Presenting a live 90-minute webinar with interactive Q&A Patent Infringement: Structuring Opinions of Counsel Leveraging Opinion Letters to Reduce the Risks of Liability and Enhanced Damages TUESDAY, DECEMBER 13, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Thomas J. Scott, Jr., Senior Vice President and General Counsel, Personalized Media Communications , Reston, Va. April Weisbruch, Attorney, Goodwin Procter , Washington, D.C. Eleanor M. Yost, Partner, Goodwin Procter , Washington, D.C. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Patent Infringement: Structuring Opinions of Counsel Leveraging Opinion Letters To Reduce The Risks Of Liability And Enhanced Damages Thomas J. Scott, Jr., Senior VP & General Counsel, Personalized Media Communications, LLC Eleanor Yost, Partner, Goodwin Procter, LLP April Weisbruch, Associate, Goodwin Procter, LLP December 13, 2016
Presentation Overview I. Willful Infringement, Inducement Of Infringement, And Use Of Opinions Of Counsel II. Waiver III. Court Treatment IV. Best Practices For Employing Opinions Of Counsel 5
Section I: Overview I. Willful Infringement, Inducement Of Infringement, And Use Of Opinions Of Counsel “Totality Of The Circumstances” Standard For Determining Willfulness Opinions Of Counsel In Defending Against Willful/Induced Infringement Claims Reliance On Opinions Of Counsel Updating Opinions Recent Developments And Their Impact On How Opinions Should Be Used 6
Willful Infringement And Enhanced Damages “Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court. When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed. Increased damages under this paragraph shall not apply to provisional rights under section 154(d). The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances. ” 35 U.S.C. §284 (emphasis added) 7
Willful Infringement And Enhanced Damages • The History Of Enhanced Damages - The Patent Act of 1793 mandated treble damages in any successful patent suit. (Patent Act of 1793, §5, 1 Stat. 322.) - The Patent Act of 1836 allowed for the award of treble damages “according to the circumstances of the case.” (Patent Act of 1836, §14, 5 Stat. 123.) ▪ A “defendant who act[s] in ignorance or good faith” should not be subjected to the same treatment as a “wanton and malicious pirate.” ( Seymour v. McCormick , 57 U.S. 480 (1854).) ▪ This approach was preserved in the Patent Act of 1870. (Patent Act of 1870, §59, 16 Stat. 207.) - The Patent Act of 1952 provided for codified enhanced damages under §284. ▪ The Supreme Court described §284 as providing for “punitive or ‘increased’ damages” could be recovered “in a case of willful or bad-faith infringement.” ( Aro Mfg. Co. v. Convertible Top Repl. Co. , 377 U.S. 476, 508 (1964).) 8
Willful Infringement And Enhanced Damages • Underwater Devices Inc. v. Morrison-Knudsen Co. , 717 F.2d 1380 (Fed. Cir. 1983) originally imposed an “affirmative duty to exercise due care” on a potential infringement that included “the duty to seek and obtain competent legal advice.” ( Underwater Devices at 1389-90.) - So an “[a]dverse inference” was possible from failure to seek advice of counsel. Kloster Speedsteel AB v. Crucible Inc. , 793 F.2d 1565 (Fed. Cir. 1986).) • Knorr - Bremse Systeme Fuer Nutzfahrzeuge GmbH v . Dana Corp ., 344 F.3d 1336, 1336 (Fed. Cir. 2003) eliminated the “adverse inference” for failure to obtain and use an opinion of counsel. 9
Willful Infringement And Enhanced Damages • Before Seagate , willfulness was almost always alleged in patent cases (92.3% of cases) • Willfulness was found in most cases finding infringement (55.7% of cases) • Damages were usually enhanced where willfulness is found - Almost always enhanced in cases where the judge had found willfulness (91.9% of cases) - Enhanced where the jury had found willfulness most of the time (60.6% of cases) Source: K. Moore, “Empirical Statistics on Willful Patent Infringement,” 14 Fed. Cir. B.J. 227 (2004 -2005) 10
Willful Infringement And Enhanced Damages • In In re Seagate Technology , 497 F. 3d 1360 (2007) ( en banc ), the Supreme Court set forth a two part test for determining when a district court may increase damages pursuant to §284: - (1) A patent owner must first “show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent .” ( Seagate at 1371.) - (2) Second, the patentee must demonstrate, again by clear and convincing evidence, that the risk of infringement “was either known or so obvious that it should have been known to the accused infringer .” ( Id. ) • Subject to trifurcated appellate review: Objective recklessness ( de novo ); Subjective knowledge (substantial evidence); and whether to award enhanced damages (abuse of discretion). 11
Willful Infringement And Enhanced Damages • The Supreme Court overruled the Seagate two-part test in Halo Elec., Inc. v. Zimmer, Inc. et al. , 136 S. Ct. 1923 (2016). - The “principal problem” with Seagate’s test was that it required a showing of objective recklessness in every case, which the Court feared excluded the “most culpable offenders[.]” Halo at 1923. ▪ Including “wanton and malicious pirate[s].” Id. • Seagate test found to be inconsistent with the statute due to the first prong’s “clear and convincing evidence” standard - Analogy to Octane Fitness, 134 S. Ct. 1749 (2014). • Ultimately, the Supreme Court “eschew[ed] any rigid formula for awarding enhanced damages under § 284” and recommended that “courts…continue to take into account the particular circumstances of each case in deciding whether to award damages, and in what amount. ” Halo at 1933-934. - The tripartite standard of review was also repudiated (now abuse of discretion) 12
Willful Infringement And Opinions Of Counsel “The failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of an infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent. ” 35 U.S.C. § 298 • Result of the perception by Congress that the Federal Circuit had been inconsistent on this issue • No adverse inference from failure to obtain opinion of counsel • Repudiates Broadcom • “[R]eflects a policy choice that the probative value of this type of evidence is outweighed by the harm the harm that coercing a waiver of attorney-client privilege inflicts on the attorney- client relationship.” (H.R. Rep. No. 112 -98, pt. 1, at 53 (2011)) 13
Reliance On Opinions Of Counsel • Although the failure to obtain an opinion cannot be used to prove willful infringement, it may be helpful for companies or individuals to secure such an opinion in certain cases to demonstrate their intent to comply with the law • If opinion of counsel will be relied upon, it is important to confirm that the company or individual has actually read and understood any such opinion - Make certain that opinions are drafted and received before the start of any litigation • Ensure that opinions are updated as appropriate to account for newly issued patents, relevant claim constructions from other litigations, etc. • Ensure that the opinion itself is competent, thorough, and clear 14
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