patent infringement claims, opinions of counsel and client

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


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)



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?



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


▪ 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


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


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


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?


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.”


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.”


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


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


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.”


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.”


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 )


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



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


Final opinion


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


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


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 )


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


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


The Role of Opinions of Counsel Post

Michael SimonsPartner

pSeagate and Broadcom

[email protected]

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


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.


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.


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


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.


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”


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


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


No post-filing opinions of counsel

Open Forum Discussion


patent infringement claims, opinions of counsel and client

Documents