In re OptiumInsight (Federal Circuit 2017)
The Federal Circuit has denied OptumInsight’s petition for writ of mandamus on privilege waiver.
In the underlying litigation, OptumInsight has sued Cave Consulting for infringement of several healthcare analytics patents. One of the originally asserted patents – U.S. Patent No. 5,835,897 – was developed by Symmetry Health Data Systems who later merged with Optum. (In particular, Optum bought Symmetry as the settlement of Symmetry’s infringement case against Optum).
Antitrust claim: An element of the Cave Consulting defense is an antitrust claim against the patentee for “knowingly asserting a fraudulently procured patent.” The allegations argue that Symmetry (now part of Optum) lied about the conception date of the ‘897 patent during a prior reexamination. As the appellate court describes:
Symmetry submitted an Information Disclosure Statement and a supporting affidavit from its patent attorney. The affidavit asserted that the ETG Program was not ready for patenting at the time of [its] RFP response because the inventor did not conceive of all the claimed concepts until August 1994. Symmetry successfully persuaded the patent examiner that the RFP response was not an invalidating offer for sale, and Symmetry thereafter filed additional patent applications that claimed priority to the ’897 patent.
To pursue its antitrust claim, Cave Consulting then demanded discovery of information relating to conception and first-sale of the invention. Optum refused – claiming privilege, but the district court ordered disclosure, including post-merger-communications – finding that the PTO submissions constituted waiver.
Under the Federal Rule of Evidence 502(a), the disclosure of to a federal agency or court waives attorney-client privilege and work-product protection as to information disclosed. That intentional disclosure also extends to otherwise undisclosed communications if they “concern the same subject matter” and “they aught in fairness to be considered together.” As the Federal Circuit has explained: “The rule prevents parties from selectively disclosing privileged information as an affirmative legal strategy, but falling back on the privilege to conceal inconsistent information.” See Seagate.
Here, Optum argues that Symmetry’s waiver should not apply to its successor. In response, the Federal Circuit refused to “adopt such a categorical rule.” Rather, the approach of Section 502 is to extend waiver to the scope deemed fair. Further, the court writes: “Logically, if a successor company can assert privilege over its predecessor’s communications, the flipside of that principle is that a successor company can also be subject to its predecessor’s intentional waiver in certain circumstances.”
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A big caveat here that the court determined was important is that the PTO submission by Symmetry was in a reexamination in the midst of a litigation campaign by Symmetry – asserting the very patent at issue. Although attorney submissions during patent prosecution will also result in waiver, they are less likely to apply to extend to either (1) later communications with trial counsel or (2) subsequent owners of the patent rights.