The impact of patent opinions on willful infringement and attorney-client privilege issues cannot be overstated; and the Federal Circuit’s en banc decision in In re Seagate Technology contains more subtle ramifications than initially meet the eye. This decision is the third major decision in as many years concerning these critical issues. The first two decisions, Knorr-Bremse and In re EchoStar, took incremental approaches in attempting to bring under control what many considered to be an onerous, unpredictable, and often absurd aspect of patent litigation. In contrast, the Seagate decision fundamentally changed the law of willful infringement by eliminating the “affirmative duty of care” that has been in place for nearly 25 years. The decision also provides protections against interference with the attorney-client privilege by severely curtailing discovery of communications with trial counsel if a defendant chooses to rely on another attorney’s advice to defeat a charge of willful infringement.
Immediately following the Seagate decision, many commentators and practitioners announced the end of opinion practice. Unfortunately, neither the courts nor the juries deciding the issue of willfulness listened. Virtually every jury instruction issued after Seagate mentions an opinion as one way a defendant can defeat a charge of willfulness. Further, juries instructed to apply the Seagate standard appear to be finding willful infringement at the same rate they found willful infringement before.
Finally, while the Federal Circuit’s willfulness trilogy might have helped to clarify the law of willful infringement and waiver, the Federal Circuit’s recent DSU and Broadcom decisions have raised new complications in how patentees and defendants will litigate the issue of induced infringement. In the DSU case, the defendant company was permitted to rely on an opinion of counsel to show that it did not intend to cause its customers to infringe. On the other hand, the patentee in Broadcom was permitted to argue that the defendant company’s failure to rely on an opinion suggested that it knew or should have known that its products cause its customers to infringe. The practical effect of the Broadcom decision may undo many of the protections the Federal Circuit’s Knorr-Bremse and Seagate decisions provided to defendants who did not obtain opinions of counsel or chose to keep them privileged. Making matters potentially even worse, the Federal Circuit’s traditional approach to corporate officer and director liability for induced infringement puts your clients’ executives at risk of personal liability every time their company infringes another’s patent.
Clearly, opinions remain an important factor in whether or not your clients will be found liable for infringement and increased damages.
And as before, the value of the opinion, whether for issues of avoiding willful infringement or for providing solid business advice, turns on its competency. Knowing the elements of a competent opinion remain significant. Risk management and ethics issues associated with IP opinions will also be discussed at length, from 3:00 – 4:30 p.m., as currently estimated, providing the opportunity for CLE ethics credit.