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Silicon Valley tech companies routinely receive letters telling them they might be infringing on someone else’s patents. Quantum Corp. in San Jose is no exception. “When you’re a tech company of any size, you have a target on your back,” says Jim Hall, the data-storage company’s chief patent counsel. That part’s routine. Where things have gotten murky � for corporate attorneys as well as their outside firms � is in deciding how best to respond to such letters, Hall said. Make the wrong move and, because of recent court decisions, “potentially your entire litigation strategy is subject to discovery,” he said. Good thing, then, that the Federal Circuit U.S. Court of Appeals announced Friday it would be taking up just this issue. The court’s move has local IP attorneys buzzing, with some arguing that nothing less than their ability to provide fair advice to their clients is at stake. The conflict centers around opinion counsel, who are routinely consulted when a company is notified they could be infringing. When a patent dispute goes to trial, oftentimes the defendant submits an opinion counsel’s findings as a way to debunk allegations that the company willfully infringed, and to save the company from any treble damages. This amounts to a waiver of the attorney-client privilege � at least as to the letter � between the defendant and opinion counsel. However, in a patent case against Scotts Valley’s Seagate Technology, a federal judge in the Southern District of New York last year ordered Seagate to turn over essentially all attorney-client communications � not just discussions with opinion counsel, but also those with litigation counsel, who were from an entirely different firm, as is typical. In September, Seagate asked the appeals court to vacate the judge’s decision, and the court decided Friday it was time to solicit amicus briefs and take up the issue en banc. The court did not set any date for oral arguments. Local IP attorneys couldn’t overstate the importance of the issue at hand.
‘Obtaining opinion counsel is sort of looked at as buying an insurance policy. It’s expensive and hopefully will never have to be used.’

Edward Reines Weil, Gotshal & Manges

“I’m a trial lawyer, and any trial lawyer knows that it’s hard to work a case up properly with the other side’s lawyer listening in,” said Morrison & Foerster partner Alison Tucher, who has dealt with the issue in the course of her practice and filed an amicus brief (.pdf) in the Seagate proceeding. Attorneys said the lower court’s ruling waiving Seagate’s privilege was not a fluke but rather involved reasonable concerns from plaintiffs. For instance, a plaintiff may want some assurance that the opinion letter wasn’t cooked up to hide willful infringement, said Claude Stern, a partner with Quinn Emanuel Urquhart Oliver & Hedges. “The theory is this: What happens if the letter from the opinion counsel is just a contrivance?” Stern said. “Maybe the defendant didn’t care about the letter and just infringed anyway.” The court of appeal may rule that opinion counsel letters are no longer a useful defense against allegations of willful infringement. This, say some IP attorneys, could wipe out an entire cottage industry of opinion counsel providers. Stern says he has questioned the competence of some, but still believes they have value. In terms of creating discoverable material, some are more conscientious than others, he said. “A smart and well-schooled opinion counsel should not create documentation that is going to end up biting the defendant,” Stern said. “Unfortunately, there are quite a few opinion counsel who really don’t focus on the litigation consequences of their conduct and are less than careful about the documentation they create.” Edward Reines, a partner at Weil, Gotshal & Manges, also believes opinion counsel are useful. “Obtaining opinion counsel is sort of looked at as buying an insurance policy,” he said. “It’s expensive and hopefully will never have to be used.”

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