PITTSBURGH – A federal judge recently ruled that work-product documents and a litigation funding agreement, one connected to a patent infringement lawsuit involving magnetic technology used in computer hard drives, will remain shielded.

On Jan. 18, U.S. District Court for the Western District Court of Pennsylvania Judge Cathy N. Bissoon denied a motion from Western Digital Corporation for Lambeth Magnetic Structures to produce both the work-related and litigation funding documents.

Lambeth Magnetic Structures filed separate complaints in April and May 2016 versus Western Digital Corporation, Seagate Technology Holdings and their respective related companies, alleging they violated U.S. Patent Law. The suits were later consolidated.

Per those complaints, Lambeth, a limited liability corporation that houses patents created by a retired Carnegie Mellon professor, alleges it was damaged by the defendants’ infringement of Patent No. 7,128,988, entitled “Magnetic Material Structures, Devices and Methods” (The ‘988 Patent).

Lambeth believes the defendants directly infringed the ‘988 Patent by importing, manufacturing, using, selling and offering to sell magnetic heads similar to the ‘988 Patent. At the time of original filing, Lambeth claimed to have suffered continuous financial harm and damage as a result of the aforementioned infringement, unless that same infringement was enjoined by the Western District Court.

In a later discovery dispute, the defendants sought a series of documents from Lambeth: (1) Dr. David N. Lambeth’s communications with his academic colleagues concerning reverse engineering of defendants’ products, (2) LMS’s communications with (redacted), a company hired to perform reverse engineering tests for the purpose of establishing Lambeth’s patent infringement case, and (3) LMS’s communications with litigation funding organizations, including LMS’s agreement with one of those publicly unknown groups.

Lambeth opposed these requests on the grounds of work-product privilege, attorney-client privilege or both, and the question was put to Bissoon.

“Plaintiff contends that these documents were prepared for litigation concerning the ‘988 Patent or were prepared pursuant to communications with attorneys. As to plaintiff’s communications with his colleagues on reverse engineering, defendants counter that many of these documents are communications between non-attorneys and they were not prepared in anticipation of litigation,” Bissoon said.

“As to the testing documents, they argue that plaintiff has waived any claim to privilege by citing them in plaintiff’s infringement contentions and selectively relying on them to show infringement. And, defendants argue that plaintiff’s communications with litigation funding companies are not privileged due to the lack of a common legal interest between plaintiff and these firms.”

Ultimately, Bissoon decided the documents were privileged and denied the defendants’ request.

“Upon consideration of the parties’ arguments, and for the reasons stated below, the Court finds that the materials sought are privileged under the work product doctrine. Because the Court finds that the work product doctrine shields these documents from discovery, it need not address the parties’ arguments concerning the availability of attorney-client privilege,” Bissoon stated.

Under seal, Lambeth submitted two declarations in support of his work-product assertions, in addition to two consulting agreements with his academic colleagues. The Court said it examined these exhibits “with particular attention to whether they show that the documents sought by defendants were prepared at a time when litigation was reasonably foreseeable and were prepared primarily for litigation purposes.”

The declaration states Lambeth began investigating whether the defendants’ products were infringing on his ‘988 Patent in 2008, and contacted (redacted) entities with relevant expertise, in addition to (redacted) law firms for the purpose of enforcing his patent.

Lambeth briefly sold the ‘988 Patent in December 2010 and reacquired it in mid-2013, then re-engaged in discussions about the enforcement of the patent itself.

Bissoon disagreed with the defendants’ arguments that the documents being sought were not covered by work product or attorney-client privilege.

“The Court finds…based on Lambeth’s declarations, that Lambeth has established an objectively reasonable belief that litigation to enforce the ‘988 Patent was forthcoming as of his initial consultations in October 2008. In other words, an enforcement action for the ‘988 Patent constituted an ‘identifiable…impending litigation,’ and Lambeth reasonably foresaw this action at the time he undertook testing of possibly infringing products,” Bissoon said.

“The entire basis for Lambeth’s reverse engineering communications with (redacted), which began in 2008, was to prepare for litigation by determining which products contained technologies potentially infringing the ‘988 Patent. As plaintiff states (redacted), Lambeth’s continuous communications concerning patent enforcement show a somewhat tortuous, but by no means unforeseeable, path,” Bissoon added.

Bissoon termed Lambeth’s declarations evidence that he intended to “enforce the ‘988 Patent through litigation.”

“For these reasons, the Court finds that Lambeth’s communications with and concerning reverse engineering are subject to protection under the work product privilege,” Bissoon said.

Lambeth’s communications with the litigation funder fell under the same guidelines, according to Bissoon.

“Defendants also request access to documents from (redacted), a company plaintiff used in 2014 to perform reverse engineering tests of defendants’ products for the purpose of establishing Lambeth’s patent infringement case. The Court finds that these documents naturally fall within the work product privilege for the same reasons as the reverse engineering communications with analyzed above,” Bissoon stated.

Finally, Bissoon ruled that Lambeth’s additional communications with publicly-unknown litigation funders spanning October 2010 to April 2013, in anticipation of both patent enforcement litigation and litigation to reacquire the ‘988 Patent, are also privileged.

“As previously found, these communications took place during a period when Lambeth actually and reasonably foresaw litigation. And, the evidence clearly establishes that these communications were primarily, perhaps exclusively, for the purpose of preparing for litigation. Defendants’ arguments premised on the non-legal nature of plaintiff’s relationships with are unavailing. Even if the Court were to fully credit this argument and consider the relationships to be commercial, the materials nonetheless fall within work product immunity because they were communications with plaintiff’s agents and in anticipation of litigation,” Bissoon said. 

“Defendants also seek an unredacted copy of plaintiff’s agreement with (redacted), which contains information relevant to LMS’s and (redacted). Like the materials discussed above, plaintiff’s agreement with was undisputedly prepared in anticipation of the instant litigation and for the purpose of pursuing the litigation. As a result, all of these materials are shielded under work product protection.”

U.S. District Court for the Western District of Pennsylvania case 2:16-cv-00541

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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