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Patent lawyers have long chafed under rules that require them to relinquish attorney-client privilege in certain patent cases. That may change soon. The U.S. Court of Appeals for the Federal Circuit has announced it is reviewing its past opinions on the issue and has asked for public comment. Lawyers on Oct. 3 flooded the court with about 20 amicus briefs pleading for repeal of the rules. At issue are two Federal Circuit rulings that created a process to assess whether someone knowingly infringed a valid patent. Willful infringement can result in a trebling of damages in a patent dispute. In a 1983 opinion, Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380, the court said a party must seek legal advice before engaging in activity that might infringe someone else’s patent. Three years later, the court went further in Kloster Speedsteel A.B. v. Crucible Inc., 793 F.2d 1565. It ruled that if a party accused of infringing either failed to obtain legal advice that it was acting in good faith or withheld the advice during discovery-by declining to waive attorney-client privilege-a judge could instruct the jury to infer that the party had engaged in willful infringement. This policy is known as the “adverse inference rule.” Apparently without any prodding, the Federal Circuit decided in September to review these opinions en banc. It raised the issue in a pending case- Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., No. 01-1357-in which a district court found that defendants had willfully infringed Knorr-Bremse’s air disk brake patent. Gaming the system Each ruling by the Federal Circuit made sense at the time “but they didn’t think about how people would game the system,” said Mark Lemley, a law professor at the University of California, Berkeley, who is one of several parties on one amicus brief. “I’m hopeful they’ll see the practical effect of what they’ve done.” In briefs to the court, lawyers argue that the adverse inference rule violates the right to confidential attorney advice. And they say it is based on the false assumption that refusal to release an attorney’s opinion letter indicates that the attorney’s advice was unfavorable to the client. Lawyers also contend that opinion letters should not be mandatory since they are costly, unnecessary and often meaningless. “Sophisticated parties aware that there is unusual vulnerability to a particular patent will likely be able to find a competent outside attorney that can write a plausible opinion letter, even if the party believes that, in all likelihood, it infringes,” Matthew Powers of New York’s Weil, Gotshal & Manges and his colleagues wrote in a brief. Powers filed the brief on behalf of the United States Council for International Business, Applied Materials Inc., Cisco Systems Inc., Oracle Corp., Sony Computer Entertainment America Inc. and others. Lemley said he had seen only one other patent case that created such a stir-the Festo case, which limited use of the so-called doctrine of equivalents in patent disputes. Those asking the court to revoke its adverse inference rule include the American Bar Association, Federal Circuit Bar Association, American Intellectual Property Law Association, seven law professors and several other associations and companies. While some of the amicus briefs were not immediately available for review, Knorr-Bremse counsel Jeffrey Sanok said he understood that all those filing briefs opposed the current rule, except for him. “The wisdom and policy implications of the court’s precedents in this field can fairly be debated,” Sanok, a partner at Washington’s Crowell & Moring, wrote in his brief. “But even if this court were to be convinced that its precedents were, on balance, unwise, that conviction would not justify overruling established precedent.” Other lawyers presented a barrage of arguments for revoking the court’s past opinions. The cost of obtaining an opinion letter was cited in several briefs. “Published estimates range from $20,000 to over $100,000 per patent,” Heller Ehrman White & McAuliffe partner L.J. Chris Martiniak wrote on behalf of Computer Associates. “Notices of infringement often encompass multiple patents, which means that formal opinion letters could easily reach into the hundreds of thousands or even into the $1 million range.”

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