The Software IP Report

Independent Contractors Are Covered by the Attorney-Client Privilege

By Charles Bieneman

Categories: Attorney-client privilege, Patent Civil Procedure, The Software IP Report

Use of independent contractors is common in the tech world, especially in software development.  Communications between a company’s attorneys and an independent contractor may be protected by the attorney-client privilege, so long as the communications are directed to the independent contractor functioning as an employee.  A recent case illustrates the principle.  Gen-Probe Inc. v. Becton Dickinson and Co., Nos. 09cv2319 and 10cv0602 (S.D. Cal. Apr. 6, 2012).

Mark Toukan was an independent contractor hired by RELA, Inc., which in turn was hired by Gen-Probe to help “develop an automated nucleic acid detection system.”  Toukan had presumably signed RELA’s standard contractor agreement, which required him to assign all intellectual property resulting from the engagement, including patents, to RELA.  These obligations survived termination of the agreement.  Sometime after the agreement ended, Gen-Probe’s outside counsel communicated with “Toukan by email and phone regarding a patentability investigation he was conducting.”  Becton Dickenson sought to discover the content of those communications.

In the Ninth Circuit, “an outside consultant’s role in the company was that of a functional employee, thus implicating the corporate attorney-client privilege.”  Toukan was therefore a functional employee of RELA, which in turn was an independent contractor to Gen-Probe.  As such, Toukan was bound by confidentiality obligations and obligations to assign intellectual property that survived his termination from the company.  He was treated as a regular member of the project team.  The privilege would have extended to regular RELA employees with whom Toukan worked in tandem, and there was no reason why it should not extend to him as well.  Moreover, the patentability investigation by Gen-Probe’s counsel involved precisely the kinds of communications that the attorney-client privilege is designed to protect.

The attorney-client privilege did not terminate even though the communications at issue occurred several years after Toukan’s time with RELA ended.  Further, although Becton Dickenson contended that Gen-Probe had unsuccessfully attempted to acquire Toukan’s rights in the patents-in-suit, there was no adverse relationship that destroyed the attorney-client privilege because “[t]he court [had] already determined that Toukan was a functional employee of Gen-Probe.”

Accordingly, the magistrate judge found that the attorney-client privilege attached to communications between Gen-Probe’s counsel and Toukan.

Not that anyone really needs a practice tip to implement solid contractor agreements, but perhaps the most instructive aspect of this case is the emphasis that the court placed on RELA’s standard practice of implementing contractor agreements, and on the confidentiality and intellectual property provisions that survived RELA’s standard agreement.