Smithkline Beecham Corp. v. Apotex Corp.
193 F.R.D. 530, 2000 U.S. Dist. LEXIS 11263, 2000 WL 776998 (2000)
Rule of Law:
The party asserting attorney-client privilege or the work product doctrine bears the burden of establishing its applicability on a document-by-document basis, and courts will apply a functional approach to recognize foreign patent agent privilege if the foreign nation extends the privilege and the agent acts as an attorney, while work product protection requires a showing of a substantial and significant threat of litigation leading to the document's creation.
Facts:
- Beecham Group, Inc. obtained United States Patent No. 4,721,723 on Crystalline Paroxetine Hydrochloride Hemihydrate on January 26, 1988, which it later assigned to Smithkline Beecham Corporation.
- Apotex, a Canadian pharmaceutical corporation, established TorPharm as an operating division in 1993 to develop, test, and manufacture drugs for the United States market.
- On May 18, 1998, TorPharm sent a letter to Smithkline Beecham, notifying them that it had filed an Abbreviated New Drug Application with the FDA for “Paroxetine HCI Tablets.”
- TorPharm's letter claimed its product did not infringe on Smithkline Beecham's patent because it contained paroxetine in an anhydrous state.
- Smithkline Beecham disputed TorPharm's claim, asserting that paroxetine hydrochloride in an anhydrous state would convert to a hemihydrous state, infringing their patent.
- Smithkline Beecham entered into an exclusive licensing agreement for paroxetine with Ferrosan A/S, which was later succeeded by Norvo Nordisk, giving the licensor primary responsibility for legal defense of the patents and requiring Smithkline Beecham to provide reasonable assistance.
Procedural Posture:
- On June 26, 1998, Smithkline Beecham Corporation and Beecham Group, Inc. (plaintiffs) filed a one-count patent infringement claim against Apotex Corporation, Apotex Inc., and Torpharm, Inc. (defendants) in the United States District Court for the Northern District of Illinois.
- Plaintiffs sought an order barring FDA approval of the defendants’ product until the expiration of the 723 Patent and an order barring defendants from manufacturing, using, or selling their product.
- Defendants answered the complaint, asserting affirmative defenses of unenforceability and invalidity of the 723 Patent.
- Defendants filed a motion to compel the production of approximately 1500 documents listed in the plaintiffs' privilege logs.
- Plaintiffs submitted multiple privilege logs, including a 370-page initial log, a 386-page revised log after a court order, and an 89-page log for additional documents sought by defendants, describing documents they claimed were protected by attorney-client privilege or the work product doctrine.
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Issue:
Are documents withheld by plaintiffs from discovery protected by the attorney-client privilege or the work product doctrine, considering communications with foreign patent agents, application of the common interest doctrine, and the timing of anticipated litigation?
Opinions:
Majority - Magistrate Judge Bobrick
No, many of the documents withheld by Smithkline Beecham Corporation are not protected by attorney-client privilege or the work product doctrine because the plaintiffs failed to meet their burden of establishing the necessary elements for each claim. Regarding attorney-client privilege, the court applies a functional approach, looking to the foreign nation’s law to determine if privilege extends to patent agents and then assessing the specific capacity in which the agent functioned. For United Kingdom patent agents, the court found communications privileged under British law since 1968, provided the agent was functioning as an attorney engaged in substantive lawyering. However, for communications involving patent agents in over 20 other foreign countries, the plaintiffs failed to provide the applicable foreign law, and many such communications were deemed mere transmittals of non-confidential information to a foreign patent office, thus not privileged. In the context of patent practice, the court recognized that advising clients on patentability, drafting applications, and strategizing before application filings constitute legal advice and are privileged, even if they involve technical information, as long as confidential legal advice is revealed. However, documents described as agendas for meetings, communications between two or more non-legal advisors (even if copied to an attorney), or those distributed broadly within corporate management (without demonstrating a need for access) were not privileged. For the common interest doctrine, the court affirmed it is an exception to privilege waiver, not a privilege itself. It applied because the exclusive licensing agreement created essentially identical legal interests between Smithkline Beecham and its licensors. Nonetheless, documents distributed to generically described “employees” without demonstrating a need for access were not protected under this doctrine. Regarding the work product doctrine, the court determined that materials must be prepared in anticipation of litigation, which requires a “substantial and significant threat of litigation” and objective facts establishing an “identifiable resolve to litigate.” The plaintiffs’ broad, unsupported claims of anticipated litigation spanning continents and decades, based on vague affidavits, were insufficient. The court found that for the current litigation, Smithkline Beecham could not have reasonably anticipated litigation prior to May 18, 1998, when they became aware of Apotex’s competing product. Therefore, most documents claiming work product immunity created before this date, or without a date, were not protected.
Analysis:
This case clarifies the stringent requirements for asserting attorney-client privilege and work product protection, particularly in complex patent litigation involving international communications and corporate entities. It establishes a practical framework for analyzing foreign patent agent privilege by deferring to foreign law and evaluating the agent's function. The ruling also underscores that blanket claims or vague descriptions are insufficient to establish privilege, reinforcing the importance of detailed privilege logs and the burden on the asserting party. For work product, the court's clear establishment of a specific date for 'anticipation of litigation' based on objective facts will serve as a precedent, making it harder for parties to retroactively claim work product protection for routine business activities or speculative threats.
