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Morvil Technology, LLC v. Ablation Frontiers

March 8, 2012

MORVIL TECHNOLOGY, LLC
PLAINTIFF,
v.
ABLATION FRONTIERS, LEGAL INTEREST" DOCTRINE LLC; AND MEDTRONIC, INC. DEFENDANTS,



The opinion of the court was delivered by: Bernard G. Skomal United States Magistrate Judge

ORDER ON JOINT MOTION FOR DETERMINATION OF DISCOVERY DISPUTE RE PLAINTIFF'S REQUEST TO COMPEL DOCUMENTS WITHHELD BY ABLATION FRONTIERS, INC.; DEFENDANTS UNDER THE "COMMON MEDTRONIC AND RELATED COUNTERCLAIMS.

Currently before the Court is the parties' joint motion for determination of discovery dispute regarding production of "common legal interest" documents.*fn1 (Doc. No. 63.) Plaintiff Morvil Technology, LLC ("Morvil") moves to compel documents 39*fn2 -42, 51-52 and 57-58 identified on Defendants Medtronic Ablation Frontiers, LLC and Medtronic, Inc.'s ("Medtronic") privilege log, which Defendants have withheld as attorney client privileged. (Id.) The Court, for the reasons set forth below, denies Plaintiff's request to compel the documents.

The disputed documents at issue were either authored by Ablation Frontiers, Inc.'s ("AFI") outside counsel for AFI, or Medtronic's outside counsel for Medtronic. The documents were subsequently turned over to each respective party by the other during Medtronic's negotiations to acquire all of AFI's products and related intellectual property. (Doc. No. 63 at 1-2.) Morvil argues that the documents are not privileged because they regarded business related advice, not legal advice. (Id. at 4.) Morvil requests the court to review in camera the documents to determine if the material contains business information as opposed to legal advice. (Id. at 5.) After reviewing the parties' briefing, the Court ordered Defendants to lodge the disputed documents with the Court for an in camera review. (Doc. No. 100.)

The Ninth Circuit typically applies an eight part test to determine whether material is protected by the attorney-client privilege:

(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) unless the protection be waived.

In re Grand Jury Investigation, 974 F.2d 1068, 1071 n. 2 (9th Cir.1992) (quoting United States v. Margolis (In re Fischer), 557 F.2d 209, 211 (9th Cir.1977)). The Court has reviewed these documents in camera and determines that they are attorney-client privileged documents as between AFI's outside counsel and AFI, and between Medtronic's outside counsel and Medronic. The documents satisfy the above elements for the privilege to apply.

Notwithstanding, Morvil argues that disclosure of such documents to an unrelated third party in a business transaction waived such privilege. (Doc. No. 63 at 4.) Defendants respond that the disclosure of the documents between Medtronic and AFI through their respective counsel does not waive the privilege because the communications fit within the common legal interest doctrine. (Id. at 8.) The common-interest doctrine constitutes an exception to the rule on waiver where communications are disclosed to third parties. See United States v Bergonzi, 216 F.R.D. 487, 495-96 (N.D. Cal. 2003). "The common interest privilege... applies where the (1) communication is made by separate parties in the course of a matter of common [legal] interest; (2) the communication is designed to further that effort; and (3) the privilege has not been waived."

at 495 (citation omitted).

Morvil argues that this doctrine does not apply to this case because the communications were in furtherance of a business interest. (Doc. No. 63 at 5.) In support of this argument, Morvil asserts that Medtronic was attempting to negotiate a purchase price and other terms that it believed were acceptable and AFI was attempting to do the same. (Id. at 4.) Defendants counter this assertion by noting that the disclosures were subject to a strict confidentiality agreement between AFI and Medtronic, and the documents constituted a shared legal analysis as to the scope of AFI's patents, including identification of specific AFI products believed to be covered by specific patents, and the scope of several third party patents and the identification of certain claims, specifically as their scope related to AFI's intellectual property. (Id.

The Court, after review of the disputed documents, finds that they purport to disclose what Defendants have proffered in their moving papers. The issue remains as to whether said disclosure of this subject matter to a third party as part of what in essence is a business transaction satisfies the common legal interest exception. Defendants contend that "if AFI's IP was believed to infringe other IP, then Medtronic and AFI"s successor would face liability together in the event of the acquisition and therefore would want the benefit from opinions of AFI's legal counsel." (Id. at 8.)

Joint anticipated litigation has been held to be a common legal interest among buyer and seller of See, e.g., Hewlett-Packard v. Bausch & Lomb, Inc., 115 F.R.D. 308 (N.D.Cal.1987). The court in Corp. v. Victor Company of Japan, 249 F.R.D. 575 (N.D. Cal. 2007), did not find the exception applied in that "there appears little to indicate that the Defendants and the TPG fund might ever engage in joint litigation. The TPG fund was simply considering buying a majority share of JVC. It will not likely become a joint defendant with JVC." Id. at 579.

It is unclear from the parties' papers whether AFI and Medtronic and/or its successor would face joint litigation. Morvil stresses that Medtronic and AFI were not co-defendants at the time the documents were exchanged, and were not intending to further a common legal interest. Defendants have not proffered any facts that would indicate that AFI would face joint litigation along with Medtronic due to alleged infringements of its products sold before the wholesale acquisition of AFI to Medtronic.

The Nidec court went on to note that, "[t]he protection of the privilege under the community of interest rationale, however, is not limited to joint litigation preparation efforts. It is applicable whenever parties with common interests join forces for the purpose of obtaining more effective legal assistance." Nidec, 249 F.R.D. at 578 (quoting Rice, Attorney Client Privilege in the United States § 4:36, at 216).

The in In re the Regents of the Univ. of California, 101 F.3d 1386 (Fed. Cir. 1996), held that the common-interest doctrine applies to documents that "'address either anticipated litigation or a joint effort to avoid litigation.'" Id. at 1391 (quoting Edward Lowe Indus., Inc. v. Oil-Dri Corp. of America, 1995 WL 410979 *2 (N.D.Ill. July 11, 1995)). In Regents, third party Lilly was negotiating for the exclusive license to UC's patents. Id. at 1389-90. Genentech, the plaintiff in that case, contended that the communications between UC and Lilly attorneys were not covered by the privilege because they were not made in anticipation of litigation. The court concluded that the communications were subject ...


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