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MCCORMICK-MORGAN, INC. v. TELEDYNE INDUS.

April 19, 1991

McCORMICK-MORGAN, INC., a California Corporation, Plaintiff and Counterdefendant,
v.
TELEDYNE INDUSTRIES, INC., a California Corporation, Defendant and Counterclaimant



The opinion of the court was delivered by: CONTI

 SAMUEL CONTI, UNITED STATES DISTRICT JUDGE

 I. Introduction

 This motion came on for hearing before this court pursuant to Local Rule 410-2(a) providing for review of nondispositive pretrial matters originally determined by a magistrate. In this case, McCormick-Morgan, Inc. ("MMI") seeks a declaratory judgment finding a patent for air-conditioning aircraft invalid. Defendant Teledyne Industries, Inc. ("Teledyne") has counterclaimed for infringement against MMI and several of its directors and officers. MMI seeks to assert, as a defense against willful infringement charges, that it acted in reliance on advice of counsel. Teledyne claims that MMI, both by asserting this defense and by making an explicit waiver, *fn1" has waived the attorney-client privilege as to communications between counsel and MMI with respect to infringement, validity and enforceability of the patent-in-suit.

 II. Background

 On February 11, 1991, Magistrate Judge Wayne Brazil, after hearing argument on the issue of waiver of the attorney-client privilege, 134 F.R.D. 275 found that, first, from the period up to and including April 16, 1990, MMI had waived the attorney-client privilege as to the following subject matter:

 
1) all communications from lawyer to client or from client to lawyer that relate to the validity, enforceability, or infringement of the patent in suit, and 2) all documents "relating to or referring to, constituting or supporting," (Brown's letter of September 25, 1990), and all documents contributing to "the basis of" (MMI's response to Teledyne's second request for production of documents) opinions communicated by lawyers for MMI to personnel at MMI relating to the validity, enforceability, or infringement of the patent in suit.

 Second, Judge Brazil ordered that, from the period after April 16, 1990, MMI and its counsel must disclose only:

 
advice of counsel or information from counsel as to which both of the following are true: 1) the advice or information differed materially from advice or information received prior to that date, and 2) in context, the new and different advice and/or information is of such a character that it clearly would have led a reasonable person in MMI's position to conclude that selling its products would invade enforceable rights held by Teledyne under the patent in suit.

 III. Discussion

 Fed. R. Civ. P. 72(a) and 28 U.S.C. ยง 636(b)(1)(A) provide that a magistrate's non-dispositive order should be reversed on appeal if it is "clearly erroneous or contrary to law." Patentee Teledyne moves this court to reconsider and reverse the second portion of Judge Magistrate Brazil's ruling limiting the enforcement of the waiver as to advice rendered after April 16, 1990. Upon careful review of the parties' briefs and the law in this area, the court is convinced that the contested portion of Judge Magistrate Brazil's order is clearly erroneous or contrary to law and must be reversed.

 The first, uncontested portion of Judge Magistrate Brazil's order stands on firm ground. In that portion, the judge found that MMI explicitly and unequivocally waived its privilege with respect to communications in specified subject areas through 1) the September 25, 1990 letter to Bright & Lorig (counsel for Teledyne), and 2) through the October 17, 1990 written response to Teledyne's request for production of documents. The pertinent parts of those two communications read as follows:

 
1. September 25, 1990 Letter to Bright & Lorig:
 
McCormick-Morgan and William Sewalk will accordingly waive the attorney-client privilege as to the subject matter of the advice given either of them or communicated to either of them by any attorney regarding the validity, enforceability, and/or infringement of the patent-in-suit, up to ...

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