Bonnie Weiss McLeod Cooley LLP “Privileged and Confidential” Considerations in Partnering Transactions Bonnie Weiss McLeod Cooley LLP

Considerations for NDA drafting Preserving Confidential Information Considerations for NDA drafting

“Privileged and Confidential”? What is the difference? What is an NDA and will it protect both types of information? One way or mutual The consideration: disclosure of information in exchange for promise of secrecy When do you need an NDA? Timing considerations as to patent filings

Privilege in the U.S. Attorney Client Privilege Protects communications between (1) the client or its representative and the attorney or the attorney’s representative; (2) the attorney with the attorney’s representative; (3) the client or its attorney with an attorney another on a matter of common interest; (4) the client with a representative of the client; (5) communications between the client’s representatives and (6) communications between the client’s attorneys. Attorney Work Product Privilege Documents were prepared in anticipation of litigation. Common Interest/Joint Defense It applies if (1) the subject communications are made in the course of a joint defense effort or common interest; (2) the parties share a common interest; and (3) the communications were made in the furtherance of that effort.

Common parts of an NDA The nature and categories of confidential information to be protected Non-use provision The term Carve out exceptions The parties to the NDA Data protection and security provisions, if appropriate Remedies

What to watch out for… Trade secrets Boiler plate paragraphs without review Disclaimers of liability or confidence Residual information disclaimer (if you are discloser)

considerations for common interest agreements Preserving Privileged Information considerations for common interest agreements

Attorney-Client Privilege in the U.S. For the privilege to attach to any document or communication, a court will consider four key elements: There must be a communication; It must be between an attorney and a client; The communication must be confidential when made; and The subject matter of the communication must be the seeking of or the rendering of legal advice as opposed to business advice. Complications arise when the “client” is a corporation and the attorney is in-house to the client

Corporations as the Client for Privilege Varies by jurisdiction Minority = “control group test” whereby a communication is privileged if the employee is a high-level employee authorized to act or make business decisions on the company’s behalf. Majority = “subject matter test” where communications are privileged if made within the scope of the employee’s responsibilities and at his or her supervisor’s direction. Federal courts generally follow the Upjohn test = communications are privileged when the employees disclosed information concerning matters within the scope of their duties and disclosed at the direction of their superiors and that the employees were information they were being questioned in order for the corporation to receive legal advice.

In-House Counsel and Privilege Courts often view in-house counsel as less independent and potentially more biased, acting with more of a business role than a legal role. Privilege often involves an analysis by the court of whether a particular communication was in their role as a lawyer or a business advisor. Communications, including email, can only be protected if in-house counsel is acting in a legal capacity and only to the LEGAL advice. Ordinary business communications may not be privileged. Some courts look to a “primary purpose” test to analyze mixed communications. Copying in-house counsel on an email is not enough. Wide distribution may compromise privilege as well.

Counsel Outside the U.S. Nearly all countries recognize some form of attorney-client privilege, though not always by name and not always for in-house counsel as opposed to outside counsel. Outside counsel nearly are always have privilege. In-house counsel in those same countries are often treated differently and may not share the same privileges. Akzo Nobel, the ECJ confirmed the existing rule that the legal professional privilege under EU competition law extends only to communications between company employees and an external lawyer admitted to a Bar of one of the members of the European Economic Area (the 27 EU Member States plus Iceland, Liechtenstein and Norway).

Privilege and Patent Agents U.S. patent agents – courts are divided as to whether privilege attaches Some courts use a “subordinate” theory to allow privilege, while others find no privilege or an independent privilege Foreign patent agents present complications because they are not registered to practice in the USPTO and are not U.S. attorneys. Courts take various approaches to determine if U.S. privilege law will be applied to find a privilege A majority of courts apply a “touching base” analysis to apply U.S. privilege law. Situations that do not touch base in the U.S. include communications seeking advice on foreign patent law, foreign filing, or foreign litigation.

U.S. Litigation – Which Privilege Applies? As to whether U.S. law will apply or the foreign jurisdiction’s law will apply to a determination of privilege, a U.S. court will likely apply the most common “touching base” test. Under this test, if the communication “touched base” with the U.S., then U.S. privilege law can be used to determine privilege. If the communication relates to activity outside the U.S. in a foreign jurisdiction, then the law of that foreign jurisdiction will apply. Nonetheless, even in situations where the touching base test might dictate that foreign law should be used in the analysis, some courts will still apply U.S. law. See Astra Aktiebolag v. Andrx Pharmaceuticals, Inc., 208 F.R.D. 92 (S.D.N.Y. 2002)  

Common Interest Agreement What is it and when might you need one? What is covered? May differ depending on the state Which parties? Timing considerations Confidentiality

Potential pitfalls Risk Unintended attorney-client relationship Conflicts and unintended receipt of confidential information Party without counsel should not be co-party Does not protect communications between parties where counsel is not present

Privilege Waiver Privilege can be lost through express or implied waiver by disclosure to a third party. Scope of the waiver can reach all other privileged communications relating to the same subject matter. Attorney-client easier to wave than work product Express waiver often occurs through disclosure to a third party who is either internal to the organization or external to the organization. As to implied waiver, a party may impliedly waive the attorney-client privilege by placing the party’s privileged communications “at issue” in a litigation. Inadvertent waiver can occur sometimes in litigation, for example, through the accidental production during discovery.