TC Technology LLC v. Sprint Corporation et al

Filing 256

MEMORANDUM ORDER: The Motion to Compel Production of Non-Privileged Documents (D.I. 161 ) is GRANTED-IN-PART and DENIED-IN-PART. Signed by Judge Richard G. Andrews on 12/13/2018. (nms)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

TC TECHNOLOGY LLC,
Plaintiff,
V.

No. 16-cv-153-RGA
SPRINT CORPORATION and SPRINT
SPECTRUM, L.P.,
Defendants.

MEMORANDUM ORDER
Presently before the Court is the motion to compel production of non-privileged
documents filed by Defendants Sprint Corporation and Sprint Spectrum, L.P. (collectively
"Sprint"). (D.I. 161). I have considered the parties' briefing. (D.1. 162, 172, 183).
I.

BACKGROUND
Plaintiff TC Technology LLC ("TC Tech") is jointly owned by cable companies Time

Warner Cable LLC ("TWC") and Cox Communications, Inc. ("Cox") and has no separate
employees. (D.I. 172 at 2). TC Tech filed this action against Sprint alleging infringement of
U.S. Patent No. 5,815,488 ("the '488 patent") on March 10, 2016. (D.I. 1). The relevant
timeline, however, starts well before TC Tech filed suit.
In December of 2011, Sprint sued TWC and Cox, among others, for infringement of
Voice over Internet Protocol ("VoIP") patents. (D.1. 162 at 2). In early 2012, TWC and Cox
began to consider joint acquisition of the '488 patent from CableLabs, a consortium of U.S. cable
companies. (D.1. 172 i-! 10; D.I. 175 ,-r 7). On March 26, 2012, TWC and Cox formed TC Tech

to acquire and monetize the '488 patent. (D.I. 175, ex. A). On March 30, 2012, TC Tech
purchased the '488 patent from CableLabs. (Id, ex. B). In the spring of 2013, TC Tech, TWC,
and Cox began to hear pitches from outside counsel for potential litigation asserting the '488
patent. (D.I. 173

,r 30; D.I. 175 ,r 26).

TWC and Cox met with Latham & Watkins LLP in

October of 2015, and all three entities formally retained the firm in January of 2016. (D.I. 173

,r

33; D.I. 175 ,r 30). In March of 2017, after this suit was filed, Sprint won a $140 million verdict
against TWC. (D.I. 162 at 3). 1 Sprint settled its suit against Cox later that year. (Id).
Sprint brought this motion to compel the production of various pre-2013 communications
between TC Tech, TWC, and Cox. 2 The disputed documents can be sorted into two, overlapping
categories-(1) communications including third parties (D.I. 183 at 4 n.1, ex. A), and (2)
communications alleged to be likely to contain relevant business information (D.I. 162, app. 2).
In regard to the first category, the parties dispute whether TC Tech can claim attorney-client
privilege via the common-interest exception to third-party disclosures. 3 (D.I. 183, ex. A; D.I.
162 at 8-15; D.I. 183 at 4-10). In regard to the second category, Sprint argues that, even if the
communications are privileged in part, TC Tech should be required to produce the portions that
contain non-privileged business information. (D.I. 162 at 7-8; D.I. 183 at 1--4).

1

The Federal Circuit affirmed the decision on November 30, 2018. Sprint Commc'ns Co., L.P. v. Time
Warner Cable, Inc., 2018 WL 62663'19 (Fed. Cir. Nov. 30, 2018).

2

Sprint withdrew "its challenge to communications with outside counsel in 2013 over which Cox and
[]TWC claim joint-client exception and work product protection." (D.I. 183 at 4 n.1). The remaining
disputed documents are listed in Appendix 2 of Sprint's opening brief and Exhibit A of Sprint's reply
brief. I believe all the remaining documents pre-date 2013. (D.I. 162, app. 2; D.I. 183, ex. A).

3

As stated in note 1, Sprint withdrew its objections to the initially disputed 2013 communications with
outside counsel. I believe this eliminated any disputes over the applicability of the joint-client exception,
at least pertaining to this motion. (Compare D.I. 162, app.1, with D.I. 183, ex. A).
2

II.

LEGAL STAND ARD
A. Common Interest Privilege
"The attorney-client privilege" is a common-law privilege that "protects communications

between attorneys and clients from compelled disclosure." In re Teleglobe Commc'ns Corp., 493
F.3d 345, 359 (3d Cir. 2007). In order for the privilege to apply, there must be "(l) a
communication (2) made between privileged persons (3) in confidence (4) for the purpose of
obtaining or providing legal assistance for the client." Id (quoting Restatement (Third) of the
Law Governing Lawyers§ 68 (Am. Law. Inst. 2000)). The party asserting the privilege bears
the burden of establishing the requisite elements. In re Grand Jury, 705 F.3d 133, 160 (3d Cir.
2012). A communication is only privileged if made in confidence. Tele globe, 493 F.3d at 361.
If "persons other than the client, its attorney, or their agents are present, the communication is
not made in confidence." Id Further, "if a client subsequently shares a privileged
communication with a third party, then it is no longer confidential, and the privilege ceases to
protect it." Id
The common interest doctrine is an exception to the general rule that voluntary disclosure
to a third party of purportedly privileged information waives the privilege. Acceleration Bay

LLCv. Activision Blizzard, 2018 WL 798731, at *4 (D. Del. Feb. 9, 2018); Leader Techs., Inc. v.
Facebook, Inc., 719 F. Supp. 2d 373, 376 (D. Del. 2010). The privilege protects "all
communications shared within a proper 'community of interest."' Teleglobe, 493 F.3d at 364
(citations omitted). The interests "must be 'identical, not similar, and be legal, not solely
commercial."' Leader Techs., 719 F. Supp. 2d at 376 (quoting In re Regents of the Univ. of Cal.,
101 F.3d 1386, 1390 (Fed. Cir. 1996)).4 Additionally, to show that the members of the

4

Applying Delaware law, the Third Circuit in Teleglobe held instead that "members of the community of
interest must share at least a substantially similar legal interest." 493 F.3d at 365. Although there has

3

community are "allied in a common legal cause," the party asserting the privilege bears the
burden of showing "that the disclosures would not have been made but for the sake of securing,
advancing, or supplying legal representation." In re Regents of the Univ. of Cal, 101 F.3d at
1389 (quoting In re Grand Jury Subpoena Duces Tecum, 406 F. Supp. 381,386 (S.D.N.Y.
1975)); see also In re Bevill, Bresler & Schulman Asset Mgmt. Corp., 805 F.2d 120, 126 (3d Cir.
1986).
The parties dispute whether the common interest doctrine also requires communications
be made through separate counsel. In Teleglobe, the Third Circuit provided that "to be eligible
for continued protection, the communication must be shared with the attorney of the member of
the community of interest," meaning that "separate attorneys share information (and not the
clients themselves)." 493 F.3d at 364-65. TC Tech argues that this language is dicta. (D.I. 172
at 11); see TD Bank, NA. v. Hill, 2014 WL 12617548, at *3 (D.N.J. Aug. 20, 2014). Although
the Third Circuit does state that its common interest opinion "may seem surplusage," it is not
clear that the opinion is dicta. Teleglobe, 493 F.3d at 365 n.18 (noting that the district court
erroneously found a community of interest, and that existing caselaw was confused, making it
important to distinguish between the common interest privilege and the joint-client privilege).
But, regardless, Teleglobe applied state law and is thus not controlling authority. See

id

at 363-

65.
This Court has previously found that requiring separate counsel is "too narrow" of an
application of the common interest doctrine. See Intellectual Ventures I LLC v. Altera Corp.,

been disagreement within the Third Circuit on "how common the supposed interests have to be," Leader
Technologies, 719 F. Supp. 3d at 376, in recent years, this Court has repeatedly stated that the interest
must be "identical." See Acceleration Bay, 2018 WL 798731, at *2; Del. Display Grp. LLC v. Lenovo
Grp. Ltd., 2016 WL 720977, at *4 (D. Del. Feb. 23, 2016); INV/STAN Am. S.a.r.l. v. M&G USA Corp.,
2013 WL 12171721, at *7 (D. Del. June 25, 2013).

4

2013 WL 12311005, at *5-6 (D. Del. July 25, 2013). "The Third Circuit has stated, '[t]he
presence of a third party will not vitiate the attorney-client privilege, if the third party is the
attorney's or client's agent or possesses a commonality of interest with the client."' Id (quoting
In re Grand Jury Investigation, 918 F.2d 374, 386 (3d Cir. 1990)). In Intellectual Ventures, the

third party to whom the privileged communications was disclosed was a non-attorney consultant.
Id at *5. The defendants argued that the common interest doctrine did not apply because,

among other things, "there is no evidence that [the third party] was represented by an attorney."
Id This Court rejected that argument and found a "sufficient common interest" between the

plaintiffs and the third party. Id at *6.
In light of Intellectual Ventures and In re Grand Jury Investigation, I find that the
common interest doctrine does not strictly require that communications be between separate
attorneys. It is sufficient to show that the client and third parties shared an interest that is
"identical, not similar," and "legal, not solely commercial."

B. Business Advice
The attorney-client privilege requires that a communication be made "for the purpose of
obtaining or providing legal assistance for the client." Teleglobe, 493 F.3d at 359. "Where a
lawyer provides non-legal business advice, the communication is not privileged." Wachtel v.
Health Net, Inc., 482 F.3d 225,231 (3d Cir. 2007). Courts have recognized that "business and

legal advice may often be inextricably interwoven." Hercules, Inc. v. Exxon Corp., 434 F. Supp.
136, 147 (D. Del. 1977). For this reason, courts look to the documents' primary purpose to
determine whether attorney client privilege applies. Id at 147; Immersion Co_rp. v. HTC Corp.,
2014 WL 3948021, at *1 (D. Del. Aug. 7, 2014).

5

III.

ANALYSIS

A. Communications Including Third Parties 5
TC Tech does not dispute that TWC and Cox are third parties for purposes of attorneyclient privilege. The question is whether TC Tech, TWC, and Cox shared an identical legal
interest such that the disputed communications fall under the common interest privilege.
TC Tech argues that all three entities shared a common legal interest "in seeking and
receiving legal advice related to (1) obtaining a strong and enforceable patent, (2) forming a legal
entity to obtain and enforce that patent, and (3) engaging outside counsel to litigate Sprint's
infringement of that patent." (D.I. 172 at 7). TC Tech cites to Rembrandt Technologies, L.P. v.

Harris Corp., where the court found the parties shared a "common legal interest in the
exploitation and enforcement of [the patent at issue]." 2009 WL 402332, at *8 (Del. Super. Ct.
Feb. 12, 2009). Likewise, in In re Regents of University of California, the court held the
patentee, University of California, and a nonexclusive licensee shared the identical legal interest
of "seeking valid and enforceable patents." 101 F.3d at 1390. The University of Cali,fornia did
so "to support royalty income," and the licensee did so "to support commercial activity." Id
Sprint argues that any common interest between TC Tech, TWC, and Cox was
commercial, rather than legal. (D.1. 162 at 10-11; D.I. 183 at 5). Sprint likens the shared
interest to "'an agreement to share litigation expenses,' which 'could be viewed as more
consistent with a financial oriented decision."' (D.I. 162 at 10 (quoting King Drug Co. of

Florence, Inc. v. Cephalon, Inc., 2011 WL 2623306, at *5 (E.D. Pa. July 5, 2011)). In support,
Sprint cites several cases that it says find similar interests are not legal interests. See Baby Neal

5

This section refers to the first category of documents, described in Exhibit A of Sprint's reply brief.
(D.1. 183, ex. A).

6

v. Casey, 1990 WL 163194, at *2 (E.D. Pa. Oct. 23, 1990); Net2Phone, Inc. v. Ebay, Inc., 2008
WL 8183817, at *8 (D.N.J. June 26, 2008); McCullough v. Fraternal Order ofPolice, Chi.

Lodge 7, 304 F.R.D. 232,240 (N.D. Ill. 2014).
Sprint's case law is distinguishable. In King Drug, the defendant conceded that
communications with the non-privileged third party were purely on the "business side" of their
joint efforts. 2011 WL 262330, at *4-5. The third party further represented that the litigation
was "completely controlled" by the defendant and that the third party was "not actively
involved." Id. Here, TC Tech is comprised only of its members, TWC and Cox. (D.I. 175, ex.
A). The disputed communications were allegedly made to obtain legal advice related to the '488
patent. (D.I. 173

,r,r 11, 13, 23-26; D.I. 175 ,r,r 8, 10-11, 19-23).

Unlike the parties in King

Drug, TWC and Cox both appear to have been heavily involved in the anticipated litigation.
Net2Phone, Baby Neal, and McCullough are even less helpful to Sprint. Net2Phone
addressed "an indirect interest as a shareholder"-a purely financial interest. 2008 WL 8183817,
at *_8. Baby Neal addressed an interest "in the sense that relief sought by the plaintiffs would
almost certainly work to [the relevant party's] benefit as well"-a less direct, purely financial
interest. 1990 WL 163194, at *2. McCullough addressed "a common interest in seeing the
[defendant] punished for what [the relevant parties] perceived to be the wrongs each of them
allegedly suffered"-an intangible emotional interest. 304 F.R.D. at 240. Each of these is
clearly distinguishable from the interests shared by TC Tech, TWC, and Cox to obtain and
enforce the '488 patent.
I find Rembrandt and In re Regents more persuasive. I agree that the interest here in
acquiring and enforcing a patent is a legal interest. Mr. Block (former in-house counsel for
TWC) and Mr. Delgado (in-house counsel for Cox) represent that TWC and Cox began

7

considering joint acquisition of the '488 patent in early 2012 and formed a joint venture to
explore that opportunity. (D.I. 173

~

10; D.I. 175

~~

7-8). The parties together engaged in

negotiations to purchase the '488 patent from CableLabs and ultimately formed TC Tech to
purchase and enforce the patent. (D.I. 173

~~

12, 18; D.I. 175

~~

9-10, 15). I think these

representations are sufficient to show TWC, Cox, and later TC Tech, had a shared legal interest
in acquiring and enforcing the '488 patent.

Iri the alternative, Sprint argues that TC Tech, TWC, and Cox could not have had
identical legal interests because TC Tech is inherently adverse to TWC and Cox. Sprint argues
that TC Tech's sole purpose is to monetize the '488 patent, while TWC and Cox were only
interested in the patent as a means to gain leverage over Sprint in their respective litigations.
(D.I. 162 at 9). In those litigations, TWC and Cox each had an incentive to settle, and Cox did in
fact settle in late 2017. (Id. at 3, 9). Under Sprint's theory, the relationship was "potentially
conflicted" from the beginning as TWC or Cox would inevitably be forced to choose between
selling its interest in TC Tech and the '488 patent, or continuing to fund a lawsuit for which it
could not receive any financial return. (D.I. 162 at 10). Sprint argues that the parties'
"potentially conflicted relationship" waives any community interest privilege they might have
had, or at least requires the Court to conduct in camera review of the disputed communications.

See 3Com Corp. v. Diamond II Holdings, Inc., 2010 WL 2280734, at *8 (Del. Ch. May 31,
2010).
Sprint assumes that TWC and Cox were only interested in the '488 patent as it related to
their litigations with Sprint. There is no reason to believe that TWC and Cox, as the only
members of TC Tech, were not also interested in monetizing the '488 patent. (D.I. 175, ex. A).
Further, even if Sprint is correct, a conflict of interest would have only arisen after TWC or Cox

8

settled. Otherwise, TC Tech, TWC, and Cox all shared th~ same legal interest in acquiring and
enforcing the '488 patent. Sprint's argument that privilege was waived by the parties'
"potentially conflicted relationship" is based on a mischaracterization of 3Com. The court in

- 3Com found the relevant parties had both common and adverse interests. 2010 WL 2280734, at
*8. Thus, the court described their relationship as "potentially conflicted" and opted for in·

camera review. Id Here, Sprint argues that, despite the parties having no adverse interests at
the time the communications were made, the mere potential for adverse interests in the future is
sufficient to warrant in camera review. I disagree. The fact that Cox did settle in 2017 should
not retroactively taint the communications made in 2012.
Finally, Sprint argues that, at a minimum, TC Tech cannot claim the community interest
privilege over communications prior to its formation on March 26, 2012. 6 Sprint alleges,
"[P]rior to entering any formal agreement acquiring rights in the '488 patent, these companies
merely shared a business interest in evaluating the profitability of a shared business venture."
(D.I. 162 at 11). Sprint points to this Court's previous finding that parties did not share a
common legal interest because they had not yet reached a written agreement, nor filed any
litigation. Acceleration Bay, 2018 WL 798731, at *3. I think Sprint reads Acceleration Bay too
broadly. I did not set a firm rule that parties must have a written agreement or have filed suit to
share a legal interest. Rather, I merely considered the lack of an agreement or suit as evidence of
the lack of a shared interest. Here, only a handful of the disputed communications occurred
before March 26, 2012, and they are dated between March 14 and March 23, 2012. (D.I. 162,
app. 3). Mr. Block and Mr. Delgado represented that TWC and Cox began discussing

6

This argument refers to the documents described in Appendix 3 of Sprint's opening brief. (D.I. 162,
app. 3).
9

acquisition of the '488 patent in early 2012, including forming a joint venture and negotiating the
purchase with CableLabs. (D.1. 173

,r,r 10, 12; D.I. 175 ,r,r 7-10).

Prior to that, TWC and Cox

had already entered a common interest and joint defense agreement to obtain legal advice
regarding the Sprint VoIP litigation. (D.I. 173 ,r,r 7-8; D.I. 175

,r 6).

TC Tech then purchased

the '488 patent a mere four days after it was formed. It seems likely that TWC and Cox sought
legal advice regarding the '488 patent prior to forming TC Tech, at least as early as March 14,
2012. Thus, I believe TWC and Cox shared substantively identical legal interests shortly before
and after forming TC Tech. I see no reason why the formation date should be a hard cut-off for
privilege.
Therefore, I find TC Tech has met its burden of establishing the common interest
privilege with respect to the disputed communications between TC Tech, TWC, and Cox. (D.I.
183, ex. A).

B. Communications Likely to Contain Business Information7
Sprint does not dispute that the second category of documents may include privileged
information. Rather, Sprint argues that the documents also include non-privileged information
that requires TC Tech to produce the documents with the appropriate redactions. (D.I. 162 at 78; D.I. 183 at 1-4). Specifically, Sprint alleges that the documents are likely to contain business
information related to "(1) the reasons for acquiring the '488 patent; (2) the reasons for forming a
joint venture to monetize that patent; (3) the reasons for acquiring the '488 patent rather than
some other patent; and (4) the price of the '488 patent." (D.I. 162 at 8 n.4).

7

This section refers to the second category of documents, described in Appendix 2 of Sprint's opening
brief. (D.I. 162, app. 2).

10

I am not convinced that Sprint's four categories necessarily read on business, rather than
legal, advice. 8 However, for issues related to non-legal communications, courts generally look to
a document's "primary purpose" to determine whether attorney-client privilege applies. See
Hercules, 434 F. Supp. at 147. I appreciate that doing so requires reviewing the actual

documents. Therefore, moving forward, Sprint should identify a subset of no more than 15 of
the 173 disputed documents (D.I. 162, app. 2) that it believes are most likely to contain business
information. TC Tech should then provide the identified documents for in camera review. If,
after reviewing those documents, the Court finds that Sprint's arguments have merit, the Court
will review the remainder of the documents.
Sprint should make its identifications within one week of this order, and TC Tech should
provide the documents in camera within one week of the identifications.
IV.

CONCLUSION

For the foregoing reasons, Defendant's motion to compel production of non-privileged
documents (D.I. 161) is GRANTED-IN-PART and DENIED-IN-PART.

IT IS SO ORDERED this

(3 day of December 2018.

8

I do not now express an opinion that Sprint's first three categories have any independent relevance to
this litigation.

11