Spectrum Dynamics Medical Limited v. General Electric Company

Background

Spectrum Dynamics Medical Limited alleged that General Electric Company, GE Healthcare, Inc., and GE Medical Systems Israel Ltd. (collectively, “GE”) misappropriated Spectrum’s trade secrets in developing the competing StarGuide medical imaging device. Spectrum also alleged that GE falsely represented to the U.S. Patent and Trademark Office that its personnel invented aspects of two patents, referred to as the “’113” and “’114” patents. Spectrum asserted additional claims for breach of contract and correction of inventorship. GE counterclaimed that Spectrum infringed the “’439” patent.

The opinion concerned outstanding privilege disputes after fact discovery. Spectrum moved to compel production of documents that GE had withheld or clawed back under attorney-client privilege, invoking the crime-fraud exception. That exception removes privilege from communications made to help carry out contemplated or ongoing criminal or fraudulent conduct. Spectrum argued that discovery showed GE had received Spectrum’s disclosures under a nondisclosure agreement before applying for the ’113 and ’114 patents and had misrepresented inventorship to the Patent and Trademark Office. Spectrum also opposed GE’s clawback of a spreadsheet called “Exhibit R,” arguing alternatively that GE had waived privilege by disclosing other documents on the same subject.

Legal standard

The attorney-client privilege generally protects confidential communications between a client and lawyer made to obtain or provide legal advice. To obtain privileged communications under the crime-fraud exception, the requesting party must show probable cause to believe that a crime or fraud was attempted or committed and that the communications or attorney work product furthered it. The court explained that this requires a substantial possibility of fraud, not proof by a greater-than-50-percent standard.

Court’s analysis

The court concluded that Spectrum’s motion was aimed at the merits of its allegations rather than at particular documents on GE’s privilege log. The parties offered conflicting evidence about whether GE had previously claimed the relevant camera geometry, whether Spectrum had publicly disclosed it, and when GE’s inventors conceived the “ferris wheel” invention.

The court nevertheless ordered GE to submit 25 sample documents for private judicial review. The court described them as routine communications among GE, the asserted inventors, and counsel concerning patent filing, including diagrams and pictures of the invention. The documents did not show knowledge of Spectrum’s alleged trade secret or a plan to commit inventorship fraud. Instead, they showed counsel asking questions and giving directions intended to promote accurate representations about the device, prior art, and inventorship. The court therefore found that Spectrum had not shown probable cause of a crime or fraud and held that there was no basis to apply the crime-fraud exception.

As to Exhibit R, the court found that Spectrum appeared to concede that the crime-fraud exception did not apply and instead relied on waiver. Spectrum pointed to spreadsheets from internal intellectual-property bootcamp meetings, while GE explained that Exhibit R was created for a different meeting held with counsel to discuss and comment on patent ideas. Because Exhibit R included a column for counsel’s comments and was created to obtain legal advice, the court held that it was privileged. The court also found no waiver based on GE’s production of the nonprivileged bootcamp spreadsheets.

Disposition

The court denied Spectrum’s motion to compel and its opposition to GE’s clawback of the spreadsheet. It directed the Clerk to terminate the motions at ECF Nos. 670 and 671. The court expressly stated that the decision did not affect the merits of Spectrum’s claims, including its inventorship-correction claim.