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SAN JOSE — Patent defendants have learned to live without an attorney-client privilege. While most trial attorneys assume their advice to clients is not discoverable, patent litigation is different. Patent defendants expect to waive the privilege and see their patent attorneys take the witness stand at trial. The defendant who refuses to waive the attorney-client privilege may face the “adverse inference” — that is, an instruction to the jury that assertion of the attorney-client privilege is evidence that the defendant is hiding bad facts. This strange process is a recent evolution of the law of willful infringement. When an infringer has actual notice of a patentee’s rights, the infringer has an affirmative duty of due care to avoid infringement. Avia Group Int’l Inc. v. L.A. Gear Cal., Inc., 853 F.2d 1557, 1566 (Fed. Cir. 1988). Failure to exercise due care can be willful infringement, and the trial court, in its discretion, may levy up to treble damages against willful infringers. For about 150 years, willfulness and enhanced patent damages were post-trial issues for the judge after a verdict of infringement. The focus in willful infringement was on the conduct of the defendant, and juries, if used at all, were advisory. Judges generally awarded increased damages only in unusual cases, involving particularly egregious conduct. This procedure was simple, inexpensive and consistent with the relevant statute (35 U.S.C. � 284), which neither mentions “willful infringement” nor gives juries any role in enhancing damages. Instead, the statute states simply that regardless of who determines actual damages, “the court may increase the damages up to three times the amount found or assessed.” The Federal Circuit has refashioned this law, creating an elaborate two-part process involving both the judge and the jury and changing the focus from bad conduct to legal formalism, specifically whether the defendant obtained and relied upon a “competent” opinion from a patent attorney. The jury now decides whether infringement is willful by using an essentially unreviewable multifactor “totality of the circumstances” test. Under this vague test, one piece of evidence, or its absence, is always relevant — the competent legal opinion. As a predicate to the enhancement phase, which remains within the discretion of the court, the jury assesses the quality of the legal advice received by the defendant. Because jurors are not patent attorneys and have no experience in evaluating legal opinions, the judge tells the jury how to evaluate the competence of an opinion. According to one model jury instruction, the jury should decide whether the opinion “was based upon a reasonable examination of the facts and law relating to validity and/or infringement issues, consistent with the standards and practices generally followed by competent lawyers.” Of course jurors only get to this issue after they have already decided that the opinion had come to the wrong conclusions. It’s little wonder that juries find a majority of infringements to be willful. Oddly, the judge, who, unlike the jury, does know something about legal competence, has no role in deciding if the opinion is competent or if the infringement is willful. Only after a jury verdict of willful infringement does the judge have a part to play. If the infringement was willful, the judge in post-trial motions, using additional factors, exercises judicial discretion in determining whether, and by how much, damages should be enhanced. But in exercising that discretion, the judge is bound by the jury’s willfulness finding and may not reweigh the evidence on willfulness. Jurgens v. CBK, Ltd., 80 F.3d 1566 (Fed. Cir. 1996). Taking into account the weight of the evidence, however, is apparently not reweighing the evidence. The judge is not free to say the jury was wrong, but the judge can say that the finding of willfulness was a close call, and on that basis decline to enhance damages. Brooktree Corp. v. Advanced Micro Devices, Inc., 977 F.2d 1581 (Fed. Cir. 1992). Likewise, the judge can base the decision to enhance damages on factors not considered by the jury, such as the wealth of the defendant, and its conduct during the litigation. But the judge may not enhance damages unless the jury has found the infringement to be willful. The Federal Circuit has never adequately explained why juries should be the fact-finders on an issue that the statute gives to the judge. All it has said on the subject is a simplistic assertion that willfulness is a state of mind, and that juries decide fact issues such as intent. Richardson v. Suzuki Motor Co., 868 F.2d 1226, 1250 (Fed.Cir. 1989). See also Shiley Inc. v. Bentley Laboratories, Inc., 794 F.2d 1561, 1567-58 (Fed. Cir. 1986); National Presto Industries, Inc. v. The West Bend Company, 76 F.3d 1185 (Fed. Cir. 1996). But letting juries decide facts that are only relevant to an issue for the court is, at the least, unusual. It is even more unusual here because the judge remains the sole fact-finder on all the other issues relevant to damage enhancement. In fairness to the Federal Circuit, it has never actually determined if either the statute or the Seventh Amendment requires a jury determination of willfulness over the objection of a party. Two leading cases, Richardson and Shiley, are clearly dicta, and a third, National Presto, although holding that willfulness was not an “equitable” issue, never purported to address the statutory or Seventh Amendment issues. The statutory issue was squarely raised in Transmatic, Inc. v. Gulton Industries, 53 F.3d 1270, 1278 (Fed.Cir. 1995), but never decided because the case was resolved on other grounds. Nevertheless, most district judges and patent attorneys assume from the Richardson, Shiley and National Presto trio that a plaintiff has a right to a jury on the issue of willfulness regardless of what the statute may say. This procedural change, whether required or not, has unleashed a host of problems. The new procedures greatly increase litigation costs and complexity. The willfulness doctrine has created a cottage industry of patent opinion scriveners who produce made-for-trial legal opinions designed to convince juries of infringers’ good faith. It has also seriously impaired the attorney-client relationship in patent litigation, increased the cynicism that the lay public and some attorneys feel toward the legal profession and undermined the usefulness of patents as public information. Of course, giving the issue of willfulness to the jury is a boon to patent plaintiffs. It is no surprise that studies have shown that juries are far more likely than judges to find willful infringement. But even if there were no difference in how judges and juries perceive the evidence, willful infringement gives the plaintiff a legitimate reason to focus on the defendant’s “bad” state of mind, an appealing prospect given the usual tedium inherent in patent cases. Letting juries decide the competency of patent opinions also poses other problems for the defendant. In order to assert reliance on an opinion of counsel, the defendant must waive the attorney-client privilege. This is a subject matter waiver, and thus all communications between the client and any of its attorneys on the subjects addressed by the opinion become discoverable and potentially admissible at trial. One subtle shift in the law has made opinions and the waiver virtually mandatory. Pre-Federal Circuit cases indicated that a defendant, as evidence of good faith, could offer opinions of counsel. Now the plaintiff can argue the absence of an opinion or the assertion of the privilege is evidence of bad faith. Indeed, failure to obtain an opinion by itself can warrant a finding of willful infringement even if infringement is a very close call. See, for example, Smith Engineering Co., Inc. v. Eisenmann Corp., 2002 U.S. App. LEXIS 905 (Fed. Cir.), an unpublished opinion in which the appellate panel affirmed a finding of willfulness based on a failure to secure an opinion of counsel even though one of the panel concluded that no reasonable jury could have found infringement. Opinions are expensive. A well-written opinion by an experienced patent attorney will cost between $10,000 and $100,000, and over the course of a year a large company may be on notice of dozens of possible infringements. Nor can a company cut corners. The Federal Circuit requirements for a “competent” opinion can be rigorous, and failure to satisfy those requirements can be fatal. Moreover, it is appearance, and not substance, that is often dispositive. Oral opinions and opinions by in-house counsel are suspect, regardless of their fundamental soundness. As a practical matter the opinion author must tailor the opinion for the jury, not for the client. The entire opinion and waiver process should be viewed with concern. It seems cynical to draft opinions not for the purpose of advising the client, but for use as trial evidence. It also seems cynical to select opinion counsel based on the attorney’s skills as a witness rather than as a patent analyst. Focusing on the appearance of the opinion, and not its underlying soundness, would be, in other circumstances, poor professionalism. The real problem with patent opinions is more fundamental. In the end, patent attorneys (and federal judges) recognize that patent cases often turn on close questions of claim construction and difficult questions of fact. But an opinion that said so would be useless in court. What the current system does is foster support for the popular view that clients can buy any opinion they want from their lawyers. The current system also impairs the attorney-client relationship. Because, in order to offer an opinion at trial, the client must waive the attorney-client privilege on the subjects of infringement and validity, the defendant’s trial counsel must be guarded in discussing the case with the client. By doing so, the client can take the position that trial counsel has expressed no opinions on those subjects, thereby protecting communications with trial counsel from disclosure. Despite these problems, no one has strong interest in reverting to the pre-Federal Circuit procedures. To the contrary, plaintiffs like the current system. So do patent attorneys, because opinion work is a sizeable and highly profitable source of income for many patent firms. Nor do trial attorneys strongly object if federal judges wish to make patent litigation more complex and more expensive. But there are unquestionable benefits in returning to the old procedures. Taking the issue of willfulness from juries and dealing with the issue in post-trial motions would inevitably refocus the issue of willfulness away from opinions of counsel and toward more fundamental issues, such as the strength of the defendant’s case. Moreover, taking the willfulness issue from juries would postpone or eliminate the scope of the waiver and negative inference issues that currently plague patent litigation. It would also reduce the current staggering fees and costs of patent litigation. None of this is likely to happen soon. Despite growing criticism of the current procedures, the Federal Circuit seems oblivious to the practical implications of its decisions and, in any event, is rarely interested in correcting past mistakes. More importantly, district court judges, rightly or wrongly, regard the issue as already settled by the Federal Circuit. Someday the Federal Circuit may squarely address the issue. In the meantime, at least the current system makes patent litigation far more interesting — and far more profitable. Justin Beck is of counsel at Mount & Stoelker in San Jose and teaches copyright law and patent litigation courses at Golden Gate University School of Law.

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