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A.L.M. Holding Co. v. Zydex Indus. Private Ltd., No. 25-155 (D. Del. Apr. 29, 2026)
In A.L.M. Holding Co. v. Zydex Industries Private Ltd., the district court refused to find waiver of attorney-client privilege that shielded pre-litigation communications with counsel even though the defendant asserted a defense that relied on its pre-litigation knowledge and where the communications with counsel might contradict its position regarding its pre-litigation knowledge.
In September 2017, A.L.M. Holding Co. (“ALM”) sent Zydex a letter notifying it that ALM co-owned a patent portfolio related to asphalt paving, and that Zydex may need a license to the portfolio to avoid infringement. The following month, Zydex responded by requesting further information from ALM about its patents. ALM did not respond. Over six years later, ALM sued Zydex for patent infringement.
In response, Zydex alleged that ALM’s claims were barred by the defense of equitable estoppel. Equitable estoppel requires a showing that the patentee misled the accused infringer into believing it would not be sued, and that the accused infringer reasonably relied on that conduct to its detriment. Here, Zydex argued that it relied to its detriment on ALM’s silence of nearly six years. ALM attacked whether Zydex’s reliance on its silence was reasonable because Zydex had on-going discussions with its counsel during this period and sought production of those communications.
The district court began its analysis by looking at waiver of privilege when a defendant relies on advice of counsel to rebut an allegation of willful patent infringement. In that situation, when a defendant relies on advice of counsel to show it did not believe it was infringing, the defendant must produce its communications with that counsel; it cannot use privilege as both “a sword and a shield” by selectively disclosing favorable advice while withholding unfavorable advice. ALM argued that Zydex was doing exactly that here and therefore waived its privilege as to its communications with counsel during this time period.
The district court recognized that if Zydex was actively consulting counsel about ALM’s patents during the period of ALM’s silence, that could undermine the reasonableness of its reliance claim. But the mere possibility of unfavorable communications did not justify piercing privilege. Waiving privilege exists to prevent a party from using privilege as both a sword and a shield. In this case, ALM failed to identify any “sword.” Instead, ALM only had a suspicion that Zydex’s communications with counsel might contradict its reliance on ALM’s silence. The district court rejected this as an overreach warning that such a theory of waiver “knows no limits” and would erode a claim of privilege anytime a party suspected a privileged communication might contradict a party’s position. The district court did note that that Zydex will be bound by its decision not to rely on legal advice and could not later use privileged communications to support its equitable estoppel defense.
As seen here, courts are reluctant to expand waiver of privilege beyond their established contours. Thus, merely asserting a defense that places a party’s state of mind or reasonableness at issue does not, by itself, trigger a privilege waiver. Something more is required—such as an affirmative reliance on privileged advice. Parties should carefully consider early whether they will need to rely on advice of counsel to support a defense because they will have to be prepared to live with that strategy choice. And if they decide that they do not need to rely on advice of counsel, they can take appropriate action to ensure that they preserve privilege by avoiding injecting legal advice as part of their defense.
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