The patentability of the Eco-

1 Of course, counsel for Mr. Worden could have instructed his client not to answer the guestions he believed intruded upon the attorney-client privilege and then sought a protective order from the court. See Fed.R.Civ.P. 30(d). It is unclear, however, whether counsel was required to pursue that line of recourse or if, by failing to do so, his client should be deemed to have waived the privilege. See generally, Paparelli v. Prudential Ins. Co. of America, 108 F.R.D. 727, 730 (D.Ma. 1985); Perrinqton v. Bergen Brunswig Corp., 77 F.R.D. 455, 461 n.4 (N.D.Cal. 1978). Wal and/or Mr. Worden's discussions with his counsel regarding

the Eco-Wal would seem to have little relevance to whether

Concrete Systems willfully infringed the '245 patent. Concrete

Systems received an opinion from patent counsel that the product

it manufactured and sold did not infringe the '245 patent.

Presumably, Concrete systems was entitled to rely on that

opinion. It is unclear why System Evergreen seeks discovery of

privileged communications Mr. Worden may have had with counsel or

how such information might support its claims against Concrete

Systems. Again, unfortunately. System Evergreen's pleadings

provide little guidance in that regard.

Obviously, System Evergreen has a right to guestion Attorney

Kayden with regard to the basis of his non-infringement opinion,

the materials he considered in connection with forming that

opinion, etc. However, it appears that Concrete Systems and

Attorney Kayden provided System Evergreen with all such

information. Attorney Kayden simply refused to reveal the

content of any confidential communications he had with Mr. Worden

in connection with his representation of Mr. Worden individually

and on another subject: the patentability of the Eco-Wal.

10 Perhaps it is important to reiterate that Attorney Kayden

represents two distinct entities. First, he represents a party

to this litigation: Concrete Systems. And, as its patent

counsel, he provided Concrete Systems with a non-infringement

opinion letter. That letter has been disclosed to System

Evergreen and, at his deposition. Attorney Kayden testified about

the basis for his opinion. All of that information is plainly

relevant and was (apparently) properly produced. Attorney Kayden

also represents Mr. Worden individually. Mr. Worden is not a

party to this litigation and System Evergreen has failed to

demonstrate how the confidential communications between Mr.

Worden and Attorney Kayden might be relevant or likely to lead to

the discovery of relevant evidence. Because System Evergreen, as

moving party, has failed to meet that threshhold burden, the

court need not speculate as to how that burden might be met or

even if it can be met.

D. Other Considerations.

Finally, the court finds that System Evergreen failed to

file its motion to extend the trial date, reopen discovery, and

compel Mr. Worden to issue a written waiver of the attorney-

client privilege in a timely fashion. That motion was filed well

11 after the close of discovery and Attorney Kayden's deposition

(which was not taken until 2 days before the close of discovery

and 6 months after System Evergreen had been provided with a copy

of his non-infringement opinion letter). Accordingly, in the

exercise of its discretion, the court finds that granting the

relief reguested by System Evergreen would not be appropriate.

This case was originally scheduled for trial during the first

week of February, 1996. Due to scheduling conflicts, however,

trial has been rescheduled for the first week of September, 1996.

Further delay, at least for the reasons advanced by System

Evergreen, is unwarranted.

Conclusion

System Evergreen has failed to provide the court with any

legal or factual support for its reguests. For all of the

reasons discussed. System Evergreen's motion to continue trial,

extend discovery, and compel deposition testimony (document no.

57) is denied.

12 SO ORDERED.

Steven J. McAuliffe United States District Judge

June 10, 1995

cc: Jeffrey N. Danis, Esq. Christopher Gagne, Esq. James M. Costello, Esq. Daniel J. Bourque, Esq.