My mentor used to tell a story about a patent attorney who, at the beginning of a meeting with clients would say “Everyone hold up your pencils.” When everyone held up their pencils, he would then say “OK, now break them!”
Many people have gotten into legal troubles by writing the wrong things down. This has only become more of a problem as electronic communication and record keeping have become ubiquitous. These developments have implications for how you manage intellectual property, which is the subject of this article.
So, what should you write down, and what should you not? As a general rule, do not write down any bad news. Imagine that what you have written is projected onto a large screen in a courtroom in front of a judge and a jury. If that idea makes you uncomfortable, or makes you want to hide under a rock somewhere, you should not write it down.
But what about attorney-client privilege and all of that? Well, attorney-client privilege might apply to a meeting where lawyers are present discussing intellectual property, but it might not. There are other types of privilege and other rules that can be used to prevent documents from being produced in a litigation. However, they are complicated even for a lawyer like me. Unless you are a litigator who is familiar with all of the rules related to privilege and evidence, (and even if you are) it is best to assume that you will not be able to avoid producing a document in question. There are many things that I do not write down as a lawyer because I am not sure whether it could be used against the client later in connection with patented or patentable subject matter, or the conduct of business more generally. Instead, I discuss it in person or over the phone. If I err on the side of avoiding writing bad news down, those of you who are not lawyers should too.
This advice is appropriate for many settings. Here are a few examples related to managing intellectual property.
I once received an email from a client who had a detailed patentability search report carried out by a third party, non-lawyer, organization. This report carefully documented that structures of interest to the client were “obvious” or “not patentable.” If this report fell into the hands of opposing counsel in a patent litigation, this would, at best, cast doubt upon the validity of the patent. Of course, the patentee could argue that the author of this report was not qualified to make the conclusions of unpatentability, but this may fall on deaf ears in the courtroom. At worst, this document could be taken as an admission by the patentee that the structures in the report were unpatentable.
I have also seen tables listing issued patents by third parties, their claims, and whether or not the client infringes the patent in question. Again, these tables were not prepared by lawyers, but by scientists or some other non-lawyers in the organization. As with the patentability report described above, if such a report fell into the hands of the patentee’s lawyers, it would make it much easier for the patentee to convince the court that defendant infringes the patent.
This raises two questions. First, what if we have to make a record of bad news? Second, what if we have already written down bad news?
With respect to the first question, there are situations where bad news, the kind that would make you uncomfortable if it were displayed on a screen in a courtroom, needs to be recorded. If it is not done, then some decisions will be second guessed in the future, and it may appear that the parties were not diligent when making the decision, including in circumstances where someone had a fiduciary obligation to consider adverse information in making a decision. This could potentially expose people, or an organization, to liability for negligence or other misfeasance. The answer is that you should follow company guidelines, if applicable, to comply with your reporting obligations, and consult with your lawyer, if there is a grey area, to determine how you should record the event and the reasoning for your decision. If you have no company guidelines, you should consult with your lawyer about developing some.
For example, you may decide to allow a patent application to go abandoned because the subject matter of the application does not appear to be novel or nonobvious. If you do not document that information, it could look like the abandonment was the result of someone missing the deadline. The decision to abandon the application should be documented, but it needs to be done in a way that does not have a negative effect upon any other IP that you may have. If you only need to demonstrate that this abandonment was considered, and the deadline was not simply missed, this could be documented by saying something like “upon the advice of counsel, we determined that allowing this application to be abandoned was the best course of action in light of our needs.” If you need to document, for example, why the patent claims were not patentable over the prior art, you should discuss exactly how to do so with your patent attorney.
With respect to the second question, you should consult with your lawyer regarding whether the documents at issue can be legally destroyed.
In order to avoid legal problems down the road, it would be prudent for you to think about whether your organization, with the help of counsel, should set up standard procedures for dealing with negative information.
Brent Johnson, Ph.D. is a shareholder in the Firm’s Orange County office. He is focused on patent prosecution, particularly in the areas of pharmaceutical and other chemistry-related
*Published with permission of the Orange County Business Journal