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Allegations of willful patent infringement are a thorn in the side of accused infringers, as well as their counsel. In addition to being on the hook for treble damages ( see Jurgens v. CBK Ltd., 80 F.3d 1566, 1570 (Fed. Cir. 1996)), charges of willfulness routinely open up a can of worms in the context of waiving the attorney-client and/or work-product privileges. Consequently, if a patent holder files suit, subject to the patentee’s Rule 11 obligations, there is nothing to lose and much to gain from alleging that the defendant’s infringing activities were committed willfully. The U.S. Circuit Court of Appeals for the Federal Circuit has held that potential patent infringers with notice of another’s patent rights have an affirmative duty to exercise due care in assessing whether their actions infringe. Minnesota Mining & Manufacturing Co. v. Johnson & Johnson Orthopaedics Inc., 976 F.2d 1559, 1580 (Fed. Cir. 1992). This normally includes the duty to obtain competent legal advice regarding potential infringement. The accused infringer is then faced with three problematic alternatives: don’t seek the advice of counsel in determining whether a device or process might infringe, in which case the duty to exercise due care is not satisfied; seek the advice of counsel but fail to disclose it as a defense, in which case most courts draw a negative inference against the accused infringer; or rely on the advice of counsel and risk waiving the attorney-client and/or work-product privileges. REBUTTING CHARGES OF WILLFUL PATENT INFRINGEMENT Although the burden of proving willful infringement is on the patentee, procedural advantages afforded the patentee often make it appear as though the burden were on the defendant to rebut such charges. E.I. du Pont de Nemours & Co. v. Phillips Petroleum Co., 849 F.2d 1430, 1439 (Fed. Cir. 1988). The Federal Circuit held more than a decade ago that a potential infringer is not required to obtain the advice of counsel before engaging in activity that could potentially infringe one’s patent rights. Studiengesell-schaft Kohle mbH v. Dart Industries Inc., 862 F.2d 1564, 1579 (Fed. Cir. 1988). More recently, however, the court has stated that the duty to exercise due care “normally includes the duty to seek and obtain competent legal advice from counsel regarding the potential infringement.” See Jurgens, 80 F.3d at 1569. Consequently, seeking an infringement and validity analysis (accompanied by the necessary prior art review) is advisable whenever a company knows or has good reason to believe that its actions may implicate another’s patent rights. This review should be undertaken expeditiously because it may later prove difficult to convince a jury of an alleged infringer’s good-faith belief that it has not infringed a valid patent if it allowed months to tick by without consulting an attorney. See Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380, 1389 (Fed. Cir. 1983). Any opinion must be competent and informed for an alleged infringer to rely on it justifiably. The mere fact that an alleged infringer “runs something by” an attorney does not immunize it from charges of willful infringement. See Jurgens, 80 F.3d at 1572-73. Instead, the Federal Circuit uses an “objective” standard to assess the competency of an opinion. Read Corp. v. Portec Inc., 970 F.2d 816, 829 (Fed. Cir. 1992). Even if an attorney renders an incorrect opinion, as long as certain indicia of reliability are present and the alleged infringer relies on it in good faith, there should be no finding of willfulness. The Federal Circuit has, over time, enumerated several factors that impact the objective competence of an attorney’s opinion. In an early case, the court noted, “Had [the opinion] contained within its four corners a patent validity analysis, properly and explicitly predicated on a review of the file histories of the patents at issue, and an infringement analysis that … compared and contrasted the potentially infringing method or apparatus with the patented inventions, the opinion may have contained sufficient internal indicia of creditability [sic] to remove any doubt that [the infringer] in fact received a competent opinion.” Underwater Devices, 717 F.2d at 1390. The Federal Circuit has since referred to additional variables that affect the competency of an attorney opinion letter, and, consequently, whether an alleged infringer can be said to have relied upon the advice of counsel in good faith. See Stryker Corp. v. Davol Inc., 2000 WL 1809998 (Fed. Cir. Dec. 12, 2000) (noting importance of whether reliance on advice of counsel was “reasonable”). These include whether the opinion is: “conclusory” or “authoritative”; rendered orally or in writing; rendered by in-house counsel or outside counsel; fully informed, based on the alleged infringer’s disclosure of all relevant facts to the advising attorney; and based on an analysis of the doctrine of equivalents in addition to literal infringement. See Jurgens, 80 F. 3d at 1572; Minnesota Mining, 975 F.2d at 1580; Westvaco, 991 F. 2d at 743-44; and Jurgens, 80 F. 3d at 1571. Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 56 U.S.P.Q.2d 1865 (Fed. Cir. 2000) changes the doctrine-of-equivalents analysis but is not likely to change the requirement to consider that doctrine in noninfringement opinions. SHOULD AN ALLEGED INFRINGER RELY ON AN OPINION LETTER? Assuming an alleged infringer timely receives a competent opinion, the question then becomes whether the alleged infringer should rely on the opinion. Theoretically, an alleged infringer may choose not to disclose the opinion, to preserve the attorney-client privilege. Studiengesellschaft, 862 F.2d at 1579. In several cases, however, the Federal Circuit and other courts have drawn an adverse inference in such circumstances based on the erroneous assumption that if an exculpatory opinion existed, it would be produced. See Electro Medical Systems, 34 F.3d at 1056; Kloster Speedsteel A.B. v. Crucible Inc., 793 F.2d 1565, 1579 (Fed. Cir. 1986). This guilty-until- proven-innocent attitude frustrates alleged infringers and has become a recurrent theme in patent cases. Because of the adverse inference many courts draw, alleged infringers often feel that they have no choice but to rely on a counsel opinion letter, despite the waiver-of-privilege problems this creates. The only solace alleged infringers may take is in the significant disagreement over the scope of the waiver. THE SCOPE OF THE WAIVER OF ATTORNEY-CLIENT PRIVILEGE Most courts have held that if an alleged infringer relies on the opinion of counsel, the attorney-client privilege is waived as to all attorney-client communications concerning patent validity, infringement and enforceability. Thermos Co. v. Starbucks Corp., 1998 WL 781120 (N.D. Ill. Nov. 3, 1998). Since the “competence” and “objective reasonableness” of an attorney’s opinion are also relevant, most courts allow discovery into at least some of the information that underlies the opinion. Belmont Textile Machinery Co. v. Superba S.A., 48 F. Supp. 2d 521, 523 (W.D.N.C. 1999). This generally includes all information the alleged infringer supplies to the opining attorney, which allows the finder of fact to tell whether the opinion was fully informed. Mushroom Association v. Monterey Mushrooms Inc., 24 U.S.P.Q. 2d 1767, 1770 (N.D. Cal. 1992). Furthermore, since it is the alleged infringer’s good faith that is under scrutiny, most courts allow discovery into all documents that party may have referencing the opinion. See, e.g., Saint-Gobain/Norton Industries Ceramics Corp. v. General Electric Co., 884 F. Supp. 31, 34 (D. Mass 1995). The courts begin to diverge when it comes to attorney work product. Although attorney notes may aid in the determination of whether an opinion is competent and objectively reasonable, there is room to argue that they do not affect the alleged infringer’s state of mind — and should therefore not be produced — if not disclosed to the alleged infringer. While some courts allow discovery into the “vast majority” of attorney work product respecting patent validity, infringement, and/or enforceability ( see, e.g, Avery Denison Corp. v. UCB Films P.L.C., 1998 WL 703647 (N.D. Ill. Sept. 30, 1998), others draw the line at information that is actually exchanged between attorney and client. See Thorn EMI North America Inc. v. Micron Technology Inc., 837 F. Supp. 616 (D. Del. 1993); accord Steelcase Inc. v. Haworth Inc., 954 F. Supp. 1195 (W.D. Mich. 1997). Additionally, since patent infringement is a “continuing” tort — assuming that the alleged infringer does not cease the accused activity — an alleged infringer’s good-faith belief that it is not infringing a valid patent may change during the life of a patent case. Thus, in theory, what starts out as innocent infringement may, over time, become willful. Therefore, some counsel argue that the waiver should extend beyond the time the suit is filed. Few courts have addressed this issue. In two early cases, courts expressed doubts as to whether a waiver should extend to conduct after the start of litigation, perhaps realizing that a contrary holding would make effective communication between alleged infringers and their counsel next to impossible. See, e.g., Nobelpharma A.B. v. Implant Innovations Inc., 23 U.S.P.Q. 2d 1476, 1478 (N.D. Ill 1992). Another court, however, has implied that at least some post-filing documents and/or communications may be discoverable, provided that they are “solely consistent” with the opinion letter. Micron Separations, 159 F.R.D. at 365. This begs the question of what is to be done when counsel conveys information to the alleged infringer that is not solely consistent with the prior opinion. The Federal Circuit has long recognized the thorny issues created by the advice-of-counsel defense, and it has proposed a way to make the difficult choices that confront an alleged infringer a little easier: “Trial courts … should give serious consideration to a separate trial of willfulness whenever the particular attorney-client communications, once inspected by the court in camera, reveal that the defendant is … confronted with this dilemma.” Quantum Corp. v. Tandon Corp., 940 F.2d 642, 643-44 (Fed. Cir. 1991). This suggestion has not been universally adopted, however. See, e.g., Real v. Bunn-O-Matic Corp., 195 F.R.D. 618, 626 (N.D. Ill. 2000). Furthermore, even if a court is inclined to grant a separate trial on the issue of willfulness, it may not be willing to order bifurcated discovery as well. Thus, how evidence is presented at trial concerns only half the problem because the issue of what needs to be produced and who needs to be deposed arises much earlier in the discovery process. ALLEGED INFRINGERS MUST BEGIN PLANNING EARLY Planning for these events must begin before the receipt of discovery requests. Since opinions in this area cover a wide spectrum, it is important for defense counsel to assess the precedent in the forum where suit has been or is likely to be filed. Unfavorable precedent in the patentee’s home forum may increase the desirability of a declaratory judgment action in the accused’s home forum. Although it is imperative that any opinion meet the objective standards of competence prescribed by the Federal Circuit, it is equally important to evaluate the implications of a possible waiver of privilege when preparing an opinion. Confronted with aggressive plaintiffs’ counsel who pursue sweeping discovery requests, accused infringers have several options. First, in those cases in which an accused infringer has a truly strong case for patent invalidity, noninfringement or unenforceability, it may choose not to rely on a counsel opinion letter. Second, accused infringers may seek to delay the decision on whether to rely on the advice of counsel. While some courts force an alleged infringer to make its choice as soon as a motion to compel is filed, others allow the decision to be made in the later phases of discovery. See, e.g, Belmont, 48 F. Supp.2d at 523. Third, the alleged infringer may seek bifurcated discovery, separate trials or a phased trial on the issue of willfulness. See Novapharm Ltd. v. Torpharm Inc., 48 U.S.P.Q.2d 1471 (W.D.N.C. 1998). Despite these options, however, patentees continue to receive a clear procedural advantage when it comes to litigating willfulness. John P. Fry is a partner at Atlanta’s Alston & Bird. Christopher B. Roblyer is an associate at the firm. This paper is part of a presentation that was originally given in October 2000 at the sixth annual Intellectual Property Law Institute, sponsored by the Georgia Institute of Continuing Legal Education.

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