Defendant, Xilinx, Inc. ("Xilinx"), identified and disclosed an employee as an expert pursuant to Fed.R.Civ.P. 26 and submitted several disclosures for the employee expert as well. Plaintiff moved to exclude the employee expert's disclosures on grounds of (a) improper hearsay, (b) undisclosed opinions regarding prior art, (c) unreliable opinions, (d) improper opinions regarding defendant's licensing practices and (e) as an improper attempt to remedy defendant's improper invocation of the attorney-client privilege during the employee expert's deposition. The court denied the motion on each of these grounds.

With respect to hearsay, plaintiff argued that the disclosures contained no opinion but instead were an improper attempt to admit hearsay at trial. The court disagreed stating that hearsay objections could be made to exclude inappropriate statements at trial and that the employee expert's subjective believe as to the nature of his testimony, i.e., that he did not believe his testimony was "opinion" was irrelevant.

In terms of the undisclosed opinions regarding invalidity and prior art and independent development or copying, the court also rejected those challenges. First, the court found that it was not necessary to exclude the employee expert because defendant's represented that he would follow the court's orders of exclusion and the court stated that he would be expected to follow the court's order and should take care to avoid violating any orders of the court. Second, with respect to the testimony regarding independent development or copying, the court found that none of plaintiff's concerns were valid because "[t]here has been no showing that it is necessary to know anything about PACT's patents, or events that have occurred involving PACT, in order to reliably testify to the presence of features in Xilinx's products."

Turning to the issue of licensing practices, plaintiff contended that the testimony would be improper because the employee expert did not have personal knowledge of the specific negotiations underlying each agreement. The defendant asserted that the testimony was not opinion testimony and was only offering the testimony as a lay witness. Based on this representation, the court declined to exclude the disclosures at this stage.

Finally, with respect to the improper invocation of the attorney-client privilege, plaintiff asserted that the new changes to the Fed.R.Civ.P. 26 did not apply to employee experts. The district court disagreed: "The parties do not dispute that the communications between Dr. Trimberger and Defendants' lawyers would ordinarily be privileged. Therefore, the remaining issue is whether Defendants waived privilege when they designated Dr. Trimberger as an expert witness and provided disclosures under Rule 26(a)(2)(C). In Pioneer Hi-Bred, the court found that privilege and work-product protection is waived when confidential information is disclosed to a testifying expert witness. 238 F.3d at 1375. However, Pioneer Hi-Bred is distinguishable because the court's reasoning relied on the broader disclosure requirements that then existed for testifying expert witnesses under the Federal Rules. Id. Rule 26, as amended in 2010, now protects drafts and certain communications between a party's attorney and a testifying expert from disclosure. Fed. R. Civ. P. 26(b)(4)(B) & (C). Therefore, it is no longer true that all privileges and protections are waived as to confidential information disclosed to a testifying expert."

The district court continued, reasoning: "Although the amended rule explicitly provides these protections for expert witnesses who submit a written expert report under Rule 26(a)(2)(B), the Rules contemplate that privileges and protections may be available to protect communications with other types of expert witnesses, such as Dr. Trimberger. See Fed. R. Civ. P. 26 advisory committee's note (2010) ('The rule does not itself protect communications between counsel and other expert witnesses, such as those for whom disclosure is required under Ruled 26(a)(2)(C). The rule does not exclude protection under other doctrines, such as privilege or independent development of the work-product doctrine.') Accordingly, the Court finds that Defendants did not improperly invoke the attorney-client privilege."

Pactt XPP Technologies, AG v. Xilink, Inc., et al., Case No. 2:07-CV-563-RSP (E.D. Tex. April 11, 2012)