November 06, 2019 Top Story

Attorney-Client Privilege May Extend to Investors

Communications between company and its investors may not waive privilege

By Stephen Carr

A  recent decision could significantly expand the attorney-client privilege in commercial litigation to include communications with outside investors with some stake in the litigation. The decision in SecurityPoint Holdings, Inc., v. Transportation Security Administration, involving a contentious patent dispute, finds that a non-party “equity investor” still shared “a common legal interest in the validity of the patent-in-suit” so that communications between the investor and the plaintiff did not waive claims of privilege.

The IP dispute began when a company claimed the TSA violated a patent on using carts to move trays at security checkpoints

The IP dispute began when a company claimed the TSA violated a patent on using carts to move trays at security checkpoints

iStockphoto by Getty Images

While the opinion declined to decide whether a simple agreement to fund litigation between two parties could be enough to establish shared interest in litigation, the court noted that an equity investor with a stake in the disputed property had more than a “merely commercial” relationship with the party—although the court said little more.

Premium Content For:
  • Litigation Section
Join - Now