United States: New Privilege Considerations For Korean Patent Practitioners

In patent litigation cases involving foreign parties, issues on whether the attorney-client privilege applies to foreign IP professionals may arise during discovery. This analysis can be complex and fact-specific, and often depends on the specific court or the laws of the country from which the communication originated. With respect to Korea, relatively recent developments in the law and procedure may affect how the courts in the United States analyze attorney-client privilege issues with respect to Korean IP professionals and also provide additional guidance that Korean companies should consider when implementing policies to protect privileged communications. In addition, the recent recognition of patent agent privilege provides another, albeit riskier, potential option to protect certain communications within the scope of the privilege.

U.S. Patent Agent Privilege

Last year in In re Queen's University at Kingston,1 the Federal Circuit resolved a split in the district courts and recognized the existence of a limited patent agent privilege. Relying on U.S. Supreme Court precedent, the Federal Circuit reasoned that Congress authorized non-attorney patent agents to engage in the practice of law before the United States Patent and Trademark Office and that clients have a reasonable expectation that all communications with patent agents relating to patentability and preparing a patent application will be privileged. Although the court recognized this new privilege for U.S. patent agents, it limited its scope to only those communications necessary to the preparation and prosecution of patent applications before the USPTO or other USPTO proceedings in which the patent agent is authorized to participate.2 Examples of patent agent communications that would not be considered privileged include opinions on the validity of another party's patent in contemplation of litigation, the sale or purchase of a patent, and infringement.3

While the Federal Circuit's recognition of patent agent privilege is welcome news to patent agents and their clients, caution should be exercised in relying on this privilege because the scope and applicability of the privilege remains limited and uncertain in some circumstances. For example, in one of two cases that have since analyzed the In re Queen's decision, the Texas Court of Appeals declined to recognize the patent agent privilege on the basis that In re Queen's was not binding precedent because the case at issue was a breach of contract action governed by Texas law, not patent law.4 Thus, to the extent the patent agent privilege applies, at least one court has held that it is only applicable "if the case involves substantive issues of patent law."5

In general, litigants should not expect In re Queen's to alter the established analytical framework based on choice of law, which currently governs the application of attorney-client privilege for foreign IP professionals. But the case could nevertheless potentially affect the outcome of whether a particular communication is deemed privileged. For instance, in a communication with a foreign patent agent involving a U.S. patent application, under traditional choice of law analysis, courts have held that U.S. privilege law would apply, and prior to In re Queen's, the communication would not be privileged unless the foreign patent agent was acting under the authority and control of an attorney barred in the United States.6 With the creation of the patent agent privilege, however, the same facts may not necessarily result in the same finding. It is possible that some courts may consider a communication with a foreign patent agent involving a U.S. patent application privileged, even without the involvement of an attorney. On the other hand, other courts may find that while In re Queen's recognizes a limited patent agent privilege for United States patent agents, it does not with respect to foreign patent agents, and find no privilege, unless the foreign patent agent was acting under the authority of a U.S. attorney or a U.S. patent agent.

Until additional cases shed light on what impact In re Queen's will have on how U.S. courts treat privilege issues involving foreign patent agents, there is risk and uncertainty in relying solely on In re Queen's to protect communications with a foreign patent agent. A safer course would be to expect the traditional choice of law analysis to continue to govern. This means that if a communication is deemed to concern a foreign matter, privilege will generally apply to the extent the foreign country's law protects a communication from disclosure.7 Nevertheless, given the additional rationale for privilege under In re Queen's, there will likely be an increase of privilege assertions over any communications with a U.S. patent agent and foreign patent agents because the argument in support of such privilege may have become stronger. With respect to choice-of-law analysis for Korea, recent developments in Korean law and procedure create additional uncertainty for privilege claims for Korean IP professionals.

Discovery and Privilege in Korea

To determine privilege matters implicating the substantive foreign law of countries with more restrictive discovery than the United States, such as Korea, courts have considered a blend of the foreign country's substantive and procedural law. For example, in Astra Aktiebolag v. Andrx Pharm. Inc.,8 the court determined that communications between the plaintiff's employees and in-house legal counsel were governed by Korean law.9 The court then found that Korean substantive law did not provide for attorney-client privilege or work product protection and the communications were therefore not protected from disclosure on those bases.10 But rather than order the plaintiff to produce the documents, the court recognized that Korea's restrictive discovery rules would not have compelled the production of those documents in the first instance.11 Recognizing the incongruity of producing documents that were protected from disclosure under U.S. law as privileged and unobtainable under Korean law because of restrictive discovery rules, the court applied U.S. law to the documents, even though they did not "touch base" with the United States, as would typically be required.12 The court noted that ending the inquiry in the absence of Korea's attorney-client privilege and work product provisions and not taking into account Korea's "vastly different discovery practices, which permit only minimal discovery," would violate principles of comity and offend public policy.13 On that basis, the court deemed the documents privileged and protected from discovery.14

The court in Astra therefore shielded from disclosure documents that Korean substantive law otherwise did not protect because of Korea's limited discovery provisions. Since Astra, however, the combination of a Korean Supreme Court case finding for the first time that broad attorney-client privilege does not exist in Korea and recent amendments broadening the scope of discovery in Korea suggests that the scope of protection afforded to communications implicating Korean law may have narrowed.

About 10 years after the Astra ruling, the Korean Supreme Court found that Korean law does not provide for broad U.S. style attorney-client privilege.15 While the court in Astra held that Korean statutes did not provide for broad attorney-client privilege or work product protection, the Korean Supreme Court case is important because the highest court in Korea, not a U.S. court, affirmatively stated for the first time that such protections do not exist under Korean law, which will make it very unlikely that a court in the United States will make a different finding regarding Korean law.16 Instead, Korean law excuses certain professionals, including attorneys and patent agents from producing documents containing or testifying regarding confidential information received from a client.17 Only the professional, and not the client, can invoke this right.18 Also, the obligation is excused only with respect to information received by an attorney, and not transmitted from an attorney to a client.19

Korea also recently amended its Patent Act to significantly expand the scope of discovery in patent litigation.20 The Korean Patent Court issued new rules and procedures modeled after the local patent rules of U.S. federal district courts, which explain the discovery scheme in more detail.21 Under this new amendment, which took effect on June 30, 2016, the court can now order the submission of documents or materials necessary for proving infringement and assessing damages.22 Moreover, litigants previously faced hurdles in even obtaining the requested discovery to prove infringement because the accused party could avoid production or adverse inferences by asserting that the requested materials contained trade secrets or by simply not producing the requested materials.23 The new amendment, however, expressly allows a court to make an adverse inference against the accused infringer if the requested materials are not produced and the requesting party would otherwise have difficulty proving infringement without the requested documents.24 The new amendment also expands the scope of discovery to "materials" instead of just documents, thereby expanding discovery to include information contained in media such as videos, pictures, or other electronic forms.25 Thus, these new discovery rules represent a significant expansion of Korea's discovery provisions in patent cases.

These two developments suggest that prospective litigants should carefully consider privilege issues that may arise when dealing with Korean attorneys, patent agents, and other IP professionals. Although the court in Astra recognized the absence of broad attorney-client privilege under Korean law, it ultimately protected documents from disclosure based on the restricted discovery practice in Korea. In view of the recent expansion of the Korean discovery rules, other courts may not reach the same conclusion, even if the documents would otherwise be shielded from discovery as privileged under U.S. law. Moreover, to the extent that courts agrees with the Astra court and find that U.S. privilege law should apply, even with Korea's expanded discovery rules, it is unclear how courts will deal with the newly recognized patent agent privilege created by In re Queen's in the context of Korean patent agents.

Given the lack of clarity in certain areas of privilege regarding foreign IP professionals and the changes to Korean law and rules since Astra, it now seems more important than ever to involve U.S. attorneys in matters connected to U.S. IP issues to benefit from the protections of privilege. With the Korean Supreme Court expressly rejecting the existence of attorney-client privilege under Korean law and the amendments to the Korean Patent Act expanding the scope of discovery in patent cases, a Korean litigant in a U.S. court may find it more difficult to convince the court that privilege should apply under Korean law. Under these circumstances, involving U.S. attorneys in U.S. related matters, particularly in a supervisory role, is still one of the most predictable ways to maintain the protection of privilege. With the In re Queen's decision, there is now an option to include a U.S. patent agent as well, but reliance on the patent agent privilege alone is riskier because the scope of protection is limited only to proceedings before the USPTO. Moreover, some courts may refuse to recognize the patent agent privilege based on the specifics of the case, like the Texas Court of Appeals in In re Singer. Accordingly, until case law in this area is further developed, the use of a U.S. attorney still remains one of the safer and tested ways to ensure the protections of privilege.

Footnotes

1 820 F.3d 1287 (Fed. Cir. 2016).

2 Id. at 1301-02.

3 Id.

4 In re Silver, 500 S.W.3d 644, 646-47 (Tex. App. August 17, 2016).

5 Id. at 646-47.

6 See In re Rivastigmine Patent Litigation, 237 F.R.D. 69, 74 (S.D.NY. Aug. 8, 2006) (citing Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., No. 95 Civ. 8833, 1998 WL 158958, at *1 (S.D.N.Y. April 2, 1998)).

7 See, e.g., Lincoln Elec. Co. v. Esab Grp., Inc., No. 2:15-CV-1404, 2016 WL 6804861, at *1 (E.D. Tex. Nov. 17, 2016); 2M Asset Mgmt., LLC v. Netmass, Inc., No. 2:06-CV-215, 2007 WL 666987, at *2-*3 (E.D. Tex. Feb. 28, 2007); Astra Aktiebolag v. Andrx Pharm., Inc., 208 F.R.D. 92, 98-99 (S.D.N.Y. 2002).

8 208 F.R.D. 92 (S.D.N.Y. 2002).

9 Id. at 99.

10 Id. at 100-01.

11 Id. at 101-02.

12 Id. at 102.

13 Id.

14 Id. at 104-05.

15 Young Seok Lee & Sae Youn Kim, New Korean Supreme Court Case Finds That Broad Attorney-Client Privilege Does Not Exist in Korea, Yulchon IDR News Alert, May 2012, available at https://www.yulchon.com/mail/201205/IDR/IDR-ENG_0522.html.

16 Id.

17 See Astra, 208 F.R.D. at 100-01.

18 Id.

19 Id. at 101.

20 Yulchon LLC, Korea Finally Puts Some Teeth into Its Discovery Rules An - Executive Summary and Analysis of Significant Updates to the Korean Patent Act and Korean Trademark Act, Lexology, June 29, 2016, available at http://www.lexology.com/library/detail.aspx?g=1a443b07-0397-443d-a531-d5ad069751aa.

21 Min Son, South Korea: Patent Court Procedure Guidelines Published in English and Japanese, Managing Intellectual Property, Nov. 1, 2016, available at http://www.managingip.com/Article/3604007/South-Korea-Patent-Court-procedure-guidelines-published-in-English-and-Japanese.html.

22 Yulchon LLC, supra note 20.

23 Young Hwan Yang, Raymis H. Kim, Kyoung-Soo Jin, & Hyung Won Chae, Significant Changes to the Korean Patent Act, A Quarterly Update of Korean IP Law & Policy, Spring 2016, at 2, available at http://www.kimchang.com/newsletter/201604/en/img/KIM%20&%20CHANG%20IP%20Newsletter_Spring%202016.pdf.

24 Id.

25 Yulchon LLC, supra note 20.

Originally published in Law360 March 6, 2017

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