August 27, 2007

By Greg Duff

An en banc panel of the U.S. Court of Appeals for the Federal Circuit recently revisited the law of willful patent infringement, overruling precedent that stood for about twenty-four years. The Court also addressed the scope of a defendant's waiver of its attorney-client privilege and work product protection resulting from the defendant's assertion of the advice-of-counsel defense to a willful infringement claim.

In In re Seagate Technology, LLC, the Court abolished the "affirmative duty of care" set forth in Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed. Cir. 1983), which required "a potential infringer [having] actual notice of another's patent rights" to exercise due care to avoid infringing those rights. Id. at 1389-90. As the Underwater Devices decision explained, the "affirmative duty includes, inter alia, the duty to seek and obtain competent legal advice from counsel before initiation of any possible infringing activity." Id. The duty was significant because any defendant found to have breached the duty was exposed to potential liability for up to three times the amount of damages it would otherwise have had to pay for infringing the patent (so-called "treble damages"), as well as the plaintiff's attorneys' fees.

After Seagate, however, a plaintiff can prove willful infringement – and therefore become eligible for an award of treble damages and attorneys' fees – only if the plaintiff shows that: (1) the defendant acted recklessly, that is, the defendant acted in the face of "an objectively high likelihood that its actions constituted infringement of a valid patent," and (2) the likelihood of infringement "was either known or so obvious that it should have been known" by the defendant.

In addition, the Seagate Court addressed the rules of discovery regarding the often-asserted advice-of-counsel defense. Specifically, the Court clarified the scope of privilege waiver based on assertion of the defense, setting forth the general rules that

"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"; and

"relying on opinion counsel's work product does not waive work product immunity with respect to trial counsel."

The Court did not specify whether these general rules would apply in the situation where opinion counsel also serves as trial counsel.

Slip Opinion: LINK

Greg Duff is an attorney with Ice Miller focusing his efforts on patent litigation and prosecution.

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Mark Reichel
Reichel IP LLC

I am a patent attorney with Reichel IP LLC, where I concentrate my practice on patent drafting and prosecution, trademarks, and general intellectual property matters. I currently focus on the preparation and prosecution of medical device and other life sciences patent applications, and being actively involved in a number of local not-for-profit organizations.

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