Sunday, April 27, 2008, 4/27/2008 03:39:00 PM

The Marvell Case – Screwing Up a Voicemail Message Waives Attorney-Client Privilege

Here’s how Sue Riessinger put it in an article in Corporate Counsel in June 2005:

There are dumb mistakes, and then there are really dumb mistakes. Four years ago Matthew Gloss, the general counsel of Marvell Semiconductor Inc., and two of his colleagues phoned the legal chief of a rival company, Jasmine Networks Inc. The call went straight to voicemail, so Gloss left a message and hung up.

At least, he thought he did. Though the Marvell officials didn't know it, the Jasmine lawyer's voicemail was still taping them as they continued to talk on speakerphone – allegedly about how they were stealing their rival's trade secrets.

The trial judge ruled that the recorded conversation was an inadvertently disclosed attorney-client communication and suppressed it from use in the subsequent trade secrets case by Jasmine against Marvell.

An appellate court reversed but that ruling was stayed when the California Supreme Court put the case on hold while it reviewed another case on a related issue.

Now a new development, reported in The Reporter, brings us up to date. The California Supreme Court has dismissed the appeal which appears to mean that the order of the intermediate appellate court finding no privilege will stand.

That ruling found that the tape could be used in evidence because the attorney-client privilege had been waived for three reasons:

In the words of the earlier report, first, the conversation fell within the crime-fraud exception to privilege. fraud.")

Second, Marvell's "uncoerced disclosure" – even though it wasn't intentional – also also waived the company's privilege. This finding ran counter to traditional doctrine, which holds that inadvertent disclosure doesn't waive privilege.

The appellate court said that because the individual leaving the message was a company officer, he could waive privilege on Marvell's behalf.

Interestingly, it's not as if Marvell didn't know much about misappropriation matters. To the contrary, they secured an indictment in 2005 against a customer's former employee for stealing trade secrets. http://www.justice.gov/criminal/cybercrime/zhangIndict.htm

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