Opinions Of Counsel Remain Powerful Evidence Against Claims Of Willful Infringement

On September 13, 2004, the United States Court of Appeals for the Federal Circuit issued its long-awaited en banc decision in the case of Knorr-Bremse GmbH v. Dana Corporation, which dealt with the issue of willful patent infringement. Willful infringement is the deliberate disregard for the property rights of the patent owner, or the failure to avoid infringement after being notified of the patent. A finding of willful infringement can result in the trebling of compensatory damages otherwise awarded for patent infringement. A willful infringer may also be required to pay the patent owner’s attorney’s fees.

In the Knorr-Bremse decision, the Federal Circuit overruled earlier contrary holdings and held that “[a]n adverse inference that a legal opinion was or would have been unfavorable shall not be drawn from invocation of the attorney-client and/or work product privileges or from failure to consult counsel.”

Under prior law, if an accused infringer decided not to produce an opinion of counsel during litigation, the trier of fact (judge or jury) could draw an adverse inference that the opinion was or would have been unfavorable. In jury cases, the jury was often instructed to draw the adverse inference, which greatly increased the probability of a finding of willful infringement.

Does removal of the adverse inference mean that an accused infringer should not obtain an opinion of counsel? Not at all. The Federal Circuit specifically reiterated that there are no hard and fast per se rules for determining the issue of willful infringement and recognized that many defendants may choose to rely on advice of counsel as evidence that they did not willfully infringe the patent-in-suit.

Notably, the Federal Circuit refused to adopt a proposed per se rule that a substantial defense to infringement presented at trial would be sufficient to defeat liability for willful infringement, even if no opinion of counsel had been obtained or relied upon. Instead, the Federal Circuit reaffirmed that willful infringement must be determined by evaluating the totality of the circumstances.

One of the key factors approved by the Federal Circuit for evaluating willful infringement continues to be whether the accused infringer investigated the patent and formed a good-faith belief that the patent was invalid or not infringed. A good non-infringement and/or invalidity opinion of counsel is often the best evidence of a defendant’s good faith.

Thus, although the Federal Circuit has removed the threat of an adverse inference of willful infringement if an accused infringer fails to obtain or rely upon an opinion of counsel, it is still important for defendants to obtain such opinions in order to demonstrate their good-faith and defeat a claim of willful infringement.