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In a landmark and welcome decision, the U.S. Court of Appeals for the Federal Circuit on Aug. 20 established a new, more difficult standard for proving willful patent infringement, while confirming the sanctity of the attorney-client privilege. The case, In re Seagate Technology LLC, is of particular import because a finding of willful infringement often results in increasing the damages awarded to the patentee. Seagate Technology LLC was sued for patent infringement. In defending a charge of willful infringement, Seagate produced opinions by its independent opinion counsel advising that it did not infringe. The district court entered orders compelling discovery of all communications with Seagate’s trial counsel that related to any of the issues addressed by Seagate’s opinion counsel (i.e., infringement, validity, enforceability). Seagate petitioned the appeals court for a writ of mandamus vacating the district court’s orders. The court considered the case en banc and addressed not only the scope of the attorney-client privilege and work product immunity waiver, but also the standard for proving willful infringement. Duty of due care is overruled In its 1983 decision Underwater Devices v. Morrison-Knudsen, the Federal Circuit established a “duty of due care” standard applicable when an accused infringer received notice of another’s patent rights. As the court recognized in Seagate, this standard set a lower threshold for proving willful infringement, one that is “more akin to negligence.” In overruling the standard, the court held that “proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness. Because we abandon the affirmative duty of due care, we also reemphasize that there is no affirmative obligation to obtain opinion of counsel.” The court’s decision correctly conforms this area of the patent law to U.S. Supreme Court precedent and places the burden of proving willful infringement back on the patentee. First, as the court stated, the Supreme Court defines willful conduct in the context of its “standard civil usage,” i.e., reckless behavior and/or reckless disregard of the law. Second, since the Underwater Devices decision, a de facto requirement that a defendant obtain an opinion of counsel once it had notice of a patent effectively turned the patentee’s burden of proving willful infringement into a presumption of willfulness that required rebuttal by defendants. The duty of due care standard had thus caused companies to be wary of learning what patents exist in their industries, for fear of later being charged with willfully infringing those patents. As the Federal Trade Commission recognized in a 2003 report, this fear stifled, rather than encouraged, innovation, in direct contravention of the purpose of the patent laws. The court’s decision should result in the focus in patent cases being on the underlying merits � infringement and validity � and not the willfulness/attorney-client privilege waiver sideshow into which too many cases devolve. Further, the court’s decision should result in companies more freely exploring technological advances in their relevant fields, thereby increasing innovation and product development. The court noted the irreconcilable results reached by district courts regarding the scope of the privilege waiver in a willfulness context. It concluded that “the significantly different functions of trial counsel and opinion counsel advise against extending waiver to trial counsel.” Thus, it held that, “as a general proposition, . . . asserting the advice of counsel defense and disclosing opinions of opinion counsel do not constitute waiver of the attorney-client privilege for communications with trial counsel,” absent evidence of “chicanery” by the defendant or its counsel. The court correctly balanced the patentee’s need for defense trial counsel’s communications with the defendant’s right to full and frank advice from its attorneys and concluded the latter outweighed the former. Prior to the court’s decision, the uncertainty surrounding the scope of the waiver left accused infringers with a Hobson’s choice between relying on advice of counsel to a charge of willful infringement and losing the right to communicate openly with trial counsel. The district court’s extension of waiver to trial counsel, if allowed to stand, would have laid bare Seagate’s litigation strategy to its adversary. In such cases, merely alleging willfulness would have ensured the patentee access to strategic communications between trial counsel and its client with respect to the ultimate issues � infringement, invalidity and unenforceability � in the case. This turned the question of willful infringement, rather than infringement itself, into the paramount issue � a consequence the law never intended. The court eliminated this dilemma by recognizing the different roles played by opinion counsel and trial counsel in a patent case, and reaffirming the importance of the attorney-client privilege and the work product immunity doctrine. Brian E. Ferguson and Paul Devinsky are partners in the Washington office of McDermott Will & Emery. Ferguson is the firmwide deputy head of the intellectual property, media and technology department, of which Devinsky is a member. As lead counsel for Seagate, Ferguson argued the appeal before the Federal Circuit en banc panel; Devinsky was appeal counsel.

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