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IN RE RIVASTIGMINE PATENT LITIGATION

September 22, 2005.

In Re RIVASTIGMINE PATENT LITIGATION (MDL No. 1661).


The opinion of the court was delivered by: JAMES FRANCIS, Magistrate Judge

MEMORANDUM AND ORDER

This multidistrict litigation concerns the patent rights for rivastigmine tartrate ("rivastigmine"), the active ingredient in Exelon, a medication marketed by Novartis Pharmaceutical Corporation ("NPC") for the treatment of mild to moderate dementia of the Alzheimer's type. NPC, together with Novartis Pharma AG, Novartis International Pharmaceutical Ltd., and Proterra AG (collectively, "Novartis"), has brought actions alleging that the defendants, Dr. Reddy's Laboratories, Ltd. and Dr. Reddy's Laboratory, Inc. (collectively, "Dr. Reddy"), Watson Pharmaceuticals Inc. and Watson Laboratories, Inc. (collectively, "Watson"), and Sun Pharmaceutical Ltd. ("Sun") have induced infringement of two patents owned by Novartis by seeking approval from the Food and Drug Administration to market generic versions of Exelon.*fn1 Two discovery disputes are currently pending. First, the defendants seek to compel production of communications between representatives of the inventors of rivastigmine on the one hand and representatives of Novartis on the other. Novartis objects on the ground that the communications in question are protected by the attorney-client privilege and argues that, because the inventors and Novartis had a common legal interest, they could share attorney-client communications without waiving the privilege. Second, the defendants seek disclosure of documents consisting of: (1) communications between Swiss patent agents and their clients, (2) communications between Swiss in-house counsel and their clients, and (3) communications between European patent attorneys and their clients. Novartis opposes this application on the grounds that the defendants have failed to identify the specific documents at issue and that, in any event, the categories of communications referenced by the defendants would be privileged. I will address each of these issues in turn.

Communications Between the Inventors and Novartis

  One of the two patents in suit is identified as United States Letters Patent No. 4,948,807 (the "`807 patent"). It claims a method of treating persons suffering from Alzheimer's Disease and certain other conditions by administering N-ethyl, N-methyl-3 [1-(dimethylamino) ethyl] phenyl carbamate, which is the chemical composition of rivastigmine. The `807 patent was issued to Marta Weinstock-Rosin, Michael Chorev, and Zeev Tashma, who conducted their research during 1982-1983 at Hebrew University in Israel. At some point, Yissum Development Corporation ("Yissum"), the licensing arm of Hebrew University, entered into discussions with Proterra AG ("Proterra") concerning commercial exploitation of the invention. Proterra was an entity controlled by Sandoz Ltd. ("Sandoz"), the predecessor of Novartis, and was the entity used by Sandoz to acquire these patent rights. In that connection, Sandoz provided Yissum access to its international network of patent attorneys to prosecute the necessary patent applications. The discussions resulted in an agreement dated December 8, 1986, in which Yissum assigned all rights in the invention to Proterra in return for certain specific payments as well as ongoing royalties. (Agreement dated Dec. 8, 1986, attached as Exh. 1 to Letter of Maurice N. Ross dated July 21, 2005 concerning common interest issue ("Ross 7/21/05 Letter-A")). Thereafter, Yissum and Sandoz entered into a second agreement dated December 23, 1987, setting the terms for cooperation in future research. (Agreement dated Dec. 23, 1987, attached as Exh. 6 to Letter of Diego Scambia dated Aug. 3, 2005, concerning common interest issue ("Scambia 8/3/05 Letter-A")). Prior to any involvement by the plaintiffs, Yissum retained the Israeli law firm of Wolff, Bregmen & Goller to prosecute the original patent application in Israel. (Ross 7/21/05 Letter-A at 2; Deposition of Martin Lutz ("Lutz Dep."), excerpts attached as Exhs. 2, 3, 4, 5, 7, 8, 9, 10, and 11 to Ross 7/21/05 Letter-A, at 173-74). That application was filed on March 5, 1985, and was the priority counterpart to the application filed a year later in the United States Patent Office which resulted in the issuance of the `807 patent. (Ross 7/21/05 Letter-A at 2). Novartis had no involvement in the Israeli patent application. (Lutz Dep. at 89).

  There were apparently communications between representatives of Novartis and the law firm that prosecuted the Israeli patent application on behalf of Yissum. These communications took place both before and after the assignment of rights to Novartis. (Letter of Maurice N. Ross dated August 5, 2005, Exh. A). As noted above, Novartis contends that these communications are privileged because they took place between one party and the attorneys for a second party with which the first party shared a common interest. The defendants argue that the common interest doctrine is inapplicable to the communications occurring after the assignment of rights, because at that point any common interest between Novartis and Yissum was only commercial, not legal. They further contend that, prior to the assignment, Novartis and Yissum were adversaries in a negotiation process and consequently did not share a common legal interest.

  A. Common Interest Doctrine

  The attorney-client privilege protects from disclosure communications among clients and counsel made for the purpose of obtaining legal advice, provided that the communications were intended to be kept confidential and the privilege has not been waived. See United States v. International Brotherhood of Teamsters, 119 F.3d 210, 214 (2d Cir. 1997); United States v. Doe (In re Six Grand Jury Witnesses), 979 F.2d 939, 943 (2d Cir. 1992); Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 160 F.R.D. 437, 441 (S.D.N.Y. 1995). The burden of establishing each of the elements of the privilege rests on the party asserting it. See United States v. Doe (In re Grand Jury Proceedings), 219 F.3d 175, 182 (2d Cir. 2000); International Brotherhood of Teamsters, 119 F.3d at 214).

  The common interest doctrine neither creates an independent privilege nor provides a separate basis for establishing the existence of an attorney-client relationship.

 
Rather, it is an exception to the general rule that the privilege is waived when confidential information is communicated to a third party. If the third party and the client share a common legal interest, the rule applies and the privilege is not waived.
In re Federal Trade Commission, No. M18-304, 2001 WL 396522, at *2 (S.D.N.Y. April 19, 2001). In order for the doctrine to apply, the shared interest must be legal rather than commercial and identical rather than merely similar. See Bank of America, N.A. v. Terra Nova Insurance Co., 211 F. Supp. 2d 493, 496 (S.D.N.Y. 2002); Johnson Matthey, Inc. v. Research Corp., No. 01 Civ. 8115, 2002 WL 1728566, at *6 (S.D.N.Y. July 24, 2002); Federal Trade Commission, 2001 WL 396522, at *3; Bank Brussels Lambert, 160 F.R.D. at 447. Thus, the doctrine "does not encompass a joint business strategy which happens to include as one of its elements a concern about litigation." Bank Brussels Lambert, 160 F.R.D. at 447. Furthermore, it is not sufficient for the party seeking the protection of the common interest doctrine merely to show that a unified legal interest theoretically existed. Rather, it must also demonstrate that the parties demonstrated cooperation in developing a common legal strategy. Federal Trade Commission, 2001 WL 396522, at *3; Bank Brussels Lambert, 160 F.R.D. at 447.

  The common interest doctrine has routinely been applied in the context of patent litigation. See In re Regents of the University of California, 101 F.3d 1386, 1389 (Fed. Cir. 1996); Sony Electronics, Inc. v. Soundview Technologies, Inc., 217 F.R.D. 104, 107-08 (D. Conn. 2002); Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., No. 95 Civ. 8833, 1998 WL 158961, at *2 (S.D.N.Y. April 1, 1998); Baxter Travenol Laboratories, Inc. v. Abbott Laboratories, No. 84 C 5103, 1987 WL 12919, at *1 (N.D. Ill. June 19, 1987). However, "the Second Circuit has warned that expansions of the attorney-client privilege under the common interest rule should be `cautiously extended.'" Federal Trade Commission, 2001 WL 396522, at *4 (quoting United States v. Weissman, 195 F.3d 96, 100 (2d Cir. 1999)).

  B. Shared Interests

  Novartis shared a theoretical legal interest with Yissum and the inventors at least up to the point where it acquired an assignment of all of the patent rights. In Regents, the Federal Circuit found that a common legal interest existed between the University of California ("UC"), which owned the patent at issue, and Eli Lilly and Company ("Lilly"), which exercised an option to become the exclusive licensee. The court held that "the legal interest between Lilly and UC was substantially identical because of the potentially and ultimately exclusive nature of the Lilly-UC license agreement. Both parties had the same interest in obtaining strong and enforceable patents." Regents, 101 F.3d at 1390. Similarly, in Bristol-Myers, 1998 WL 158961, at *1-2, the court found a community of interest between a patent owner and its exclusive licensee.

  A community of interest may also arise, as in this case, among parties engaged in a joint program of developing technology and obtaining patents for it. Thus, in Research Institute for Medicine and Chemistry, Inc. v. Wisconsin Alumni Research Foundation, 114 F.R.D. 672, 678-79 (W.D. Wisc. 1987), the court found the common interest doctrine applicable to communications between inventors and the entity to which they assigned their patent rights. Likewise, in Baxter Travenol, the court found the doctrine applicable where the inventors and the manufacturer "were essentially engaging in a joint program of developing patents and technology[.]" 1987 WL 12919, at *1. "A community of legal interests may arise between parties jointly developing patents; they have a common legal interest in developing the patents to obtain greatest protection and in exploiting the patents." Id.; see also SCM Corp. v. Xerox Corp., 70 F.R.D. 508, 514 (D. Conn. 1976). In this case, even though Novartis and the inventors may have ultimately anticipated a transfer of the patent rights to Novartis exclusively, until that occurred they had a common legal interest in obtaining the patents in order to maximize the value of the property that would ultimately be conveyed.

  This potential common legal interest is not diminished by the fact that, because Novartis was negotiating with the inventors and Yissum at this time concerning some future economic arrangement, some of their interests may have diverged. Rather, the common interest doctrine would apply, but only insofar as their interests were in fact identical; communications relating to matters as to which they held opposing interests would lose any privilege. See Baxter Travenol, 1987 WL 12919, at *2 ("The community of interest, however, extends only to communications relating to ...


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