Richards v. Kallish

Background

The parties disputed whether the defendants could claim attorney-client privilege over communications with patent counsel that Nicole Richards sought through requests for admissions and document production. Richards argued that she had an express or implied attorney-client relationship with the patent counsel, making her a joint client with Everyone’s Earth. She also argued that the defendants waived privilege by sharing communications with her and others, placing the attorney-client relationship at issue, selectively disclosing communications, and using counsel’s services in alleged fraud concerning patent inventorship.

The defendants argued that Everyone’s Earth alone was the client, that Richards acted as Everyone’s Earth’s agent when communicating with patent counsel, and that the privilege had not been waived. They also argued that Richards had not provided enough evidence to invoke the crime-fraud exception.

Attorney-Client Privilege and Joint-Client Argument

The court found that the defendants established the basic elements of attorney-client privilege for communications with patent counsel about prosecuting patent applications. The court concluded that Everyone’s Earth, and its predecessor Tommie for Mommie, had the attorney-client relationship with patent counsel based on engagement letters and related evidence.

The court rejected Richards’s claim that she was a joint client. Applying six factors used to determine whether an implied attorney-client relationship existed, the court noted that Richards had no fee arrangement, payment, contract, or retainer agreement with patent counsel; there was no evidence that counsel performed legal services gratuitously for her; and there was no evidence that counsel personally represented her at patent-office meetings. The court also found that excluding Richards from some communications and the circumstances of her assignment of patent rights to Everyone’s Earth weighed against finding such a relationship.

The court acknowledged that Richards believed patent counsel represented her, but found that her belief was not reasonable under the circumstances described. Her communications, technical assistance, powers of attorney, and participation in patent-office meetings were consistent with her role as the inventor providing information and documents so counsel could prosecute patents for Everyone’s Earth. The court therefore held that Richards was not a client of patent counsel and could not discover communications to which she was not directly privy.

Waiver

The court held that Richards’s presence on communications with patent counsel did not waive Everyone’s Earth’s privilege because she acted as Everyone’s Earth’s agent in providing information needed to prosecute the patents. A formal written agency agreement was not required. The privilege belonged to Everyone’s Earth, not to Richards as its agent.

The presence of patent counsel’s paralegals and administrators and Everyone’s Earth’s employees and agents also did not destroy the privilege because those individuals assisted the attorney-client communications. The court declined to address whether two other individuals’ presence independently waived privilege because Richards was included on all communications with them and could use those communications under the ruling in Section IV. The defendants had also removed certain communications involving unrelated third parties from their privilege log, so the court did not address those communications.

The court rejected Richards’s argument that the defendants had waived privilege by placing the attorney-client relationship at issue. The court stated that Richards could not unilaterally create an at-issue waiver and noted that the defendants had not yet filed an answer or relied on communications with patent counsel in a claim or defense.

The court also rejected Richards’s selective-disclosure argument. The communications shared with her were provided because she was acting as the inventor and agent of Everyone’s Earth, not as part of a strategic or self-serving disclosure. The court explained that any waiver from an extrajudicial disclosure would generally be limited to the communications actually revealed, but found that Richards could use the communications previously sent to her under the separate ruling in Section IV.

Richards’s Use of Communications Previously Sent to Her

Although the communications remained privileged against the outside world, the court held that Everyone’s Earth could not use the privilege to prevent Richards from relying on and using communications that had intentionally been sent to her as its agent. The court analogized the situation to disputes between joint clients or parties with a common interest whose interests later become adverse.

Richards could use those communications in this lawsuit. However, her use was limited to this litigation. The communications could not be disclosed publicly on the docket or to anyone outside the litigation, and they remained privileged as to the outside world.

Crime-Fraud Exception

The court held that Richards had not established the crime-fraud exception. That exception can remove attorney-client protection when communications further a crime or fraud, but the party invoking it must provide evidence establishing a factual basis for probable cause. In the patent context, the court also discussed the requirement of clear evidence of Walker-Process or common-law fraud.

Richards alleged that Thomas C. Kallish falsely claimed to be an inventor and used patent counsel’s services to commit fraud or inequitable conduct before the United States Patent and Trademark Office. The court found that this argument depended on the disputed factual claim that Kallish contributed nothing to the inventions. Richards identified Bates numbers and submitted a declaration and privilege log, but the court found her evidence insufficient. Her statements that Kallish did not contribute were conclusory and did not provide a sufficient factual basis for probable cause.

Because Richards did not meet the initial evidentiary burden, the court did not proceed to an in-camera review of the communications to determine whether the exception applied.

Disposition

The court granted in part and denied in part the defendants’ motion for a protective order. Communications between Everyone’s Earth, including communications facilitated by its agents, and patent counsel were subject to attorney-client privilege, and the privilege belonged solely to Everyone’s Earth. Richards could not discover communications to which she was not directly privy, but she could rely on and use previously shared communications during this action, subject to the restriction against public or outside disclosure. The Clerk was directed to terminate the pending letter motions at ECF Nos. 69, 71, and 78.