Presenting a live 90‐minute webinar with interactive Q&A
Patent Infringement Claims, Opinions of Patent Infringement Claims, Opinions of Counsel and Attorney‐Client PrivilegeBest Practices for Opinion Letters After Seagate and Qualcomm
T d ’ f l f
1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
WEDNESDAY, JANUARY 5, 2011
Today’s faculty features:
Thomas J. Scott, Jr., Partner, Goodwin Procter, Washington, D.C.
Michael Simons, Partner, Akin Gump Strauss Hauer & Feld LLP, Austin, Texas
The audio portion of the conference may be accessed via thel h b ktelephone or by using your computer's speakers.
Please refer to the instructions emailed to registrants for additional information. If you haveany questions, please contact Customer Service at 1-800-926-7926 ext. 10.
Continuing Education Credits FOR LIVE EVENT ONLY
For CLE purposes, please let us know how many people are listening at your location by completing each of the following steps:
• Close the notification box
• In the chat box, type (1) your company name and (2) the number of attendees at your location
• Click the blue icon beside the box to send
Tips for Optimal Quality
S d Q litSound QualityIf you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection.
If the sound quality is not satisfactory and you are listening via your computer speakers, you may listen via the phone: dial 1-866-873-1442 and enter your PIN when prompted Otherwise please send us a chat or e mail when prompted. Otherwise, please send us a chat or e-mail [email protected] immediately so we can address the problem.
If you dialed in and have any difficulties during the call, press *0 for assistance.
Viewing QualityTo maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key againpress the F11 key again.
Patent Infringement Claims, Opinions of Counsel, and Attorney-Client Privilege
Best Practices for Opinion Letters after Seagate andQualcomm
Thomas J. Scott, [email protected]
©2010 Goodwin Procter LLP
January 5, 2011
Willful Infringement and Use of Opinions of Counsel
Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp. eliminated the adverse inference for failure to obtain and use an opinion of counsel
In re Seagate Tech., LLC found willfulness “requires at least a showing of objective recklessness”
Broadcom Inc. v. Qualcomm Corp.
› Opinion of counsel probative of inducement, i.e., “whether the accused infringer ‘knew or should have known’ that itsthe accused infringer knew or should have known that its actions could cause another to directly infringe”
Opinion of counsel defense
Waiver issues
› Attorney-client privilege
› Work product
Goodwin Procter LLP 5
› Work product
Willful Infringement and Use of Opinions of Counsel
Standard for evaluating willful infringement and the effect of opinions of counsel initially defined in Underwater Devices Inc. v. Morrison-Knudsen C 717 F 2d 1380 (F d Ci 1983)Co., 717 F.2d 1380 (Fed. Cir. 1983) › “Where…a potential infringer has actual notice of another’s patent rights, he has an affirmative duty to exercise due care to determine whether or not he is infringing Such an affirmativedetermine whether or not he is infringing. Such an affirmative duty includes, inter alia, the duty to seek and obtain competent legal advice from counsel before the initiation of any possible infringing activity.”
U d t D i I 717 F 2d t 1389 90 ( h i dd d)- Underwater Devices Inc., 717 F.2d at 1389-90 (emphasis added)
› “Adverse inference” possible from failure to seek advice of counselcounsel
- Kloster Speedsteel AB v. Crucible Inc., 793 F.2d 1565 (Fed. Cir. 1986)
Goodwin Procter LLP 6
Willful Infringement and Use of Opinions of Counsel
Opinion of counsel became a primary defense to (and focus of) willfulness inquiries› Fear of adverse inference
› Counterbalanced by fear of effect of waiver
Inconsistent rulings on scope of waiver caused confusion
O i i l l ?› Opinion counsel only?
▪ Or trial counsel, too?
› Temporal limits?
› Uncommunicated work product?
› Non-infringement, invalidity, AND unenforceability?
Goodwin Procter LLP 7
Willful Infringement and Use of Opinions of Counsel
K. Moore, “Empirical Statistics on Willful Patent Infringement,” 14 Fed. Cir. B.J. 227 (2004/2005)
› Willfulness alleged in 92.3% of cases
› Willfulness found in 55.7% of cases finding infringement
› Juries indifferent about opinions of counselp
▪ Found willfulness in 55.8% of cases with opinion
▪ But in 56.1% of cases without opinion
› Judges heavily influenced by opinions of counsel› Judges heavily influenced by opinions of counsel
▪ Found willfulness in 44.8% of cases with opinion
▪ But 84.2% of cases without opinion
› Willfulness finding affects enhancement
▪ Damages enhanced in 91.9% of cases where judge found willfulness
Goodwin Procter LLP 8
▪ But only 60.6% of cases in which jury found willfulness
Seagate Background: Patents-in-Suit
In 2000, Convolve, Inc. and the Massachusetts Institute of Technology sued Seagate, alleging infringement of two patents, U.S. Patent Nos. 4,916,635 and 5,638,267
▪ U.S. Patent No. 6,314,473 issued in November 2001, and plaintiffs amended the complaint to assert infringement of this patent as well
P t t ll di t d t d li i ti t d› Patents generally directed towards eliminating unwanted dynamics in a dynamic system or in a physical system response
Goodwin Procter LLP 9
Seagate Background: Opinions
Prior to the lawsuit, Seagate retained Gerald Sekimura to provide i i di Pl i tiff ’ t topinions regarding Plaintiffs’ patents
› Seagate did not receive the first opinion until July 24, 2000 - after the complaint was filed› The first opinion (Opinion # 1) analyzed the ‘635 and ‘267 patents and› The first opinion (Opinion # 1) analyzed the 635 and 267 patents and concluded the claims were invalid and not infringed by Seagate
In December 2000, Sekimura provided an updated opinion (Opinion # 2) further concluding that the ‘267 patent was unenforceableunenforceable
Sekimura’s third opinion (Opinion # 3) in February 2003 discussed the invalidity and non-infringement of the then-issued ‘473 patent473 patent
Goodwin Procter LLP 10
Seagate and the Scope of Discovery
At trial, Seagate notified plaintiffs of its intent to rely on Sekimura’s three opinion letters in defending against willful infringementopinion letters in defending against willful infringement› Sekimura’s work product disclosed, Sekimura made available for deposition
Plaintiffs moved to compel discovery of any communications and work product of Seagate’s trial counsel as well
The trial court’s concluded… › Seagate had waived the attorney-client privilege for all communications between it and any counsel, including trial attorneys and in-house counsel concerning the subject of Sekimura’s opinionssubject of Sekimura s opinions› The court accordingly ordered production of any documents and testimony concerning the subject matter of Sekimura’s opinions
The court also determined that protection of work product communicated to S t i dSeagate was waived
Goodwin Procter LLP 11
Seagate Mandamus Petition
Based on the Court’s order of production of documents and testimony i th bj t tt f S ki ' i i (i l di d iconcerning the subject matter of Sekimura's opinions, (including any advice
from trial counsel that undermined the reasonableness of relying on Sekimura's opinions), the Federal Circuit granted Seagate’s subsequent petition for mandamus on the following questions:
1. Given the impact of the statutory duty of care standard announced in Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed.Cir.1983), on the issue of waiver of attorney-client privilege, should(Fed.Cir.1983), on the issue of waiver of attorney client privilege, should this court reconsider the decision in Underwater Devices and the duty of care standard itself?
2. Should a party's assertion of the advice of counsel defense to willful infringement extend waiver of the attorney-client privilege toinfringement extend waiver of the attorney client privilege to communications with that party's trial counsel?
3. What is the effect of any such waiver on work-product immunity?
Goodwin Procter LLP 12
Seagate Decision
Proper standard for willful infringement
Overview of “willfulness” concept (looking at other statutes,Overview of willfulness concept (looking at other statutes, such as the Copyright Act and civil liability for punitive damages)
Standard of case in Underwater Devices was “more akin to negligence”negligence .
“…[W]e overrule the standard set out in Underwater Devices and hold that proof of willful infringement permitting enhanced damages requires at least a showing ofenhanced damages requires at least a showing of objective recklessness…[W]e also reemphasize that there is no affirmative obligation to obtain opinion of counsel…Accordingly, to establish willful infringement, a patentee must show by clear and convincing evidencepatentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. The state of mind of the accused infringer is not relevant to this objective inquiry.”
Goodwin Procter LLP 13
o e e a o s objec e qu y
Waiver for Opinion Counsel and Trial Counsel
District courts had different waiver standards, some extending the waiver to trial counsel (N.D. Cal.; D.Del.), and others extending the waiver to t i l l l f i ti t di ti ti d bttrial counsel only for communications contradicting or casting doubt on the opinions asserted (D.D.C.; N.D.Ill.)
“Recognizing the value of a common approach and in light of the new willfulness analysis set out above, we conclude that the significantly different functions of trial counsel and opinion counsel advise against extending waiver to trial counsel…Because of the g gfundamental difference between these types of legal advice…fairness counsels against disclosing trial counsel's communications on an entire subject matter in response to an accused infringer's reliance on opinion counsel's opinion to refute a
illf l ll ti ”willfulness allegation.”
Goodwin Procter LLP 14
Work-Product Immunity
In re EchoStar Communications Corp.
› Uncommunicated work product not waivedp
▪ “[W]ork product, which is never communicated to the client, is not discoverable.”
Seagate had held “…relying on opinion counsel's work product does notg y g p pwaive work product immunity with respect to trial counsel.” (emphasis added)
› Opinion Counsel: The scope of the waiver of immunity for an accused infringer relying on the advice-of-counsel defense is almost complete. The opinions themselves revealed, and the attorney who drafted them deposed
› Trial Counsel: No waiver as to trial counsel mental process work product (unlike factual work product, which can be discovered upon a showing of
b t ti l d d d h d hi )substantial need and undue hardship)▪ Trial counsel enjoys substantial, “nearly absolute” protection
› In-house Counsel: The scope of waiver as to in-house counsel remains open. The scope of waiver should be determined by whether in-house
Goodwin Procter LLP 15
p p ycounsel is serving a function of opinion counsel or trial counsel.
Broadcom Background
In 2008, the Federal Circuit decided Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683 (Fed. Cir. 2008) › Broadcom and Qualcomm were competitors in the market for chipsets used in mobile radio devices such as cell phone handsets. Patents-in-suit were generally directed towards wireless voice andPatents in suit were generally directed towards wireless voice and data communications on cellular telephone networks found in 3G baseband processor chips. › Qualcomm never obtained a non-infringement opinion letter› Qualcomm appealed from a jury determination that Qualcomm had infringed three patents owned by Broadcom: U.S. Patent Nos. 6,847,686; 5,657,317; and 6,389,010
T d ft th di t i t t d i d Q l ’ t t i l› Ten days after the district court denied Qualcomm’s post-trial motions, the Federal Circuit decided In re Seagate Technology
Goodwin Procter LLP 16
Broadcom: Jury Instructions
During the trial in the district court, the jury received the following instruction: “In considering whether [Qualcomm] acted in good faith, you h ld id ll th i t i l di h th tshould consider all the circumstances, including whether or not
[Qualcomm] obtained and followed the advice of a competent lawyer with regard to infringement…[Y]ou may consider whether [Qualcomm] sought a legal opinion as one factor in assessing
h th d th t t lit f th i t i f i twhether, under the totality of the circumstances, any infringement by [Qualcomm] was willful.”
Goodwin Procter LLP 17
Broadcom and Indirect Infringement
Qualcomm’s position was that Seagate had altered the standard for establishing the intent element of inducement.
› If specific intent is a more strict standard than “objective recklessness”, evidence not probative of willful infringement could not be probative of specific intent to induce infringementg
The Federal Circuit agreed no affirmative duty remains to seek opinion of counsel regarding infringement, improper to allow anopinion of counsel regarding infringement, improper to allow an adverse inference that such an opinion would have been unfavorable.
However, the Court found that “…a lack of culpability for willful infringement does not compel a finding of non-infringement underinfringement does not compel a finding of non-infringement under an inducement theory.”
Goodwin Procter LLP 18
Broadcom Opinion
“Because opinion-of-counsel evidence, along with other factors, may reflect whether the accused infringer ‘knew or should have known’ that its actions would cause another to directly infringe, we hold that such evidence remains relevant y g ,to the…intent analysis. Moreover, we disagree with Qualcomm's argument and further hold that the failure to procure such an opinion may be probative of intent in this context. It would be manifestly unfair to allow opinion-of-y pcounsel evidence to serve an exculpatory function…and yet not permit patentees to identify failures to procure such advice as circumstantial evidence of intent to infringe...”. (Emphasis added).( p )
Goodwin Procter LLP 19
Obtaining Competent Opinions of Counsel
The Federal Circuit opinions in Seagate and Broadcom teach that obtaining a competent opinion of counsel can be helpful in defending allegations of willful infringement› In order to rely on the advice-of-counsel defense, these opinions must be disclosed to the court and to opposing counsel
Goodwin Procter LLP 20
Obtaining Competent Opinions of Counsel
Credible defenses› Also consistent with trial argumentsg
Thorough/accurate› Based on complete facts› Based on correct law› Based on correct law› Addresses all potential claims› Product documentation reviewed› Prosecution history reviewed› Information not “concealed” from opinion counsel› Note: Just non-infringement or invalidity OK
No unreasonable cost constraints Timely “Final” opinion
Goodwin Procter LLP 21
Final opinion
Obtaining Competent Opinions of Counsel
Opinions of Counsel should also beOpinions of Counsel should also be…› Unbiased/independent› Credible, competent & litigation savvy› Signing attorney drafted opinion› Signing attorney can defend opinion at deposition
and trial
Goodwin Procter LLP 22
Reliance on Opinions of Counsel
Seagate and Broadcom together suggest that the Best Practice is for companies or individuals to secure such an opinion
Other Best Practices
› Confirm that the company or individual has actually read and understood any such opiniony p› Make certain that opinions are drafted and received before the start of any litigation, otherwise any opinions may be of limited use (as in Seagate). Also ensure that opinions are updated as appropriate to acco nt for ne l iss ed patents rele ant claimappropriate to account for newly issued patents, relevant claim constructions from other litigations, etc.› Ensure that the opinion itself is competent, thorough, and clear
Goodwin Procter LLP 23
Changes In How Opinions Are Used
Seagate and Broadcom set forth a dual functionality of opinions as both a sword and a shielda sword and a shield
Advice-of-counsel opinions as a sword› May be set forth by an accused infringer as one factor considered among all the circumstances as evidence that theconsidered, among all the circumstances, as evidence that the accused infringer had no intent to infringe the patents-in-suit (as in Qualcomm)
Advice-of-counsel opinions as a shieldAdvice of counsel opinions as a shield
› A trial counsel’s strategy or approach based off of advice-of-counsel letters is still privileged, even if the opinions themselves are disclosed (Seagate) ( g )
Goodwin Procter LLP 24
Scope of Discovery
EchoStar & Seagate together clarify scope of discoverable information
Discoverable:› Communications with opinion counsel (and
documents reflecting communications)› Investigations by in-house personnel
Not discoverable:› Uncommunicated work product of opinion p p
counsel› Communications with trial counsel (absent
chicanery)› Trial counsel work product
Goodwin Procter LLP 25
Scope of Discovery for In-House Counsel
Communications with in-house l/i h l kcounsel/in-house counsel work
product?› “No in-house counsel documents are
at issue in the petition.” EchoStar, 448at issue in the petition. EchoStar, 448 F.3d at 1297 n.2
› “We do not address the trial court’s discovery orders pertaining to Seagate’s in-house counsel ”Seagate s in-house counsel. Seagate, 497 F.3d at 1367 n.2.
Still undefined at present
Goodwin Procter LLP 26
The Role of Opinions of Counsel Post
Michael SimonsPartner
pSeagate and Broadcom
January 5, 2011
© 2010 Akin Gump Strauss Hauer & Feld LLP
Brief OverviewBrief Overview
F ll i S t illf l i l t l iFollowing Seagate, willfulness involves a two prong analysis, where the patentee must show:■ 1) An objectively high likelihood of infringement existed; and ■ 2) The infringer knew or should have known of this objectively defined■ 2) The infringer knew or should have known of this objectively defined
risk.● An opinion of counsel is relevant to the second prong
Following Broadcom inducement also involves a two prongFollowing Broadcom inducement also involves a two prong analysis, where the patentee must show:■ 1) The infringer intended to cause infringement; and ■ 2) The infringer knew or should have known its actions would cause
i f i tinfringement.● An opinion of counsel, or lack thereof, is relevant to the first prong
28
The Two Prong Willfulness AnalysisThe Two Prong Willfulness Analysis
Willfulness involves both an objective and subjective inquiryUnder the objective prong, the patentee must show the
infringer acted despite an objectively high likelihood that its actions constituted infringement■This inquiry is entirely objective, the infringer’s state of mind is
not relevant■The lack of an opinion of counsel is not relevant
U d th bj ti th t t t h thUnder the subjective prong, the patentee must show the infringer knew or should have known of this objectively defined risk■This is judged in view of the totality of the circumstances■This is judged in view of the totality of the circumstances■An opinion of counsel, or the lack thereof, is relevant, but not
controlling
29
Objectively High LikelihoodObjectively High Likelihood
An opinion of counsel, or lack thereof, has no bearing on the objectively high likelihood analysisobjectively high likelihood analysis
Credible invalidity and non-infringement arguments can prevent a finding of an objectively high likelihood● The mere fact that invalidity and non-infringement arguments were● The mere fact that invalidity and non infringement arguments were
presented to a jury does not prevent a finding of an objectively high likelihood
Close questions of claim construction can also prevent a finding of an objectively high likelihoodfinding of an objectively high likelihood
The failure to seek a preliminary injunction is also a strong factor weighing against finding an objectively high likelihood for post-filing infringementp g g
30
Cases where an Objectively High Likelihood ExistedCases where an Objectively High Likelihood Existed
Church & Dwight Co, Inc. v. Abbott Labs., (D.N.J. 2008)Th C t h ld th t bj ti l hi h lik lih d i t d h● The Court held that an objectively high likelihood existed where:■ 1) The PTO had previously rejected Infringer’s invalidity defenses;■ 2) The infringer conceded that it infringed one of the patents-in-suit; and■ 3) The infringer’s non-infringement defenses to the other patents-in-suit
i iwere very unconvincing.
GSI Group Inc. v. Sukup Mfg. Co., (C.D. Ill. 2008)● Denying summary judgment for lack of willfulness because the
accused infringer’s actions supported an objectively highaccused infringer s actions supported an objectively high likelihood where the accused infringer:■ 1) Modeled its product after patentee’s product; and ■ 2) Possessed a marketing brochure for the patentee’s product that
indicated the product was patentedindicated the product was patented● Contra. DePuy Spine, Inc. v. Medtronic Sofamor Danek, Inc., (Fed. Cir.
2009), which holds copying only relates to the 2nd prong of the willfulness inquiry
31
Cases where an Objectively High Likelihood Existed (Continued)Cases where an Objectively High Likelihood Existed (Continued)
Creative Internet Advertising Corp. v. YahooA Inc., (E.D. Tex. 2009)● The Court held that an objectively high likelihood existed where,
prior to the litigation :prior to the litigation,:■ 1) The infringer had knowledge of the patent-in-suit; ■ 2) The accused product was highly similar to the claims of the patent-in-
suit■ 3) The infringer made no attempts to avoid infringement after litigation■ 3) The infringer made no attempts to avoid infringement after litigation
commenced
Krippelz v. Ford Motor Co., (N.D. Ill. 2009)● The Court held that an objectively high likelihood existed where,
i t th liti tiprior to the litigation,:■ 1) The infringer had knowledge of the patent-in-suit; and ■ 2) Licensed a patent which referenced the patent-in-suit
32
Cases where an Objectively High Likelihood Did Not ExistCases where an Objectively High Likelihood Did Not Exist
Black & Decker, Inc. v. Robert Bosch Tool Corp. (Fed. Cir. 2008)● The Court held that an objectively high likelihood did not exist where:■ 1) The infringer offered legitimate defenses to infringement claims; and■ 2) The infringer offered credible invalidity arguments.
Northbrook Digital Corp v Browster Inc (D Minn 2008) Northbrook Digital Corp. v. Browster, Inc. (D. Minn. 2008)● The Court held that an objectively high likelihood did not exist where:■ 1) The infringer took steps to reduce or eliminate any damages by
removing infringing features from product; and■ 2) Allowed distribution website for the infringing product to become non-
functional after the patentee became aware of the patent
Cordance Corp. v. Amazon.com, Inc., (D. Del. 2009)Th C t h ld th t th i f i t b ti f th t t f● The Court held that the infringer must be on notice of the patent for an objectively high likelihood to exist
33
Cases where an Objectively High Likelihood Did Not Exist (C ti d)(Continued)
Creative Compounds v. Starmark Labs., Inc., (S.D. Fla. 2010)● The Court held that the patentee’s failure to seek a preliminary
i j ti t d th f i illf l d f thinjunction prevented them from recovering willful damages for the post-litigation infringement
34
The 2nd Prong: Acted Despite the Objectively Defined RiskThe 2 Prong: Acted Despite the Objectively Defined Risk
While a lack of an opinion of counsel is not relevant to the bj ti l hi h lik lih d d t i ti it i l t tobjectively high likelihood determination, it is relevant to
whether the infringer acted despite an objectively defined risk In determining whether the infringer acted despite an
bj ti l d fi d i k th t i th t t lit f thobjectively defined risk, the court examines the totality of the circumstances● Among the factors the court considers is whether the infringer
obtained and produced an opinion of counselobtained and produced an opinion of counsel● An opinion of counsel is not determinative, but it is a significant
factor in the court’s analysis
35
The 2nd Prong: Acted Despite the Objectively Defined RiskThe 2 Prong: Acted Despite the Objectively Defined Risk
An opinion of counsel that concludes either:● 1) the patent-in-suit is invalid; or● 2) the accused products do not infringe
Typically disproves the 2nd prongyp y p p gThe failure to obtain an opinion of counsel, by itself, is not
sufficient to prove the 2nd prong of the willfulness analysis
36
Cases where an Opinion of Counsel Disproved the 2nd ProngCases where an Opinion of Counsel Disproved the 2 Prong
Finisar Corp. v. DirecTV Group, Inc., (Fed. Cir. 2008)● The Court held that an infringer did not act despite an objectively
defined risk where the opinion of counsel that concluded that:■ The infringer’s product did not infringe the patent-in-suit, but made no
conclusions regarding the validity of the patent-in-suit
Aircraft Technical Publishers v. Avantext, Inc., (N.D. Cal. 2009)● The Court granted summary judgment denying willfulness where
the accused infringer obtained an opinion of counsel, but did not make a conclusion regarding the validity of the patent-in-suit.
37
No Willfulness and No Opinion of CounselNo Willfulness and No Opinion of Counsel
Hako-Med USA, Inc., et al. v. Axiom Worldwide, Inc., (M.D. Fla 2009)Fla. 2009)● The Court held that, under the totality of the circumstances, there
was no willfulness, where the infringer:■ 1) Made a legitimate, but failed, attempt to design around a patent; and■ 2) Had a good faith belief it was not infringing, based on an internal
investigation into the scope of the patent.
D.R. Sys. Inc. v. Eastman Kodak Co. (S.D. Cal. 2009)● The Court held that a jury could find the infringer did not act● The Court held that a jury could find the infringer did not act
willfully where it used “qualified staff,” rather than an attorney, in investigating possible infringement.■ Specifically, the infringer relied on the opinion of an individual with
significant experience in:significant experience in: project management, development, engineering, and production
operations organizations and the IT group; All of which were necessary to form a competent opinion regarding the
patent-in-suit
38
No Willfulness and No Opinion of Counsel (Continued)No Willfulness and No Opinion of Counsel (Continued)
Presidio Components Inc. v. American Technical Ceramics Corp (S D Cal 2010)Corp., (S.D. Cal. 2010)● The Court held that, under the totality of the circumstances,
there was no willfulness, where the infringer and the PTO independently initially concluded the patent-in-suit was not p y y pnovel
Krippelz v. Ford Motor Co., (N.D. Ill. 2009)● The Court held that the infringer’s actions were objectively g j y
reckless where it:■ Based it’s non-infringement argument on a claim construction that had
been rejected by the Board of Patent Appeals
39
Willfulness and No Opinion of CounselWillfulness and No Opinion of Counsel
Creative Internet Adver. Corp. v. Yahoo! Inc., et al. (E.D. Tex. 2009)2009)● The Court held that, under the totality of the circumstances, there
was willfulness, where the infringer:■ 1) Never solicited the advice of counsel even though:■ 1) Never solicited the advice of counsel even though: A) The patentee sent letters to the infringer accusing them of infringement; and B) There was a substantial degree of similarity between the patentee’s patent
and the infringer’s product.; and■ 2) Failed to make efforts to design around the patents-in-suit■ 2) Failed to make efforts to design around the patents in suit.
40
Opinion by in-house counselOpinion by in house counsel
An opinion of counsel created by in-house counsel has the same weight as an ordinary opinion of counsel and onlysame weight as an ordinary opinion of counsel and only waives privilege to a limited extent.
Convolve, Inc. v. Compaq Computer Corp., (S.D.N.Y. 2007)● Compaq relied on a non infringement opinion by in house● Compaq relied on a non-infringement opinion by in-house
counsel as a defense to a willfulness claim.● Convolve contended that because in-house counsel was
used as opinion counsel, Compaq waived all privilege with p , p q p gregards to its in-house counsel.■ The Court rejected Convolve’s argument and held that A-C privilege and
work-product are only waived for communications that were relied upon by the in-house counsel when they created their opinion of counsel.
41
Court treatment of BroadcomCourt treatment of Broadcom
In Broadcom, the Federal Circuit held that inducement i t l irequires a two prong analysis:
● 1) The defendant intended to cause the acts that constitute direct infringement; and
● 2) that the defendant knew or should have known that its actions would● 2) that the defendant knew or should have known that its actions would cause direct infringement.
The Court held that the failure to obtain an opinion of counsel was evidence of the first prongg
World Wide Stationary Mfg. Co., Ltd. v. U.S. Ring Binder, L.P., (E.D. Mo. 2009)● The Court indicated that if the patentee had alleged inducement, the p g ,
patentee could reference the infringer’s obligation to obtain an opinion of counsel
42
Future Need for Opinions of CounselFuture Need for Opinions of Counsel
An opinion of counsel is not necessary for defeating a willfulness allegation but it does carry significant benefitswillfulness allegation, but it does carry significant benefits with limited downside● In most cases, a competent opinion of counsel prevents a
willfulness finding;● There is no penalty for obtaining an opinion and deciding later
whether to disclose it; and● There is no negative inference for not relying on one.
M B d it t th l f i i fMoreover Broadcom reiterates the value of an opinion of counsel as opinions of counsel■May be required to rebut the lack of good faith or intent.
43
Patent Infringement Claims, Opinions of Counsel, and Attorney-Client Privilege
Best Practices for Opinion Letters after Seagate andQualcomm
Thomas J. Scott, JrJanuary 5 2011
©2010 Goodwin Procter LLP
January 5, 2011
Everything Relating to Opinions of Counsel Has Changed Over the Past Six Years…..g
Knorr-Bremse decision eliminated the adverse inference for failure to obtain and use an opinion of counselto obtain and use an opinion of counsel.
Seagate established an entirely new approach for assessing willfulness in a patent case and seemed at the time to foreshadow a decline in the importance of opinions of counseldecline in the importance of opinions of counsel.
Broadcom created an exception to Seagate continuing to cause some confusion as to whether Knorr-Bremse really meant what it said.
Recent district court opinions regarding the application of the new standards for willfulness are less than consistent.
Goodwin Procter LLP 45
Except one.
No opinion has criticized or implicated the obtaining of an opinion of counsel as aobtaining of an opinion of counsel as a prudent business decision.
Goodwin Procter LLP 46
Role of Opinions Of Counsel Outside of Litigation
Early stage companies seeking investors or financingfinancing
Freedom to operate opinions
Independent verification of “design around” options
Development of a patent strategy
Sarbanes-Oxley compliance issues
Licensing negotiations
Goodwin Procter LLP 47
The Broadcom “revival” of Litigation Opinions
Inducement of infringementg
› How is this predictable in advance?
› Seagate makes clear that opinions obtained after g plitigation commenced are of little value.
› As a practical matter, a prudent company needs an i i f l h i d t l iopinion of counsel whenever an inducement claim
is feasible, e.g., where the company is the manufacturer or supplier of components or application software.
Goodwin Procter LLP 48
Opinions Also Have Other Uses Within Litigation
Establish existence of a meritorious defense to infringement claims or affirmative claims against patentinfringement claims or affirmative claims against patent holder
› Support or defend against a Rule 11 motion
Used by a defendant with indemnity rights
Evidence of non-willfulness in “the totality of the ycircumstances”
Establish compliance with “standards of fair commerce”
Rebut claim of bad acts – Seagate “chicanery”
Goodwin Procter LLP 49
Best Practice is to Always Obtain An Opinion
No downside for obtaining an opinion other than that costthat cost.
Benefit of having one is likely to outweigh the cost in almost every instancecost in almost every instance.
Doubtful that an opinion is unnecessary in the particular fieldparticular field
Consider a memorandum to the file if the client indicates after counseling risk of harm does notindicates after counseling risk of harm does not justify expenditure
Goodwin Procter LLP 50
Guidelines To Follow For Obtaining Opinions
Obtain the opinion from qualified patent counsel
Avoid the use of anyone who might appear for you in court
Keep the potential audience or audiences in mind when preparing
Cli t S hi ti ti› Client Sophistication
Beware of the paper trail you are creatingU t k d ft› Unnecessary to keep drafts
Establish a corporate policy on use of opinions
Goodwin Procter LLP 51
No post-filing opinions of counsel
Open Forum Discussion
©2010 Goodwin Procter LLP