Free Motion for Leave to File - District Court of Delaware - Delaware

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IN THE UNYFEI) STATES D1S’I`RICT COURT
FOR THE DISTRICT OF DELAWARE
AHFINION NET }’ATEN'1`S, INC., )
Plaintiff, i Civil Action No. 04-360-33 F
)
v. )
)
l\/iARI'1`Z INC., )
Defendant. i
REPLY IN SUPPORT OF MARITZ‘S FIRST MOTION TO COMPEL
Aflinion opposes Maritrfs motion with the clairn that Netcentives transferred its attorney~
client privilege along with its privileged documents. But it presents no evidence that such
transfer of privilege was intended by Neteentives.
Recognizing this, Affinion takes a different tack, arguing that, "When a party sells . . .
assets directly at issue in prior litigation, the attorneywiient privilege transfers with that sale"
P!r1i2·ittyj"s O,12positz'oa (1).1. M9), p. 2. Attinion cites three cases to support this assertion. Id.
But none of them provides support and, moreover, diets aside, each case is distinguishabie.
In re Gmnd Jury Subpoeaas, 734 F. Supp. 1207 (ED. Va. l990), involved "[wlhethcr a
parent corporation controls the attoniey/client/work product privileges of a wliollypwned
sniwsidiary after its sale .... " fd. at i2lO. The District Court, citing Commodihies Ftmtres
Tmding Commisszorz v. Wezhtmtzb, 471 U.S. 343 (1985}, held that, since the parent had sold the
subsidiary, it could no longer control the subsidiaries exercise of privilege. Id. at 121 l. lt
further noted that "[aj transfer of assets, without more, is not sufficient to affect a trans.t`er ofthe
privileges; control of the entity possessing the privileges must also pass for the privileges to
pass." fd. at n. 3. Affinion bought patents from Netcentives; it did not acquire control.

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In Excess Irzsurmzee Co., Ltd. v. Sczmzee, 1996 WL 409224 (El). La.), certain insureds
assigned to a judgment creditor their coverage claims against their insuror in partial satisfaction
of a judgment against them arising out of a wrongful death claim. The judgment
creditor/assignee sought to waive the attorney-client privilege ofthe judgment debtor/assignors.
Holding that Louisiana law controlled the privilege waiver issue, the District Court affirmed the
Magistrate Judges order denying a motion to compel production of the privileged documents.
This case, based on Louisiana law, lends no support to Aftiniorrs opposition.
in Graco C/zz`irfren’s Pr0cz'z»¢cz‘_. [nc. v. Regalo Irtrermrtionctl, LLC. 1999 WL 553478 (ED.
Pa), the issue was whether an attorney was properly disqualified under Rule i.9 of the
Pennsylvania Rules of Professional Conduct for a conflict of interest. Graco sued Century
Products for patent infringement. Frederick Tecce, Esq., represented Century. After winning a
judgnient, Graco bought ali the ongoing business assets of Century, but not the stock. Thereafter
Graco sued Regalo International for patent infringement. Tecce entered his appearance as
Regalds attorney. The District Court disqualified Tecce, finding that he was in possession of
confidential- infomation and was acting contrary to the inateriai interests of his fonner client.-
The case at hand bears no resemblance to the Graco case.
Aftinion also argues that as assignee of the patents, it shares a common legal interest with
Netcentives. While parties so situated sometimes share a comrnon interest, as where an
inventor/assignor and an employer/assignee share joint counsel who assists both in securing a
patent, no such common interest arose out of the banltruptcy sale ofthe '4l2 patent. First, as
documented in Maritz’s opening brietQ Neteentives' patent prosecution lawyers never represented
or consulted with Aflinion during prosecution of the ‘4l 2 patent or vice versa. In re Regents, lOl
F.3d 1386, 1389-90 (Fed. Cir. 1996). Second, as a condition ofthe bankruptcy saie, Affiniori
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granted back to Neteentives a nonexclusive license to practice the patents. Given that the license
was nonexclusive, Neteentives and Aftinion had no protected common legal interest. [ri. at
1390 (holding that "ltlhe legal interest between Lilly and UC was substantially identical becanse
of the potentially and ultimately exclusive nature of the license agreenient."); Katz v. AT&T
Corp., 191 ERD. 433, 437 n. 4 (ED. Pa. 2000).
In sum, Aftinion has not shown tl1atNetcer1tive’s disclosure of withheld documents was
part of a transfer of corporate control or under circumstances where Netcentives and Aftlnion
had joint legal interests. Thus, the Court should order the documents to be produced.
Respectfully submitted,
CONNOLLY BO)/E LODGE & HUTZ Lei`?
7 ; A
· .1 ..rr e .. .r 4.. er ~
Date; June 13, 2006 By: t ‘ " = _.{ { -- av - =‘t:‘
Rlidolfljsr Hntz 484)
Patricia Sminic Rogowski (#2632)
The Nemours Building,
1007 Orange Street
P.O. Box 2207
_ _ _ _ _ Wilnnngton,__D_E i9899 _ _
(302) 652%-9141. i i i i
J. Bennett Clark
David W. Harlan
Jennifer E. Hoekel
Marc W. Vander T uig
SENNIGHR POWERS
One Metropolitan Square, 16th Floor
St, Louis, MO 63102
(314) 231-5400
Attorneys for Maritz Inc.
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