A recent spate of cases before the UK and European Courts re-considering the scope of privilege are of interest to businesses with valuable IP rights. The issue of privilege frequently arises in the context of determining which documents require to be disclosed during litigation. In reaching a decision on disputes which arise over disclosure, the Court must weigh the right of each party to obtain full legal advice against the interests of justice that litigation should be conducted as openly and candidly as possible.

When does privilege operate?

Broadly speaking, there are two main categories of documents to which privilege can attach:

  • Confidential communications passing between a lawyer and client for the purposes of giving or receiving legal advice ("legal advice privilege"); and
  • Communications in contemplation of litigation ("litigation privilege"). This form of privilege extends beyond communications solely between solicitors and clients.  

Why does it matter for IP litigation?

In today's global market, protecting IP rights is inherently international. Steps are often taken to register or protect rights in several jurisdictions, whether in terms of the domestic law of that jurisdiction or international conventions. Advisers such as trade mark or patent attorneys/agents in different countries frequently advise on technical and commercial aspects of registering and protecting rights. It cannot be assumed that privilege will operate to protect communications between these advisers and their client from disclosure in any litigation. The general rule in the UK is that legal advice privilege will not protect communications between a client and a non-lawyer, and this rule was recently confirmed by the Court of Appeal in the context of advice from tax advisers. In addition, general input received from a lawyer, for example in relation to the commercial aspects of managing an IP portfolio, may not be protected from disclosure if it is not advice given in a 'relevant legal context'.

In-house lawyers

In light of a recent decision of the European Court of Justice (ECJ), businesses should also be aware that their in-house legal team may not be treated as "lawyers" for the purposes of privilege. Whilst the UK Courts recognise in-house lawyers for this purpose, other jurisdictions do not. In a recent ECJ case relating to a competition investigation, the ECJ decided that in-house lawyers do not enjoy privilege in this context. The ECJ – which was influenced by the position adopted in the majority of Member States - took the stance that in-house lawyers had a lack of independence from their employer and that meant they should not be treated the same as external lawyers.

In light of this decision, businesses should be aware that communications passing between their business and in-house legal teams for the purposes of providing advice may not be privileged at a European level or indeed at local level in a number of EU member states. Since many large companies have valuable IP portfolios managed by in-house legal teams this is something that may merit detailed consideration, particularly where litigation may be in prospect.

Be prepared

Ideally, thought should be given at the time advice is sought or communications sent to the extent to which privilege will be available to protect sensitive or confidential documents. Consider what strategies the business should adopt to manage internal communications and to maximise protection within the parameters of how the business operates. If a particular issue becomes contentious, consider which Court the dispute will be fought in and whether advice should be channelled through external lawyers to maximise the chances of privilege being afforded.