Property, intangible

a blog about ownership of intellectual property rights and its licensing

Attorney-Client Privilege and Patent Assignment

Here’s an interesting tidbit to keep in mind—the assignee of a patent may be able to claim that a legal opinion given to the original owner of a patent is privileged despite the assignment of the patent. The case is SimpleAir, Inc. v. Microsoft Corp., and the challenger to the claim of privilege is Google.

Both parties relied on a district court case for their law, Soverain Software LLC v. Gap, Inc., 340 F. Supp. 2d 760 (E.D. Tex. 2004). The question is one of the totality of the circumstances. On one end is where there has been a “mere assignment” of the patent, in which case the attorney-client privilege does not transfer. But:

If the practical consequences of the transaction result in the transfer of control of the business and the continuation of the business under new management, the authority to assert or waive the attorney-client privilege will follow as well.

In SimpleAir, the assignment of patents was the consequence of the original company, AirMedia, going bankrupt. A patent application, trademarks and domain names went to a non-party and the remainder, two patents and 25 applications, went to a predecessor of the plaintiff. There was an order of magnitude difference in how much each paid for their share of the assets. The plaintiff-assignee was formed by the inventors, John Payne and Tim von Kaenel, who had also been president and employee at the original company.

Plainly, there is a significant degree of continuity in the areas of corporate knowledge, management, and experience between AirMedia and SimpleAir. Likewise, John Payne and Tim von Kaenel’s interest in preserving their privilege claims on behalf of SimpleAir is unchanged from their former interest in such privilege as representatives of AirMedia. The Court finds that these realities weigh against Google’s assertion that SimpleAir’s acquisition is nothing more than “a mere transfer of some assets.”

SimpleAir therefore was entitled to the claim of privilege.

SimpleAir, Inc. v. Microsoft Corp., No. 2:11-cv-416-JRG (E.D. Tex. Aug. 27, 2013).

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