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Oakley, Inc. v. Bugaboos Eyewear Corp.

October 15, 2010

OAKLEY, INC., A WASHINGTON CORPORATION, PLAINTIFF,
v.
BUGABOOS EYEWEAR CORP., A CANADIAN CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Jan M. Adler U.S. Magistrate Judge

ORDER DENYING WITHOUT PREJUDICE DEFENDANTS' MOTION TO COMPEL PRODUCTION OF DOCUMENTS [Doc. Nos. 42, 43] AND RELATED COUNTERCLAIM.

Presently before the Court is a Joint Motion for Determination of Discovery Dispute Re: Defendants' Motion to Compel Production of Privileged Documents (hereinafter "Joint Motion" or "Joint Mot."). [Doc. Nos. 42, 43.] For the reasons set forth below, Defendants' motion to compel is DENIED without prejudice.

BACKGROUND

Plaintiff/Counterdefendant Oakley, Inc. (hereinafter "Oakley") commenced this patent and trademark infringement action on September 17, 2009. [Doc. No. 1.] Oakley filed a First Amended Complaint on November 6, 2009. [Doc. No. 7.] Suntech Optics, Inc. filed an Answer and Counterclaims on May 17, 2010. [Doc. No. 12.] The Seventh Counterclaim asserts a false marking claim against Oakley which alleges, "Oakley has violated 35 U.S.C. § 292(a), by marking over one-hundred of its products with language indicating that the products are protected by patents which do not cover the marked products because: (i) a plurality of the patents have expired . . ., (ii) most if not all of the patents listed on Oakley's marking documents do not actually cover the Oakley products, and . . . (iii) several of the listed patents in Oakley's marking are not even owned by Oakley . . . ." Answer and Countercls., ¶ 43. The counterclaim further alleges, "each of [Oakley's Glasses] are sold with a box or package directing a purchaser to examine the packaging or enclosed warranty card for a list of patents covering the enclosed product." Id., ¶ 46. "[T]he Oakley Glasses sold in the United States within the past few years come with either one of two listings of patents on the warranty card: (i) '© 2005 Oakley, Inc. www.oakley.com 91-014 REV. J 01/07' . . . or (ii) '© 2005 Oakley, Inc. www.oakley.com 91-014 REV. K 04/09' . . ." Id. Additionally, "Oakley has and continues to mark additional products, product packaging, and/or advertising with expired, surrendered, inapplicable, and/or unenforceable United States patent numbers." Id., § 77. Oakley filed an answer to the counterclaims on May 21, 2010. [Doc. No. 15.]

On August 23, 2010, the Court granted a joint motion for name change of Defendants/Counterclaimants from Suntech Optics, Inc. to Bugaboos Eyewear Corp. and Bugaboos Eyewear (U.S.) Inc. (hereinafter collectively "Bugaboos"). [Doc. No. 26.] On August 26, 2010, Oakley filed a motion for summary judgment on Bugaboos' false marking counterclaim. [Doc. No. 27.] The motion is presently set for hearing on November 17, 2010 before the Honorable Janis L. Sammartino. [Doc. No. 41.] On August 30, 2010, Oakley filed a motion for leave to amend answer to counterclaims. [Doc. No. 29.] That motion is set for hearing on November 19, 2010 before Judge Sammartino. Id.

LEGAL STANDARDS

A. False Marking

The "false marking" statute, 35 U.S.C. § 292, provides, "Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word "patent" or any word or number importing that the same is patented, for the purpose of deceiving the public; . . . [s]hall be fined not more than $500 for every such offense." 35 U.S.C. § 292(a). With respect to the "for the purpose of deceiving the public" requirement, the Federal Circuit recently stated, "[U]nder Clontech*fn1 and under Supreme Court precedent, the combination of a false statement and knowledge that the statement was false creates a rebuttable presumption of intent to deceive the public, rather than irrebuttably proving such intent." Pequignot v. Solo Cup Co., 608 F.3d 1356, 1362-63 (Fed. Cir. 2010). "[A] good faith belief that an action is appropriate, especially when it is taken for a purpose other than deceiving the public, can negate the inference of a purpose of deceiving the public." Id. at 1364. A party may, inter alia, rely upon the advice of counsel to defeat an inference of intent. Id.

B. Attorney-Client Privilege

"The attorney-client privilege protects the confidentiality of communications between attorney and client made for the purpose of obtaining legal advice." In re EchoStar Communications Corp., 448 F.3d 1294, 1300 (Fed. Cir. 2006) (citing Genentech, Inc. v. Int'l Trade Comm'n, 122 F.3d 1409, 1415 (Fed. Cir. 1997)). Because the attorney-client privilege "impedes full and free discovery of the truth," the privilege is strictly construed. U.S. v. Martin, 278 F.3d 988, 999 (9th Cir. 2002). The burden of establishing that the privilege applies rests upon the party asserting the privilege. U.S. v. Munoz, 233 F.3d 1117, 1128 (9th Cir. 2000); Newport Pacific, Inc. v. County of San , 200 F.R.D. 628, 633 (S.D. Cal. 2001).

When a party puts at issue legal advice it received, e.g., by way of an advice of counsel defense, it waives the attorney-client privilege with respect to those communications. Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1163 (9th Cir. 1992). A party cannot claim that it relied on the advice of counsel, while protecting the communications from disclosure. "[S]elective waiver of the privilege may lead to the inequitable result that the waiving party could waive its privilege for favorable advice while asserting its privilege on unfavorable advice." In re EchoStar, 448 F.3d at 1301 (citation omitted). "In such a case, the party uses the attorney-client privilege as both a sword and a shield." Id. (citation omitted). "To prevent such abuses, . . . when a party defends its actions by disclosing an attorney-client communication, it waives the attorney-client privilege as to all such communications regarding the same subject matter." Id.

Disclosure of privileged attorney communications to a third party also constitutes waiver of the attorney-client privilege. Chevron, 974 F.2d at 1162. The disclosure of such communications "constitutes waiver only as to those communications about the matter actually disclosed." Id. (internal quotations and citation omitted).

C. Work Product Doctrine

"[M]aterials relating to mental impressions, opinions and legal theories of attorneys" are typically protected from disclosure as work product. Thorn EMI N. Am., Inc. v. Micron Tech., 837 F. Supp. 616, 621 (D. Del. 1993) (citing Fed. R. Civ. P. 26(b)(3)). "Like the attorney-client privilege, work product immunity can be waived." Id. However, "a party's assertion of good faith reliance on advice of counsel [does not] necessarily put counsel's work product at issue." Id. at 622. "The attorney-client privilege and the work-product doctrine, though related, are two distinct concepts and waiver of one does not necessarily waive the other." In re EchoStar, 448 F.3d at 1300. "Counsel's mental impressions, conclusions, opinions or legal theories are not probative [of state of mind] unless they have been communicated to [the] client." Thorn EMI, 837 F. Supp. at 622. ...


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