The Northern District of Ohio, in O1 Communique Laboratory, Inc. v. Citrix Sys., Inc., Case No. 1:06-cv-00253 (Magistrate Judge Kathleen Burke) (April 17, 2015), addressed two questions that are rarely, if ever, seen in the context of comparable license agreements:  (1) whether a corporate party asked about its “beliefs” as to legal conclusions—in this case, whether Citrix believed patents were valid and infringed that were licensed by defendant Citrix in an agreement on which Citrix intended to rely for damages purposes—may refuse to answer because those beliefs are inseparable from legal advice received from attorneys; and (2) whether reliance on a license to establish reasonable royalty waives privilege on legal advice a company received related to the patents that are the subject of the license.  The court answered the two questions:  Yes and No.

Plaintiff sought sanctions against Citrix, particularly seeking to preclude use at trial of a license between Citrix and Tridia where privilege was asserted.  Plaintiff contended that Citrix improperly invoked attorney-client privilege in response to five portions of the deposition of the licensing corporate witness (Citrix in-house counsel Robert Feldman):

  • Question 1: “What motivated Citrix to license the Tridia patents?”
  • Question 2: “What products or services did Citrix believe would be covered by the Tridia license at the time it entered into the license?
  • Question 3: “Did Citrix believe the Tridia patents to be infringed by Citrix’s products at the time it entered into the license?”
  • Question 4: “Mr. Feldman, the question, as posed, simply requests Citrix’s subjective belief as to whether or not its products were covered by the Tridia patents at the time it entered into the license?”
  • Question 5: “Did Citrix believe the Tridia patents to be valid at the time it entered into the license?”

Feldman provided partial answers to some of the questions (invoking privilege to the remainder of those questions). On others (numbers 3 and 4 above), Feldman provided no answer, and Citrix stood on privilege.  The court first address the question of corporate “belief”:  “A corporation does not have personal beliefs in the same way that a natural person does.”  Slip op. at 8.  It held that these questions were seeking privileged information. The court also concluded that historical testimony provided by Mr. Feldman concerning the Tridia license that did not disclose privileged communications did not expressly waive attorney client privilege.

More generally applicable to the reasonable royalty context, the court also concluded that Citrix’s expert’s reliance on the Tridia license for reasonable royalties did not impliedly waive privilege.  The court reasoned that “Citrix does not rely on the advice of its counsel to prove a claim or defense. While the legal advice Citrix received with respect to the Tridia patents may be relevant, Citrix is not relying on that advice to show that the Tridia license is evidence of what a reasonable royalty for the technology at issue in this case would be.”  Slip op. at 12.  “Communique has not cited, nor is the Court aware of, precedent for finding a waiver of privilege under facts analogous to this case and the Court declines to create such precedent.”  Slip op. at 13.