No Mandamus Relief in Privilege Ruling

In a recent decision, the U.S. Court of Appeals for the Federal Circuit denied a petition for a writ of mandamus filed by Cozy, Inc. seeking to set aside a district court discovery order piercing attorney-client privilege. In re: Cozy, Inc., No. 2023-145 (Fed. Cir. Dec. 4, 2023). The discovery dispute arose out of Cozy’s patent infringement lawsuit against Dorel Juvenile Group, Inc. (“Dorel”) and Dorel’s inequitable conduct counterclaims alleging that Cozy made fraudulent misrepresentations to the PTO. 21-cv-10134-JGD.

After reviewing documents in camera, the district court granted in part Dorel’s motion to compel production of certain Cozy documents listed as privileged on the basis that the crime-fraud exception to attorney-client privilege applied. The court found that Dorel had established a prima facie case that Cozy’s founder, Dr. Arjuna Rajasingham, “manipulated the PTO into recognizing priority dates to which he was not entitled” and “relied on the advice of his counsel to perpetrate a fraud on the PTO.”

The crime-fraud exception provides that attorney-client privilege does not apply to communications between a client and attorney that are made for the purpose of furthering criminal or fraudulent activity. Specifically, the ordinarily strong privilege may be pierced if the party seeking disclosure can show that (1) the client was engaged in or planning criminal or fraudulent activity when the attorney-client communications were made, and (2) the communications were intended in some way to facilitate or conceal the criminal or fraudulent activity. The policy rationale is that the usual protections afforded by attorney-client privilege should not extend to communications made to enable or aid the commission of a crime, fraud, or other misconduct.  Because attorney-client privilege is typically so strongly protected by the legal system, the exception is typically narrowly construed.

On mandamus here, Cozy challenged the privilege ruling, arguing that the exception requires a stronger showing of inequitable conduct, which requires both materiality and intent.  In particular, the patentee argued that the defendant must provide “a clear showing [of materiality,] that the patent would not have issued but for [the] misrepresentations.”  The Federal Circuit, however, denied mandamus relief, finding no “clear and indisputable” right to relief nor a lack of other adequate means to challenge the decision. The court cited Supreme Court precedent stating that “post-judgment appeals generally suffice to protect the rights of litigants and ensure the vitality of the attorney-client privilege.” quoting Mohawk Indus., Inc. v. Carpenter, 558 U.S. 100 (2009).

The Federal Circuit further held that attorney-client communications used to commit fraud on the PTO after a patent has already issued could potentially still fall within the crime-fraud exception.

Source: patentlyo.com - Dennis Crouch

Editor: IPR Daily-Horace