Preserving attorney-client privilege offshore

By Savi Savi Gupta, Clairvolex Knowledge Processes

Patent attorneys cannot outsource the preparation of patent applications to India because of attorney-client privilege, true or false?

This issue has become more profound with the burgeoning of offshore outsourcing patent work to India.

Savi Gupta, Clairvolex Knowledge Processes

Some attorneys are of the view that even an in-depth and sound legal opinion against patent applications being outsourced for drafting would not deter them from their stand until a court provides a ruling – or until this exact issue is codified into law, as that is the only means of getting an answer with any degree of certainty.

This chain of thought relies on the inadequate allocation of risk in the economies of this particular situation. An attorney may want to exercise caution in this regard, especially if a court finds the activity of sending an undisclosed invention overseas for drafting illegal.

The attorney would then face the risk of ruining their reputation; the law firm would have to risk the payment of damages; the client’s risk would relate to the invalidation of a patent; and the risk to the overseas company would be, perhaps, a loss of that particular business which amounts to very little in comparison to the other mentioned losses.

Given this worst case scenario, there seems to be a total mismatch of risk adjusted benefit on the part of attorney and firm on one hand, and the offshore vendor on the other.

Implementing safeguards

A leading authority on legal process outsourcing in the field of attorney-client privilege, says that ethical concerns relating to patent outsourcing revolve around the unauthorized practice of law, client confidentiality, the duty of competence and informed client consent. He further elaborates that there are numerous safeguards (in the context of offshore outsourcing from the US) that attorneys must ensure are in place.

He emphasizes the opinions of the bar associations of Los Angeles, New York, San Diego and Florida that discuss the outsourcing of legal work and agrees that offshore outsourcing of substantive level legal work is permissible, subject to these safeguards.

One such safeguard involves direct and rigorous supervision of, and ultimate responsibility for, the delegated work by an attorney authorized to practise law in the jurisdiction where the legal matter is pending.

These formal opinions clearly imply that outsourcing legal work to third party vendors does not amount to a waiver of attorney-client privilege.
Let us make the situation more specific and look hypothetically at a US company hiring a non-US attorney to draft a US patent application. Is any portion of that work protected by attorney-client privilege for patent litigation purposes?

Many disputes in patent litigation arise over whether attorney-client privilege extends to documents prepared for filing purposes and the prosecution of a patent application.

In In Re Spalding Sports Worldwide, 203 F. 3d 800 (Fed. Cir. 2000), the Federal Circuit found privilege existing in the implicit request for legal advice. However, in the present context, the primary question is: How would the case be resolved if a foreign patent attorney is involved in giving a US patentability opinion and a US patent drafting?

It is widely felt in the offshore outsourcers circle that the question on attorney-client privilege is really a scope of protection question, which also involves the duty of confidentiality.

As India’s confidentiality standards are relaxed in comparison to the US, this situation could lead to a potential loss of attorney-client privilege.

However, the question requires clarity in terms of the existence of privilege for attorneys and patent agents, and upon its existence, its extension to foreign patent professionals.

The privilege usually extends from an attorney to the patent agent, although the degree of supervision needed usually varies depending on the type of work being done.

Offshore outsourcing patent-related work by US attorneys to an Indian outsourcing vendor thus entails an extension of the attorney-client privilege, provided such work is done under strict supervision of the US attorney.

If the foreign patent agent was primarily a functionary of the attorney, the communication is privileged to the same extent as any communication between an attorney and a non-lawyer working under his supervision.

If the foreign patent agent is engaged in the “lawyering” process, the communication is privileged to the same extent as any communication between co-counsels.

Accordingly, an attorney who transmits or receives an otherwise privileged communication internationally,does not, and will not, waive any existing privilege so long as the attorney takes reasonable steps to preserve the privilege.