Obtaining and Using Opinions of Counsel

Third, in determining whether to rely on an opinion at trial, consider the scope of waiver, when the opinion must be disclosed, and any negative impact that may result from not producing and relying upon a competent opinion.

Annora A. Bell ([email protected]), Debra A. Lange ([email protected]), and C. Edward Polk, Jr. ([email protected]) are intellectual property attorneys with Foley & Lardner LLP in its Washington, DC, office. Bell's practice focuses on patent prosecution and litigation. Lange's practice focuses on patent litigation. Polk's practice focuses on patent litigation, client counseling, and representation of persons before the Office of Enrollment & Discipline in ethical matters. Polk also has substantial experience representing clients in actions involving the USPTO, including re-examination proceedings, and appeals to the district courts and the U.S. Court of Appeals for the Federal Circuit. The views expressed are solely those of the authors and should not be attributed to Foley & Lardner LLP or any of its clients.

In the high-stakes world of U.S. patent litigation, an opinion of counsel can be a useful weapon for defending against claims of patent infringement. This article presents practical tips regarding obtaining and using opinions of counsel under U.S. patent law.

Historical Perspective of U.S. Case Law

For more than 20 years, U.S. case law held that in order to avoid a finding of willful infringement a potential patent infringer had to “exercise due care to determine whether or not he is infringing” a patent of which he had actual notice, which normally included a “duty to seek and obtain competent legal advice from counsel before the initiation of any possible infringing activity.” Underwater Devices, Inc. v. Morrison-Knudsen Co. , 717 F.2d 1380, 1389-90 (Fed. Cir. 1983). In practical terms, this law required a company to seek legal advice before introducing a product into the marketplace that could potentially infringe another's U.S. patent rights.

U.S. law further held that a defendant's failure to produce an opinion of counsel in litigation warranted an “adverse inference” that any opinion would have been unfavorable to the alleged infringer. Fromson v. W. Litho Plate & Supply Co. , 853 F.2d 1568, 1572-73 (Fed. Cir. 1988).

Current Relevancy of an Opinion of Counsel

Several recent decisions in the United States have redefined the consequences of obtaining or not obtaining an opinion of counsel. As a result of these cases, a jury may no longer make an adverse inference regarding willful infringement if an opinion is not produced during trial, Knorr-Bremse Sys. Fuer Nutzfahrzeuge v. Dana , 383 F.3d 1337, 1343 (Fed. Cir. 2004); an alleged infringer who relies on an opinion at trial waives attorney-client privilege for the opinion and communications relating to the opinion, In re EchoStar Commc'ns Corp., 448 F.3d 1294, 1304 (Fed. Cir. 2006); and the resulting waiver typically does not extend to trial counsel, In re Seagate Tech. LLC, 497 F.3d 1360, 1373 (Fed. Cir. 2007). Even without the adverse inference, opinions of counsel are still relevant to determining willful infringement, enhanced damages, an award of attorneys' fees to the winning party, and induced infringement.

When to Obtain the Opinion

No definitive answer exists regarding when to obtain an opinion of counsel. Case law, however, provides some guidance. A company does not need to get an opinion before marketing a device. However, it may be advisable to do so if there is a competitor that routinely seeks patents for competitive devices. Indeed, a freedom-to-operate opinion can be useful when initially deciding whether to invest in a particular technology.

Having knowledge of an adverse patent before litigation, however, could trigger the need to obtain a non-infringement or invalidity opinion because willfulness ordinarily depends on an infringer's pre-litigation conduct. Opinions obtained post-complaint can also be relevant to show intent, or lack thereof, for induced infringement or willful infringement.

Who Should Write the Opinion

A disinterested U.S. patent attorney ' that is, an attorney who does not have a stake in the case ' should author the opinion. While U.S. courts have held that it is appropriate to rely on an opinion of in-house counsel in some instances, the courts have not clearly defined the scope of privilege waiver when in-house counsel authors the opinion. Thus, any reliance on in-house counsel opinion should be carefully contemplated.

Some precaution should also be taken when using the same attorney as both opinion and trial counsel because the scope of waiver in this situation also remains unsettled. However, recent case law suggests that opinion and trial counsel may be from the same law firm if they operate independently and do not communicate regarding the subject matter of the opinion.

Unlike U.S. attorneys, U.S. patent agents can opine only on invalidity and not infringement. Another drawback to using a patent agent is that U.S. case law is split on whether and what type of communications with a patent agent are privileged.

Substance and Form of the Opinion

All opinions must be competent and should provide a sufficient level of detail. Written opinions usually carry more weight in court than oral opinions. And, generally speaking, an opinion only needs to address either invalidity or non-infringement; it need not address both.

When to Update the Opinion

An opinion may need to be updated after any material product changes or changes in the law. Indeed, periodic consultation with opinion counsel on the product shows good faith.

Who Should Review the Opinion

To use an opinion at trial, it will need to be shown that the company reviewed and relied on it when making relevant business decisions. Therefore, an opinion should be reviewed, for example, by an executive with decision-making authority or in-house legal counsel with product or marketing responsibilities.

When to Rely on an Opinion During Litigation

Strategic and legal considerations help determine whether to rely on an opinion at trial. Strategic considerations include the opinion's strength, competency, and consistency with current litigation strategy.

Important legal considerations include the scope of waiver, related third-party communications, deadlines for disclosing the opinion, and consequences of not producing the opinion.

Waiver

Attorney-client privilege is waived for opinion counsel for any communications relating to the same subject matter as the opinion. Jurisdictions are split as to what “subject matter” means. Some courts construe the waiver to include all potential defenses (i.e., non-infringement, invalidity, and unenforceability), while others limit waiver to the specific defense discussed in the opinion. As for work product privilege, only actual communications and documents discussing actual communications between opinion counsel and the client are normally waived. When trial counsel is not also opinion counsel, attorney-client privilege and work-product are not waived absent exceptional circumstances, such as chicanery. U.S. courts provide little guidance on what constitutes chicanery. When trial counsel is the same attorney or from the same firm as opinion counsel, some courts pre-Seagate construed a broad scope of attorney-client and work product waiver. However, post-Seagate, one court found a narrow scope of waiver. NewRiver, Inc. v. Newkirk Prods., Inc., No. 1:08-MISC-61, 2008 WL 5115244, at *4 (N.D.N.Y. Dec. 4, 2008).

Third Parties

In general, disclosure of attorney-client communications to third parties waives privilege. The joint defense and common interest doctrines provide an exception to this rule, although it is not always clear when this exception applies. Rather, applicability of this exception depends on whether all interested parties share a common legal interest or have a community of interest with respect to the subject matter of the communication.

Deadlines

Different jurisdictions provide different deadlines for producing the opinion during trial. For example, the Northern District of California requires disclosure 50 days after the court's claim construction ruling. In the Eastern District of Texas, the deadline can vary from as early as 15 days or as late as 68 days after the court's claim construction ruling.

Negative Inferences

Although there is no longer an adverse inference if an opinion is not produced at trial, the trier of fact still may consider the failure to obtain or produce an opinion as evidence in determining willfulness, induced infringement, enhanced damages, and awarding attorneys' fees.

Conclusion

Although U.S. case law no longer requires a company to obtain an opinion of counsel before initiating potentially infringing activity, the failure to do so can be held against a company when involved in U.S. patent litigation. Several considerations should be kept in mind when obtaining and using opinions.

First, consider who should write the opinion, when to have it written, and what level of detail to include.

Second, consider updating an opinion after any material changes and remember to record who within the company actually reviewed the opinion. Years after the fact, it may be difficult to recall who reviewed a specific opinion, especially for companies that obtain large numbers of opinions in the ordinary course of business.

Third, in determining whether to rely on an opinion at trial, consider the scope of waiver, when the opinion must be disclosed, and any negative impact that may result from not producing and relying upon a competent opinion.

Annora A. Bell ([email protected]), Debra A. Lange ([email protected]), and C. Edward Polk, Jr. ([email protected]) are intellectual property attorneys with Foley & Lardner LLP in its Washington, DC, office. Bell's practice focuses on patent prosecution and litigation. Lange's practice focuses on patent litigation. Polk's practice focuses on patent litigation, client counseling, and representation of persons before the Office of Enrollment & Discipline in ethical matters. Polk also has substantial experience representing clients in actions involving the USPTO, including re-examination proceedings, and appeals to the district courts and the U.S. Court of Appeals for the Federal Circuit. The views expressed are solely those of the authors and should not be attributed to Foley & Lardner LLP or any of its clients.