The US Court of Appeals for the Federal Circuit ruled that a predecessor company’s intentional waiver of attorney-client privilege can survive the company’s merger. In re OptumInsight, Inc., Misc. Docket No. 2017-116 (Fed. Cir., July 20, 2017) (Hughes, J).

OptumInsight sought a writ of mandamus relieving it from a discovery order issued by the district court. The district court had granted a motion to compel production of documents related to a patent’s conception and first sale, which the original patent holder and OptumInsight’s merger partner, Symmetry Health Data Systems, previously asked the US Patent and Trademark Office (PTO) to consider in a re-examination proceeding. The Federal Circuit denied the mandamus petition, concluding that the district court did not clearly abuse its discretion by extending the waiver of privilege for purposes of the re-examination proceeding to post-merger communications.

Symmetry Health developed health care analytics software that it marketed as the Symmetry Episode Treatment Group Program (ETG). In 1995, Symmetry Health offered Aetna Life Insurance Company a license to ETG. More than a year later, Symmetry Health filed a patent application describing ETG, but did not disclose to the PTO the licensing offer it had made to Aetna. The PTO granted the patent, but in 2000 Symmetry Health sought re-examination, asking the PTO to examine whether the licensing offer invalidated the patent. Symmetry Health submitted an information disclosure statement and attorney affidavit to support its position that ETG as patented was not fully developed at the time of the offer. In 2007, Symmetry Health and OptumInsight merged. OptumInsight emerged as the sole surviving company and sole owner of the patent at issue. 

Following the merger, OptumInsight sued Cave Consulting Group, alleging that it infringed the patent, but ultimately dismissed the lawsuit. Cave Consulting then sued OptumInsight, alleging that it misrepresented ETG’s conception date in the re-examination proceedings and thus violated federal antitrust law by asserting a fraudulently procured patent in its lawsuit against Cave Consulting.  

During discovery in Cave Consulting’s lawsuit, Cave Consulting sought communications from both pre- and post-merger periods relating to the conception date and first sale. OptumInsight objected to the request for post-merger documents, arguing that Symmetry Health’s earlier submission could not be construed as waiver over post-merger communications between OptumInsight and its counsel. The district court granted Cave Consulting’s motion to compel as to all communications, leading up to OptumInsight’s dismissal of its infringement suit.

The Federal Circuit declined to adopt a categorical rule against attributing a predecessor’s waiver to its successor entity. Instead, the Court explained that the question of subject-matter waiver should be analyzed “through a fairness lens.” The Court noted that the authority to assert and waive a corporation’s attorney-client privilege survives succession, and concluded that “[l]ogically, if a successor company can assert privilege over its predecessor’s communications, the flipside of that principle is that a successor company can also be subject to its predecessor’s intentional waiver in certain circumstances.” 

Finding no abuse of discretion in the district court’s analysis, the Federal Circuit denied the writ of mandamus and directed OptumInsight to produce its communications in accordance with the district court’s order.