From PLI’s Course Handbook
Preparing Patent Legal Opinions 2004
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Requirements for a
Competent In-House Opinion
Vineet Kohli
Merck & Co., Inc.
Copyright © 2004
All Rights Reserved
Biographical Information
Program Title: Requirements for a competent in-house opinion
Name: Vineet Kohli
Position or Title: Assistant Patent Counsel
Firm or Place of Business: Merck & Co., Inc.
Address: P.O. Box 2000, Rahway
Phone: 732-594-3889
Fax: 732-594-4720
E-Mail: v_kohli@merck.com
Primary Areas of Practice: Patent Law - Biotechnology
Law School: CUNY Law School at Queens College
Work History:
Assistant Patent Counsel, Merck & Co., Rahway, NJ
Intellectual Property Associate, Graham & James, NY Patent Attorney, Felfe & Lynch, NY
Membership in Associations, Committees, etc.: New York Intellectual Property Law Association.
The opinions expressed in this article are those of the author and do not reflect those of Merck & Co, Inc.
Table of Contents
I. Introduction......................................................................... 5
II. Definition of willfulness............................................ 5
A. Factors Considered in Determining Willfulness:............................. 7
B. Assessment of Damages for Infringing Activity:............................ 8
C. Assessment of Attorneys Fees in Exceptional Cases..................... 9
III.
How to Avoid a Finding of Willful Infringement 10
A. Timeliness – When to seek Opinion of Counsel:.......................... 11
1. Notice Requirement:............................................................. 12
B. Competent opinion: Form and Content......................................... 16
1. Content Requirement(s)........................................................ 18
2. Author:................................................................................ 20
C. Good Faith Reliance:.................................................................. 24
IV.
Form of Opinion: Oral or Written....................... 26
V.
Adverse Inference for non production of Opinion Letter 27
VI. Conclusion:........................................................................ 29
Introduction
In the main, the paper focuses on willful infringement,
requirements thereof, and its consequences.
The article further details means of challenging a charge of willful
infringement principally via the obtainment of an opinion of counsel. Details as to what constitutes a competent
opinion of counsel sufficient to insulate the client from a finding of
willfulness and possibly paying enhanced damages resulting therefrom are also
provided.
I. Introduction
In-house
attorneys are routinely called upon to provide two types of opinions:
(i) freedom to operate opinions and (ii) validity opinions. This
paper discusses the current state of the law as it relates to the requirements
of an opinion letter that is to be used as an effective shield to deflect a
charge of willful infringement and potentially avoid payment of enhanced
damages.
Patent
infringement constitutes the making, using, selling, offering for sale, or
importing a patented invention without the consent of the patentee for a
specified period of time.[1]
Only
after a determination of infringement has been found, does the fact finder move
on to determine whether the infringement is willful.
What is willful infringement? The emerging theme for determining willfulness begs the question: Would a prudent person have sound reason to believe that the patent in question is likely to be found invalid, unenforceable or not infringed by a court of competent jurisdiction?[2]
As to what
constitutes willful conduct, the federal court’s explanation as set forth in Amsted
Indus. Inc. v. Buckeye Steel Castings Co.[3] is particularly instructive:
The issue of "willful"
infringement
measures the infringing behavior, in the circumstances in which the infringer
acted, against an objective standard of reasonable commercial behavior in the
same circumstances. Willful infringement
is thus a measure of reasonable commercial behavior in the context of the tort
of patent infringement. The extent to
which the infringer disregarded the property rights of the patentee, the
deliberateness of the tortious acts, or other manifestations of unethical or
injurious commercial conduct, may provide grounds for a finding of willful
infringement
and the enhancement of damages.
Additional guidance is
provided in In re Hayes Microcomputer
Products Inc. Patent Litigation, [4] wherein the court stated:
The role of a finding of "willfulness" in the law
of infringement is partly as a deterrent - an economic deterrent to the tort of
infringement - and partly as a basis for making economically whole one who has been wronged. ... The term
"willfulness" thus reflects a threshold of culpability in the
act of infringement that, alone or with other considerations of the particular
case, contributes to the court's assessment of the consequences of patent
infringement. (emphasis supplied)
Willfulness is determined by reviewing the
totality of the circumstances surrounding the infringer’s acts since there are
no definitive rules regarding willfulness or precise factors indicative of willfulness. [5] Indeed, all the federal court
cases considering the question of willfulness have consistently
maintained that the ultimate consideration is
whether, considering the “totality of the circumstances”, “clear and convincing
evidence” establishes that the infringer acted in disregard of the infringed
patent with no reasonable basis to believe it had a right to engage in
infringing acts.[6]
A. Factors Considered in Determining Willfulness:
When
it is found that the potential infringer acted without a reasonable belief that
its actions would avoid infringement, the patentee has established willful
infringement. Such a finding of willful
infringement, in turn, may be accompanied by enhanced damages.[7] The seminal case detailing the factors considered in
determining willful infringement is Read
Corp. v. Protec, Inc.[8]
B.
Assessment of Damages for
Infringing Activity:
While the assessment of damages for patent
infringement are compensatory, the majority
of the Federal Circuit decisions have consistently held that patent
infringement damages only accrue after the patent issues.[9] However, in Minnesota Mining & Mfg. Co. v. Johnson
& Johnson Orthopaedics, Inc.[10] the court found that conduct occurring prior to
issuance of the patent may indeed support a finding of willfulness. Under appropriate
circumstances, the assessed damages may be trebled.
Under 35 U.S.C. § 284 (2002), a federal court is authorized
to increase damages in a patent infringement case up to three times the amount
of actual damages, when there is a finding of "willful infringement." The principal considerations in the determination of whether
to enhance assessed damages are the same as for those attending a willful
infringement determination, i.e., Read
factors, supra.[11]
Even when willful infringement or bad faith on part of the
accused infringer is found, the “enhancement of damages” is not automatic, but
remains within the discretion of the court.[12] As noted by the
Federal Circuit in Kloster Speedsteel AB
v. Crucible Inc[13] a finding of willful infringement does
not mandate, but merely authorizes an award of increased damages. Importantly, this discretion is limited to
trebling the basic damage award.[14]
C.
Assessment of
Attorneys Fees in Exceptional Cases
In exceptional cases,
a court may also award attorney fees to the prevailing party.[15] Willful
infringement, inequitable conduct, vexatious or unjustified litigation are
representative examples of the types of conduct that may form the basis for
finding a particular case exceptional within the meaning of section 284.[16] The paramount
determination in the finding that a case is exceptional, and consequently,
trebling assessed damages, is the egregiousness of the defendant's conduct
based on all the facts and circumstances.[17]
While a finding of willful infringement does not automatically require
a finding that a case is exceptional, “[o]ur cases uniformly indicate that
the willfulness of the infringement by the accused infringer may be a
sufficient basis in a particular case for finding the case ‘exceptional’ for
purposes of awarding attorney fees to the prevailing patent owner.”[18] Egregiousness of
an infringer’s behavior may play a more important role with respect to the
enhancement of the damages.[19]
III. How to Avoid a Finding of Willful Infringement
Although the federal statute[20] fails to specifically prescribe a standard for assessing enhanced damages, the tort of willful infringement is based upon a deliberate disregard for the property rights of a patent holder. Consequently, the focus is generally on whether the infringer exercised “due care” to avoid infringement. In this regard, the Federal Circuit has repeatedly held that one of the relevant factors in determining willful conduct involves the infringer's actions taken to comply with its "affirmative duty to exercise due care” to ascertain the scope of the patent in question and form a good faith belief that the adverse patent will likely be found to be invalid, not infringed or unenforceable.[21]
Indeed, the opinion-of-counsel
defense is the “normal” way for an infringer to show that it acted prudently.[22]
However, to serve as a shield, the opinion letter, as detailed herein,
must be competent, timely and relied upon by the accused infringer.
A. Timeliness – When to seek Opinion of Counsel:
As noted, supra, federal court precedent establishes that a person having knowledge of an adverse patent has an affirmative duty to exercise due care to avoid infringement of a presumptively valid and enforceable patent. “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." See the Federal Circuit’s holding in Underwater Devices, Inc. v. Morrison-Knudsen Co.[23]
Federal case reviews impel the conclusion that advice of counsel e.g., obtainment of an opinion letter should be sought promptly after receipt of the requisite actual notice.[24] Ideally, the potential infringer, should obtain competent legal advice from counsel prior to initiating any possible infringing activity.[25] In the event notice is received after an infringing act, willful infringement may still be avoided by promptly seeking and obtaining an opinion letter.[26]
Obtaining
legal advice in the form of an opinion letter in a timely manner,
followed by reasonable reliance on the opinion is crucial to abiding by
the standard of “due care.”[27]
“Actual notice” may come from a variety of sources :
(i) Acts on part of the Patentee - Actual
notice sufficient to trigger the “duty of care” may be inferred from the actions of the patentee.
Representative examples include:
a) the filing of an infringement suit;[28]
b) receipt by the accused infringer of a cease
and desist letter from the patentee;[29]
c) an offer to license the claimed invention
from the patent holder or his representative;[30] and
d) refusal to license.[31]
(ii) Actual notice imputed from 3rd
parties - In Great Northern Corp. v.
Davis Core & Pad Co. Inc.,[32] notice
was imputed to the accused infringer based upon information, i.e., existence of
the adverse patent, provided to the accused infringer by its business
associate.
(iii) Notice imputed to the accused infringer from
knowledge possessed by the infringer’s agent or employees or their agents.
In John Hopkins Univ. v. CellPro Inc.,[33] knowledge possessed by
representatives of the accused infringer, e.g., monitoring the Official Gazette
was found to be sufficient to trigger “an affirmative duty of due care” on part
of CellPro.
In other instances, in-house patent attorney’s knowledge of a patent has also been imputed to the accused infringer for purposes of fulfilling the “actual notice” requirement thereby triggering a duty of due care on the part of the alleged infringer.[34] As well, a corporate officer’s knowledge of the adverse patent can properly be imputed to the employer.[35]
The seminal case dealing
with notice and willfulness is Underwater
Devices, Inc.,[36] wherein
the accused infringer's in-house general counsel began a prior art search relating to an opinion prior to engaging in
any infringing activities. Notably,
counsel failed to review the file wrappers of the patents in suit prior to
engaging in infringing activities. As well, he failed to provide a counsel’s
opinion letter until after the infringement action was instituted. The Federal
Circuit in affirming the lower court’s finding of willful infringement,
concluded, that the infringer "knew or should have known that it proceeded
without the type of competent legal advice upon which it could have justifiably
relied.”[37]
Consequently, the infringer’s continued infringement after actual notice of the
patent was inconsistent with its claim of good faith. An exculpatory legal opinion that is only sought and obtained after
litigation is initiated is likely to be of little value where the potential
infringer knew of the patent before becoming aware of the lawsuit and did not
seek an opinion before the lawsuit began.[38]
Note however, that each case is fact specific and the courts generally undertake an extensive inquiry into various factors prior to imputing knowledge to the employer.[39]
Until
recently, pending patent applications were kept secret, absent a court order or
other special circumstances.[40] However, under the current state of the law,
the statute now provides for publication of most United States patent
application eighteen months from its effective filing date.[41] As well, a patentee is
entitled to damages (i.e., reasonable royalty) incurring from the publication
date of a United States patent application provided certain conditions are met.[42] One such condition is that the claims of the issued patent be “substantially
similar” to those appearing in the published application.[43] It is unclear whether notice of a published application alone or in
combination with satisfaction of the provisions of
section 154(d) that the issued claims be “substantially similar” to the
published claims have been satisfied triggers an “affirmative duty
of due care” on part of the recipient to avoid willful infringement by the
obtainment of a pre-patent issuance opinion letter.
In American Original Corp. v. Jenkins Food Corp.[44]
the court held that mere knowledge of a pending, unpublished patent application
was insufficient by itself to form a basis for willful infringement of the
patent after it issued.
Likewise, in Gustafson,[45]
the court explained that
"In our patent system,
patent applications are secret, and patentees are authorized to sue 'innocent'
manufacturers immediately after their patents issue and without warning. To
hold patentees entitled to increased damages or attorneys' fees on the ground
of willful infringement, however, would be to reward use of the patent system
as a form of ambush"). This is particularly so where the accused product
is designed before issuance of the patent.
However, pre-issuance conduct
coupled with knowledge of the pre-issue patent may, under certain
circumstances, lead to a finding of willful infringement.[46]
While it is prudent to avoid
delay between receipt of actual notice of the adverse patent and seeking legal
advice, the gap between notice and obtainment of the opinion letter is case
specific and based upon the totality of the circumstances. Compare SRI
Int’l, Inc.[47], wherein the accused infringer sought and obtained an opinion letter some
seven years after infringement commenced.
As noted by the court, such delay in obtaining the opinion letter
was "too little, too late, coming seven years after ATL began infringing
the '750 patent")" and Sensonics,
Inc.[48] wherein
the court declined to find willfulness despite an eight month delay between
actual notice and consultation with a patent attorney.
B. Competent opinion: Form and Content
A
competent opinion is not only thorough but also authored by a competent
attorney. The competency of an opinion
letter is judged using an objective standard.[49] In general, the opinion letter, must
be thorough and include an “indicia” of reliability in
order to be considered competent. In this regard, the Federal Court’s observation in Radio Steel & Mfg. Co. v. MTD Prods., Inc [50] is of particular
import:
“an infringer may
not in good faith, justifiably rely on the opinion of counsel and proceed in
the face of a known patent unless counsel's advice is 'competent',
'authoritative', or 'contains sufficient internal indicia of credibility’ to
remove any doubt that (the infringer) in fact received a competent opinion”[51]
Additional guidance is
provided in Jurgens v. CBK, Lt., [52] wherein
the lower court, while awarding the patentee compensatory damages for
infringement, refused to grant enhanced damages in spite of a jury’s finding of
willful infringement. According to the district court judge, CBK had
established that not only had CBK relied on the opinion of its patent counsel
but also that the patentee had failed to mark their devices with the patent
number.[53] The Federal Circuit, in reversing the
district court's denial of enhanced damages, noted that the two factors relied
upon by the court were inappropriate. The court’s
guidance with respect to the competency of
an opinion letter is particularly instructive.
As explained by the court:
The competency requirement
applies to both the qualifications of the person giving the opinion and the
content of the opinion itself. ...
To reasonably rely on an opinion, it must be authoritative, not just conclusory, and objective. The steps
"normally considered to be necessary and proper in preparing an
opinion" include a thorough review of the cited prior art and prosecution
history. If infringers could rely on any opinion to defeat willful
infringement, no matter how incompetent, insulation from increased damages
would be complete.[54]
(emphasis supplied)
A determination into
whether an opinion letter may serve to exculpate the intended recipient, e.g.,
accused infringer on the issue of willful infringement,
requires the fact finder to view the evidence objectively to determine
"whether it was obtained in a timely manner, whether counsel analyzed the
relevant facts and explained the conclusions in light of the applicable law,
and whether the opinion warranted a reasonable degree of certainty that the infringer had the legal right to conduct the infringing
activity."[55]
Generally, a competent opinion is one which includes within its four corners an objective “indicia of credibility” such that it instills in the potential infringer a good faith belief that a court is likely to find the patent invalid, not infringed or unenforceable.[56] More broadly, the court looks at the opinion's "overall tone, its discussion of case law, its analysis of the particular facts …”[57] On the other hand, an incompetent opinion fails to establish the “good faith belief” requirement on part of the accused infringer.[58]
The Federal Circuit disfavors opinions that are “conclusory” in that such opinions are usually determined to be incompetent.[59] Representative examples of such opinions include opinions that lack specific factual or legal analysis, fail to specifically link prior art and other information to the legal analysis of the patent claims, and on its face evinces ignorance of obvious factual or legal shortcomings.[60]
Preferably, a competent opinion letter speaks of probabilities,
e.g., “more likely than not,” so long as it is sufficiently supported by
analysis and subsequent proof at trial that shows why absolute certainty is
impracticable.[61] This
sentiment has been repeatedly echoed in various cases subsequently issued. For example,“[a]n honest opinion is more
likely to speak of probabilities than certainties.”[62]
While the
competency of an opinion does not turn on any one factor, various factors have
been proposed by the courts that may be considered by a fact finder when
determining the competency of a counsel’s opinion letter.
In this regard, the Federal Circuit's instructions in Westvaco [63] are
particularly instructive with respect to what facts the court considers to
support a finding of a competent opinion:
"Each opinion letter begins with a
statement that the opinion is based on a review of the
file history of the patent, the prior art of record, and additional prior art.
Thus, the opinions evidence an adequate foundation. Moreover, the opinions are
not conclusory. The validity and infringement issues are analyzed in detail,
including discussions of the prior art, the accused device, and the claim
language. The claims are not discussed as a group but are separately analyzed.”[64]
It should
be noted that the Federal Circuit has repeatedly cautioned that the conclusions
reached by the counsel need not be “correct” in order to insulate the accused
infringer from a finding of willful infringement.[65]
That is, the fact finder and the appellate
tribunal need not concur with the conclusions or reasoning set forth in the
opinion as long as the opinion is otherwise competent,
timely obtained and relied on by the recipient.
Overall, the federal court has repeatedly held that what matters is
the overall “thoroughness” of the opinion letter which, when combined with
other factors, instills a belief in the recipient that a court of competent jurisdiction will likely find the
adverse patent invalid, not infringed or unenforceable.[66]
As noted supra, a determination into the
competency of an opinion letter also calls into question the competency of the
author. Detailed hereunder are the
views of the federal courts as they relate to the requirements for authorship.
(i) Whether In-house or an outside attorney
While the Federal Circuit has been somewhat critical of opinions from in-house counsel, there is no rule that prohibits reliance on opinions obtained from in-house counsel.[67]
The
rational for questioning in-house opinions pertains to a perception that an
in-house attorney may not be as independent as an outside attorney.[68] While impartiality, bias, and lack of
objectivity[69] appear to weigh
against the use of in-house attorneys to author an opinion letter, there is no per se rule against
an in-house attorney providing an opinion letter.[70]
This is
evident from Studiengesellschaft Kohle,[71] wherein the court held that reliance on an opinion letter
authored by in-house counsel is
reliable. Specifically, the
court allowed the defendant to rely on an opinion letter by an in-house
counsel, noting that it had not issued any edict “requiring a potential
infringer to obtain advice of counsel.”[72]
Similar
views are presented in Western Electric
Co, v. Stewart-Warner Corp.[73]
where the court, referring to an opinion letter authored by an in-house
counsel, stated that “[J]ust because an attorney is in-house counsel does not
mean that his opinions are necessarily suspect.”
Overall, it appears that the test for competency of an in-house opinion letter is
that, the opinion demonstrates (a) the authors expertise and experience, (b)
the absence of a material, financial or other interest, and (c) the existence
of other indicia of reliability and objectivity.[74] While the court seems to equate objectivity with
competency, it is understood that not all factors need be present in order for
an in-house opinion to be deemed reliable. However, objectivity
in the opinion and an absence of undue influence is the ultimate hallmark of an
opinion letter authored by an in-house counsel.[75]
(ii) Whether registered patent attorney or a general attorney
The
Federal courts have traditionally favored opinions from patent attorneys
because opinions from a non-patent attorney’s are inherently
suspect because the author (non-patent attorney) lacks sufficient expertise
relating to patent law and patent issues and as such is unable to provide a
competent opinion.
That the Federal Circuit discourages opinions from non-patent
attorneys is evident from its holding in Acoustical
Design Corp. v. Control Elec. Co.[76]
wherein the accused infringer sought advice from general counsel instead
of a patent attorney.
(iii) Foreign Patent Attorney - not registered to practice before the U.S. Patent and Trademark Office
The Court appears to frown upon opinion letters from non-US patent attorneys.[77] Equally instructive is the Federal Circuit’s statement regarding opinions authored by patent agents in Signtech USA Ltd. v. Vutek Inc.[78] Therein the court explained that an opinion letter authored by an unlicensed patent agent, e.g., not yet licensed to practice law was incompetent.
(iv) Author Qualification/Experience
It is important that the
counsel providing the opinion letter is experienced and technically familiar
with the art to ensure thoroughness, both in obtaining the proper information
and in performing all of the proper analyses.[79]
In Yamanouchi Pharmaceutical Co.,[80] the
Federal Circuit affirmed a district court's finding of willfulness. Therein,
the Federal Circuit refused to accord any weight to legal opinion of counsel
that concluded that the patent at issue was invalid based on obviousness
because the legal opinion contained an acknowledged error in chemistry
that was critical to the conclusion of the underlying basis finding
obviousness. The Federal Circuit stated that actions of the accused infringer
were, thus, "without adequate foundation and speculative at best."[81] As well, the
counsel should be familiar with and “understand all aspects” of the invention.[82]
Likewise, in SRI Int’l, Inc.[83] where the court found that for an opinion to be deemed
competent, it is necessary for the author to have a correct understanding of
the accused or potentially infringing device.
More, in Conmark Communication, Inc.[84]
the opinion letter was found to be incompetent in light of evidence that showed
that the accused infringer deliberately withheld important information that he
(defendant) believed would result in an unfavorable opinion. See Todd Deveau
and Miles Hall.[85]
In
general, counsel’s knowledge about a particular area of the technology is
generally viewed favorably by the Federal Circuit, assuming that the opinion,
as a whole, is otherwise competent. For
example, in Studiengesellschaft Kohle,
supra, the court, in allowing
defendant to rely on an in-house counsel’s opinion letter, specifically
acknowledged the in-house counsel’s knowledge of the particular area
considering that the attorney had “been monitoring the relevant field for three
years prior to issuance” of the opinion.[86]
As noted, infra, the affirmative duty of due care
imposed by federal case precedent, typically involves obtaining advice of
legal counsel. As discussed below, a critical factor in evaluating the effect
of an opinion letter on willful infringement is the reasonableness of the
recipients reliance on the advice contained in the opinion letter.[87] This is consistent with federal court
precedent that an opinion letter from a competent
attorney, irrespective of its competent analysis and timely procurement, does
not exculpate its recipient unless there is a showing of good faith reliance on
the part of the recipient. See Central
Soya, Inc.[88]
The
Federal Circuit’s holding in Thorn EMI
North America v Micron Tech, Inc[89] as to what
constitutes reasonable reliance on an opinion letter is likewise very
instructive. Therein, the court enumerated various factors that may be reasonably relied upon to ascertain what constitutes reasonable reliance on
a competent opinion. These factors, include:
[W]hen the infringer sought
counsel's advice (before or after commencing the infringing activities); the
infringer's knowledge of the attorney's independence, skill, and competence;
the infringer's knowledge of the nature and extent of analysis performed by
counsel in providing the opinion; and whether the opinion contains sufficient internal indicia of credibility,
including a validity analysis predicated on a review of the file histories, and
an infringement analysis that compares and contrasts the potentially infringing
method or apparatus with the patented inventions.
In fact,
there is no requirement that all of the factors enumerated above be met in
order to avoid a finding of willfulness. Importantly, no single factor is
dispositive as to the question of reasonable reliance. The Federal Circuit has
repeatedly recognized that the above factors, are just that: factors to be
taken into consideration when determining willfulness under the “totality of
the circumstances” presented in the case.
See Minnesota Mining & Mfg. Co. [90]
A
representative example of good faith reliance on an opinion letter is Graco, Inc.[91]. Therein the evidence showed that the accused infringer was in
constant contact with his patent counsel and consistently sought counsel’s
advice for a period of time prior to the ultimate design or manufacture of the
allegedly infringing device. That
reliance appears to have been sufficient to negate a finding of willfulness on
appeal.
On the
other hand, in Central Soya.,[92]
the accused infringer failed to act on the advice of his patent counsel to
exercise due care upon notice of the adverse patent. As noted by the court therein, “[I]ntentional disregard of its
counsel’s opinion negates any inference of good faith, placing [it] in the same
position as one who failed to secure the advice of counsel.”[93]
In general, the existence of a
reasonably relied on, competent legal opinion is an important factor in
determining whether an infringement is willful.[94] Reliance on an attorney’s oral opinion,
even though it was in error, is evidence of good faith.[95] On the other hand, an opinion may lose its exculpatory effect if reliance,
initially existing, is later abandoned.[96]
IV. Form of Opinion: Oral or Written
While written opinions are
perceived as being favored by the Federal Circuit, it must be emphasized that
oral opinions are not suspect per se
and thus should not be completely dismissed.
Indeed, such opinions should be considered under the “totality of
circumstances" analysis. See Radio Steel &
Mfg. Co,[97] wherein the Federal Circuit affirmed a
finding of no willful infringement on the part of the accused infringer who
relied on an oral opinion.
The
hypothesis advanced in favor of written opinions is that oftentimes testimony concerning an oral opinion, i.e., its overall
thoroughness may be affected both by faded memories
and difficulty to corroborate.[98] As well, reliance by an accused infringer on an oral opinion may give rise to a more
broadly construed waiver of the attorney-client privilege or work product
immunity.[99]
Preferably, oral
opinion should be followed by a written opinion, serving to bolster the
previous oral opinion.[100] Ideally,
the written opinion while explicitly referencing the oral opinion confirms and expands on the previous prior oral opinion, including dates,
issues discussed etc., to preserve reasonable
reliance from the earlier date.[101]
Likewise, the potential infringer should
make some written record confirming that it is, in fact, following the advice
of counsel as set forth in the opinion letter. For example, evidence
establishing periodic consultation with counsel subsequent to the obtainment of
the opinion is persuasive evidence of good faith reliance. See, Polaroid
Corp. v. Eastman Kodak Co.[102]
V. Adverse Inference for non production of Opinion Letter
A
majority of the Federal cases reviewed suggest that a failure to produce an
opinion letter may give rise to an adverse inference that the opinion is
unfavorable to the accused infringer.[103] Likewise,
failure to adhere to counsel’s opinion may be interpreted as an indication that
the opinion was obtained solely to act as a shield rather than as part of a
good faith effort to avoid infringement which may be equated to bad faith.[104]
While a majority of federal court
cases hold that obtainment of an opinion letter by a competent counsel
satisfies the duty of due care, failure to obtain such an opinion does not
necessarily require an adverse inference of willful
infringement.[105] Compare Rolls-Royce Ltd.[106]
wherein the Federal circuit upheld a finding of non-willfulness where no
opinion was sought. On the other hand, in Amsted Ind. Inc.[107] a finding of
willful infringement was affirmed where the record established that the
defendants attempted to conceal information from its patent attorney when
seeking an opinion letter. However, in
Windsurfing International Inc. v. Fred
Ostermann GmbH, [108]
defendants good faith reliance on an equivocal opinion was sufficient to
support a finding of no willful infringement.
Overall,
the majority view is that those cases, where willfulness has been found in
spite of an opinion letter, “generally involve situations where the opinion of
counsel was either ignored or found to be incompetent.” [109]
VI. Conclusion:
Overall, the emerging theme from established Federal Court
precedent suggests that a competent and reasonably relied upon opinion letter
can be of great value to defeat a charge of willful infringement. A critical factor in determining willful
infringement is the accused infringers acts subsequent to receipt of a notice
of the adverse patent. To defeat a charge of willful infringement, the accused
infringer must establish the timely obtainment of a competent
opinion letter. The competency of the
opinion letter depends not only on its overall thoroughness but also on the
competency of its author. In addition
to being competent, the evidence must also establish the infringer’s
good faith reliance on the opinion letter to justify a good faith belief that a
court of competent jurisdiction will likely find the adverse patent invalid,
not infringed or unenforceable. That the ultimate conclusion of law reached by
the author of the opinion are found to be incorrect, matters not, as long as
the opinion letter is objective and reliable.
[1] 35 USC §284 (2002).
[2] Hoechst Celanese Corp. v. BP Chem. Ltd., 78 F.3d 1575, 1583, (Fed. Cir 1996); American Med. Sys. v. Medical Eng’g Corp. 6 F.3d 1523, 1530, cert. denied. 114 S.Ct. 1647 (1994); Ryco, Inc. v. Ag-Bag Corp. 857 F.2d 1418, 1428 (Fed. Cir. 1988).
[3] 24 F.3d 178, 181 (Fed. Cir. 1994); American Medical Sys., 6 F.3d at 1531, (Fed. Cir. 1993) (determining whether infringer had a "reasonable good faith belief" in noninfringement).
[4] 982 F.2d 1527, 1843 (Fed. Cir. 1992) (quoting Rite-Hite Corp. v. Kelley Co., 819 F.2d 1120, 1125-26 (Fed. Cir. 1987).
[5] Graco Inc. v. Binks Manufacturing Co., 60 F.3d 785, 792 (Fed. Cir.
1995); (willfulness is a question of fact that involves elements of intent,
reasonableness, and belief); Transmatic, Inc. v. Gulton Indus., Inc., 53 F.3d
1270, 1279 (Fed.Cir.1995); Electro Medical Sys., S.A. v. Cooper Life Sciences,
Inc., 34 F.3d 1048, 1056 (Fed.Cir.1994);
Stickle v. Heublein, Inc., 716 F.2d 1550, 1565 (Fed.Cir.1983) (intent
and reasonable beliefs are the primary focus of a willful infringement
inquiry).
[6]
Pall Corp v. Micron Separations, Inc., 66 F.3d 1211, 1221 (Fed. Cir.
1995) (willfulness warrants a clear and convincing standard because it is a
punitive finding and can result in the multiplication of damages); Amsted Indus. Inc., 24 F.3d at 181
(Fed.Cir.1994). American Medical Sys., 6 F.3d 1523. Graco, Inc., 60 F.3d at 792
(Fed. Cir. 1995); Transmatic, Inc., 53 F.3d at 1279 (Fed. Cir. 1995); Electro
Medical Sys., S.A. 34 F.3d at 1056(Fed. Cir. 1994).
[7] Golight Inc. v. Wal-Mart Stores Inc., 355 F.3d 1327 (Fed. Cir. 2004); Vulcan Eng’g Co. 27 8 F.3d at 1378, (Fed. Cir. 2002); Crystal Semiconductor Corp. v. Tritech Microelectronics Int'l, Inc., 246 F.3d 1336, 1346 (Fed. Cir. 2001).
[8] 970 F.2d 816, 826-27, (Fed. Cir. 1992). See also Tracy-Gene G. Durkin and Albert L. Ferro, Opinions-of-Counsel as a Defense to Willful Infringement, 667 PLI./Pat 115 (2001).
[9] Gustafson, Inc. v Intersystems Industrial Products, Inc., 897 F.2d 508, 511(Fed. Cir.1990); Kaufman Co. v. Lantech, Inc, 807 F.2d 970, 979 (Fed.Cir.1986).
[10] 976 F.2d 1559, 1581-82, (Fed. Cir. 1992).
[11] Transclean Corp. v. Bridgewood Services, Inc, 290 F.3d 1364 (Fed. Cir. 2002).
[12] Transclean Corp. 290 F.3d 1364 (Fed. Cir. 2002); SRI Int’l, Inc. v. Advanced Technology Laboratories, Inc., 127 F.3d 1462 (Fed. Cir. 1997); King Instrument Corp. v. Otari Corp., 767 F.2d 853, 866 (Fed. Cir. 1985).
[13] 793 F.2d 1565, 1581
(Fed. Cir. 1986), cert. denied, 479
U.S. 1034 (1987).
[14] Transclean Corp., 290 F.3d 1364 (Fed. Cir. 2002).
[15] 35 U.S.C. §285 (2000).
[16] McNeil-PPC Inc. v. L. Perrigo Co., 67 USPQ2d 1649 (CA FC 2003); Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1551(Fed. Cir. 1989).
[17] Rite-Hite Corp. v. Kelley Co., 819 F.2d 1120, 1125-24, (Fed. Cir. 1987).
[18] Golight, 355 F.3d 1327 (Fed. Cir. 2004); Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 146, (Fed. Cir. 1998) (en banc); Avia Group Int’l, Inc. v. L.A. Gear Cal., Inc., 853 F.2d 1557, 1567 (Fed. Cir. 1988).
[19] Transclean, 290 F.3d 1364 (Fed. Cir. 2002); SRI Int’l., Inc., 127 F.3d 1462 (Fed. Cir. 1997).
[20] 35 USC §284.
[21] Odetics Inc. v. Storage Technology Corp., 185 F.3d 1259, 1276 (Fed. Cir 1999); SRI Int’l., Inc., 127 F.3d 1462 (Fed. Cir. 1997); Read Corp., 970 F.2d 816 (Fed. Cir. 1992).
[22] Read Corp., 970 F.2d 816 (Fed. Cir. 1992).
[23] 717 F.2d 1380, 1389-90, (Fed. Cir. 1983).
[24] Stryker Corp. v. Intermedics Orthopedics, 96 F.3d 1409, 1415 (Fed.
Cir. 1996).
[25] Critikon, Inc. v. Becton Dickinson Vascular Assess, 120 F.3d 1253 (Fed. Cir. 1997); Electro Med. Sys. Inc., 34 F.3d at 1056 (Fed. Cir. 1994); Underwater Devices., 717 F 2d 1380 (Fed. Cir.1983); accord Crystal Semiconductor, 246 F.3d at 1352, (Fed. Cir. 2001) ("defenses prepared for a trial are not equivalent to the competent legal opinion of non-infringement or invalidity which qualify as 'due care' before undertaking any potentially infringing activity").
[26] Jurgens v. McKasy,
927 F.2d 1552, 1562 (Fed. Cir. 1991); Gustafson, Inc. 897 F.2d 508, 510-511
(Fed. Cir. 1990).
[27] Read Corp., 970 F.2d at 826-27, (Feb. Cir. 1992).
[28] Crystal Semiconductor, 246 F.3d 1336 (Fed.
Cir. 2001).
[29] Mentor H/S, Inc. v. Medical Device Alliance,
Inc., 244 F.3d 1365, 1379 (Fed. Cir. 2001).
[30] Ralston Purina Co. v. Far-Mar Co. Inc., 772 F.2d 1570, 1577 (Fed.
Cir. 1985).
[31] Power Lift, Inc. v. Lang Tools, Inc., 774
F.2d 478, 482 (Fed. Cir. 1985) (Patent owner contacted accused infringer
immediately after issuance of the patent in suit and offered a license. Not only did the accused infringer not avail
himself of the offer, he also failed to stop production of its lift system that
infringed the claims of the issued patent.
Patent owner filed suit. The
accused infringer failed to seek a advice from an attorney including obtaining
an exculpatory opinion letter. At trial,
the jury concluded, and the Federal Circuit agreed, that the infringer's
conduct i.e., continued production after notice of the patent was sufficient to
support a finding of willful infringement.)
[32] 782 F.2d
159, 166 (Fed. Cir. 1986).
[33] 152 F.3d 1342,
1348 (Fed. Cir. 1998).
[34] Stryker Corp, 96
F.3d 1409 (Fed. Cir. 1996) (affirming finding of actual notice based upon
in-house patent attorney's activities).
[35] Manrille Sales
Corp. v. Paramount Sys. Inc., 917 F.2d 544, 553 (Fed. Cir. 1990).
[36] 717 F.2d 1380 (Fed. Cir.1983).
[37] Id.
[38] Kori Corp. v. Wilco Marsh Buggies and Draglines, Inc., 761 F.2d
649, 656 (Fed. Cir. 1985).
[39] Edward Poplawski,
Effective Preparation of Patent Related Exculpatory Opinions, 29 AIPLA Q.J.
(2001).
[40] 35 U.S.C.§122(a).
[41]
35 U.S.C.§ 122(b). (Patent applications may still be kept secret
provided that the applicant meet certain criteria, i.e., inform the Patent and
Trademark Office that the subject application will not be filed abroad.)
[42] 35 U.S.C. §
154(d).
[43] Id.
[44] 774 F.2d 459 (Fed. Cir. 1985) ("'[T]o willfully
infringe a patent, the patent must exist..."' quoting State Industries
Inc. v. A.O. Smith Corp., 751 F.2d 1226, 1236 (Fed. Cir. 1985) (emphasis in the
original)).
[45] 897 F.2d at 511.
[46] Id. See also Minnesota Mining
& Mfg. Co., 976 F.2d at 1581-1582 (Fed. Cir. 1992).
[47] 127 F.3d at 1465, 1469 (Fed. Cir.
1997).
[48] Sensonics, Inc. v. Aerosonic Corp., 81 F.3d 1566, 1571 (Fed. Cir.
1996).
[49] SRI Int'l.,
Inc., 127 F.3d at 1467 (Fed. Cir. 1997).
[50] 788 F.2d 1554 (Fed. Cir. 1986).
[51] Id. at 435.
[52] 80 F.3d 1566 (Fed. Cir. 1996).
[53] Id. at 1569.
[54] Id. at 1572-73.
[55] SRI Int'l., Inc., 127 F.3d at 1467 (Fed. Cir. 1997).
[56] Underwater
Devices, 717 F 2d at 1390, (Fed. Cir. 1983).
[57] Ortho Pharm. Corp., v. Smith., 959 F.2d 944 (Fed. Cir. 1992).
[58] Comark
Communications, Inc. v. Harris Corp., 156 F.3d 1182, 1191 (Fed. Cir. 1998).
[59] Johns Hopkins Univ., 152 F.3d at 1364 (Fed. Cir. 1998); Critikon, 120 F.3d at 1259-1260 (Fed. Cir. 1997); SRI Int'l., 127 F.3d at 1462 (Fed. Cir. 1997); In re Hayes Microcomputer Prod., Inc. Patent Litigation, 982 F.2d at 1544 (Fed. Cir. 1992).
[60] Edward Poplawski, 29 AIPLA Q.J. (2001).
[61] Westvaco Corp. v. Int’l Paper Co., 991 F.2d 735, 744, (Fed Cir 1993). See also Read Corp. 970 F.2d at 829 (Fed. Cir. 1992) ("An opinion of counsel, of course, need not unequivocally state that the client will not be held liable for infringement. An honest opinion is more likely to speak of probabilities than certainties.")
[62] Read Corp., 970 F.2d at 829 (Fed. Cir. 1992).
[63] 991 F.2d 935. For a thorough discussion of the factors considered in evaluating the competency of an opinion letter, see generally Edward Poplawski , supra, note 38 and Todd Deveau and Miles Hall, infra, note 83.
[64] Id. at 744.
[65] Read Corp., 970 F.2d at 830 (Fed. Cir. 1992); Westvaco 991 F.2d 735 (Fed. Cir. 1993); Ortho Pharm. 959 F.2d at 944 (Fed. Cir. 1992) (“ While an opinion of counsels letter is an important factor in determining the willfulness of infringement, its importance does not depend upon its legal correctness.)”; accord Golan v. Pingel Enterprises, Inc., 310 F.3d 1360, 1365 (Fed. Cir. 2002).
[66] Graco Inc., 60 F.3d 785 (Fed. Cir. 1995); Ortho Pharm. 959 F.2d at 944-45, (Fed. Cir. 1992); Ryco, 857 F.2d at 1428 (Fed. Cir. 1988) (“The test is whether, under all the circumstances, a reasonable person would prudently conduct himself with any confidence that a court might hold the patent invalid or not infringed.”)
[67] SRI Int’l., Inc.,
127 F.3d 1462 (Fed. Cir. 1997).
[68] S.C. Johnson & Son, Inc. v.
Carter-Wallace Inc., 781 F.2d 198 (Fed. Cir. 1986); Underwater Devices, 717
F.2d 1380 (Fed. Cir. 1983).
[69] Minnesota Mining and Mfg. Co., 976 F.2d at 1580 (Fed. Cir. 1992).
[70] SRI Int'l., Inc., 127 F.3d at 1467 (Fed. Cir. 1997).
[71] Studiengesellschaft Kohle, m.b.H. v. Dart Indus. Inc. 862 F.2d 1564, 1579 (Fed. Cir. 1988).
[72] Id.
[73] 631 F.2d 333, 337
(4th Cir) cert. denied 450 U.S. 971
(1981).
[74] Studiengesellschaft Kohle, 862 F.2d 1564 (Fed. Cir. 1988).
[75] Westvaco, 991 F.2d 735 (Fed. Cir. 1993).
[76] Acoustical Design, Inc. v.
Control Electronics Co., 932 F.2d 939 (Fed. Cir. 1991).
[77] Spindelfabrik Suessen-Schurr v. Schubert & Salzer, 829 F.2d
1075, 1084 (Fed. Cir. 1087).
[78] 1999 WL 33290625 (W.D. Tex. 1999).
[79] Critikon, 120 F.3d 1253 (Fed. Cir. 1997).
[80] Yamanouchi Pharmaceutical Co., v. Danbury
Pharmacal, Inc., 231 F.3d 1339 (Fed. Cir. 2000).
[81] Id. at 1348.
[82] Amsted Indus. Inc., 24 F.3d 178 (Fed. Cir. 1994).
[83] SRI Int'l., Inc., 127 F.3d at 1466
(Fed. Cir. 1997).
[84] 156 F.3d 1182, 1191(Fed. Cir. 1998).
[85] Non-Infringement and Freedom to Operate
Opinions, 715 PLI/Pat 115 (2002).
[86] Studiengesellschaft Kohle, 862 F.2d at 1576 (Fed. Cir. 1988).
[87] Amsted Indus. Inc., 24 F.3d at 181
(Fed. Cir. 1994) (the focus of evaluation should be on the nature of the
opinion and the effect it had on the infringer's action); American Medical
Sys., Inc., 6 F.3d at 1530 (Fed. Cir. 1994).
[88] Central Soya, 723 F.2d at1577
(Fed. Cir. 1983) ([the defendant] had not only to show an opinion from
competent counsel but also that it had exercised reasonable and good faith
adherence to the analysis and advice therein. .
[89] 837 F. Supp 616, 622 (D. Del. 1993).
[90] 976 F.2d 1559, 1581-82 (Fed. Cir. 1992); accord, Radio Steel, 788 F.2d 1554 (Fed. Cir. 1986).
[91] 60 F.3d at 792.
[92] 723 F.2d 1573 (Fed Cir. 1983).
[93] Id.
[94] Conmark Comm. 156 F.3d 1182 (Fed. Cir. 1998).
[95] Read Corp., 970 F.2d at 830 (Fed. Cir. 1992).
[96] Pall Corp., 66 F.3d 1211 (Fed. Cir. 1995).
[97] Radio Steel, 788
F.2d at 1559 (Fed. Cir. 1986).
[98] Minnesota Mining & Mfg. Co., 976 F.2d at
1580.
[99] Variable-Parameter Fixture
Dev. Corp. v. Morpheus Lights, Inc., 1994 WL 97572 (S.D.N.Y. 1994).
[100] Kalman
v. Berlyn Corp., 914 F.2d 1473 (Fed. Cir. 1990); Edward G. Poplawski, 29 AIPLA
Q.J. (2001).
[101] Id. at 1483.
[102] 1990 WL 324105 (
D. Mass) (repeatedly obtaining validity and infringement opinions during the
course of development weighs against willful infringement, even though advice
adjudged incorrect).
[103] Quantum Corp. v. Tandon Corp., 940 F.2d 642, 644 (Fed. Cir. 1991); Fromson v. Western Litho Plate & Supply Co., 853 F.2d 1568, 1572-1573 (Fed. Cir. 1988).
[104] In re Hayes Microcomputer Products Inc. Patent Litigation, 982 F.2d 1527 (Fed. Cir. 1992).
[105] Ryco, Inc. v. Ag-Bag Corp., 857 F.2d 1418,
1428 (Fed.Cir.1988); Spindelfabrik Suessen-Schurr. 829 F.2d 1075
(Fed.Cir.1987); Rite-Hite, 800 F.2d 1101(Fed. Cir 1986).
[106] 800 F.2d at 1109-1110 (Fed. Cir. 1986).
[107] Amsted Indus. Inc., 24 F.3d 178 (Fed. Cir. 1993); Goodwill Construction Co. v. Beers Construction Co., 991 F.2d 751, 758 (Fed. Cir. 1993).
[108] 688 F. Supp 812,
(S.D.N.Y 1987), aff’d in BIC Leisure Products, Inc v Windsurfing International,
Inc., 1 F.3d 1214 (Fed. Cir. 1993).
[109] Read Corp., 970 F.2d at 829 (Fed. Cir. 1992).