Despite a thoughtful dissent by Justice Evans, a panel of the Dallas Court of Appeals has refused to recognize a Texas “patent-agent privilege” like that recently adopted by the Federal Circuit in In re Queen’s University at Kingston, 820 F.3d 1287 (Fed. Cir. 2016), or to apply that federal privilege in a state-law breach-of-contract case.

In re Silver
Dallas Court of Appeals, No. 05‐16‐00774‐CV (August 17, 2016) 
Justices Francis, Evans (Dissent), and Stoddart (Opinion)

Non-attorneys may register as “patent agents” with the USPTO and be authorized to prepare and prosecute patent applications there. The Supreme Court has held those activities “constitute[] the practice of law,” but that the Supremacy Clause bars states from prohibiting registered non-attorney patent agents from pursuing patent prosecutions on the ground they are engaged in the unauthorized practice of law. Sperry v. Florida, 373 U.S. 379, 383-85 (1963). Applying Sperry, a divided panel of the Federal Circuit earlier this year “recognize[d] a patent-agent privilege extending to communications with non-attorney patent agents when those agents are acting within the agent’s authorized practice of law before the Patent Office.” In re Queen’s University, 820 F.3d at 1302.

Silver claims he invented and owns patents for the technology in a device called the “Ziosk” that allows restaurant patrons to order meals, play games, and pay their checks from their tables. Silver and Tabletop Media, a corporation that marketed the Ziosk, sued each other in state court for breach of contract. In the course of that litigation, Tabletop sought discovery of more than 300 emails between Silver and his non-attorney patent agent who had pursued the Ziosk patents. When the trial court rejected his claim that those communications were privileged, Silver sought mandamus in the Dallas Court of Appeals.

The panel majority agreed with the district court and rejected Silver’s privilege claim on two grounds. First, it said, no patent-agent privilege exists under the Texas constitution, statutes, or court rules. And, although the Federal Rules of Evidence expressly authorize federal courts to recognize new common-law privileges, as the Federal Circuit had done in Queen’s University, intermediate appellate courts in Texas do not “declare new common law discovery privileges.” Second, even if such a privilege might apply under federal law in a dispute regarding the validity of a patent or its infringement, this case focused on state-law breach-of-contract claims; consequently, state rather than federal privilege law controls.

In dissent, Justice Evans argued that, unlike Queen’s University, this case involved not the recognition of a new common-law privilege, but the interpretation and application of the existing attorney-client privilege in Texas Rule of Evidence 503. Rule 503(b)(1)(A) insulates confidential communications to facilitate legal services between a client and a “lawyer,” which Rule 503(a)(3) defines as “a person authorized, or who the client reasonably believes is authorized, to practice law in any state or nation.” Because under Sperry a non-attorney patent agent is “authorized to practice law” in prosecuting patents, Justice Evans would have held communications between Silver and his patent agent in connection with the patent process to be covered by the Rule 503 Texas attorney-client privilege. (Justice Evans would not have extended the privilege to later communications between Silver and his patent agent regarding the Tabletop litigation, because those were not in connection with the patent process. Neither the majority nor dissent discussed whether the work-product doctrine, TRCP 192.5, might protect those communications.)

Stay tuned for further developments. Absent some agreement between the parties that moots the issue, this dispute seems likely to go another round or two in the appellate courts.