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Rowe International Corp. v. Ecast

March 19, 2007

ROWE INTERNATIONAL CORP. AND ARACHNID, INC. PLAINTIFFS,
v.
ECAST, INC., ROCK-OLA MANUFACTURING CORP., AND VIEW INTERACTIVE ENTERTAINMENT CORP., DEFENDANTS.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge

MEMORANDUM OPINION AND ORDER

Arachnid, Inc. has filed a motion seeking the return of three allegedly privileged documents that it inadvertently produced during discovery. Defendants have filed a cross-motion to compel, claiming that Arachnid waived privilege with regard to the three documents and that the crime-fraud exception abrogates the privilege. Defendants also contend that Arachnid's waiver and fraud allow them to seek the discovery of all otherwise-privileged information regarding the patentability of the patents-in-suit. For the following reasons, the Court grants defendants' motion in part and denies it in part, and grants Arachnid's motion in part and denies it in part.

Background

Though the present motions concern only discovery, resolution of the parties' motions requires a brief familiarity with the lengthy history of the patents-in-suit. Each of the patents-in-suit concerns a computer jukebox or computer jukebox system. Unlike a conventional jukebox, which requires routemen to visit each jukebox location to change records or compact disks and record usage data, a computer jukebox system distributes digital music and retrieves jukebox usage data over a computer network. Arachnid first obtained in 1994 a patent titled "system for managing a plurality of computer jukeboxes" (the '302 patent). The '302 patent identified Arachnid employees John Martin, Michael Tillery, and Samuel Zammuto as the inventors. Jean Kuelper and John Held of McAndrews, Held & Malloy acted as Arachnid's patent counsel. The other patents-in-suit are continuations or continuations-in-part of the '302 patent, and each names Tillery, Martin, and Zammuto as inventors.

During the prosecution of the '302 patent, the Patent and Trademark Office (PTO) examiner raised a prior art objection with regard to a previously issued patent known as Sidi. In summary, the Sidi patent claimed a server that could transmit digital music to various outlets. The PTO examiner contended that Sidi essentially was a computer jukebox and therefore found Arachnid's invention obvious and initially declined to issue a patent. Arachnid's patent attorney, Jean Kuelper, argued in response that certain features of the '302 patent distinguished it from Sidi. She told the examiner that claims 1 through 5 of the application contained "storage space data" that distinguished Arachnid's invention from Sidi. Figure 2 of the '302 patent illustrates the data structure of an individual song record stored in a master library catalog. Arachnid overcame the examiner's objections, and the PTO eventually issued the '302 patent on October 11, 1994.

Rowe International Corp. and Arachnid brought this patent infringement action against defendants, claiming that they have infringed seven patents held by Arachnid, the '302, '889, '398, '189, '575, '834, and '230 patents. Defendants have counterclaimed, contending that the patents-in-suit are invalid.

On December 11, 2006, Arachnid produced approximately 11,000 documents in electronic form to defendants. Arachnid inadvertently produced three documents that it claims are protected by the attorney-client privilege. These documents, titled "patent reports," concerned the company's inventions. They were prepared in 1997 by an Arachnid employee and were sent to John Held. Among other things, the patent reports attribute to Held certain legal opinions regarding the scope of the Sidi patent. Defendants agree that these documents are privileged, that they were inadvertently produced, and that Arachnid promptly sought their return upon learning of their production. A protective order agreed to by the parties and entered by the Court provides that [i]nadvertent production of documents subject to work product immunity or the attorney-client privilege . . . shall not constitute a waiver of the immunity or privilege, provided that the Disclosing Party notifies the Litigant in writing via facsimile, with confirmation by first-class mail, of such inadvertent production immediately upon learning of same. Such inadvertently produced documents, and all copies thereof, shall be returned to the Disclosing Party upon request immediately. Nothing in this Protective Order shall prevent any Litigant from requesting that the Court order the production of any such inadvertently produced documents.

Order of Oct. 25, 2006.

In 1999, Michael Tillery, a former Arachnid employee, was deposed in a prior lawsuit. Tillery was not employed by Arachnid at the time of the deposition, but John Held represented both Tillery and Arachnid at the deposition. At the deposition, Tillery testified as follows regarding certain features of the '302 patent:

Q: Okay. In your conversations with that second attorney, did you provide him with information about song size data?

A: No.

Q: Why do you suppose he included that or she included that?

[Objection; question rephrased].

Q: [] Can you tell us why the information we see in figure 2 was added to the patent application in 1992?

A: I mean, it is information I learned from our attorneys that -- okay, what I -- what I was led to believe was the only way we would receive the ...


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