On Sept. 16, 2011, the America Invents Act (AIA) was signed into law. Included in the AIA was section 298 entitled “Advice of Counsel” which removed failure to obtain or present advice of counsel as a basis for establishing willful or induced infringement:
The failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the 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.
With this provision, a party asserting a patent could no longer rely on an accused infringer’s lack of an opinion of counsel as part of its infringement proofs at trial.
Historically, the general rule had been that a potential infringer with actual notice of another's patent had an affirmative duty of due care that usually required the potential infringer to obtain competent legal advice before engaging in any activity that could infringe another's patent rights. Failure to obtain an opinion of counsel could result in a finding of willful infringement against the potential infringer and enhanced damages being awarded to the patent owner.
The perception has been, however, that starting about a decade ago, the Court of Appeals for the Federal Circuit began diminishing the importance of formal legal opinions in patent cases. For example, in its 2003 Knorr-Bremse decision, the Federal Circuit held that no adverse inference of willfulness could be drawn either from the failure to obtain legal advice or the assertion of the attorney-client privilege concerning the advice sought. Then, in its 2007 Seagate decision, the Federal Circuit expressly abandoned the “duty of due care” standard and stated that there was no affirmative obligation to obtain an opinion of counsel. The Federal Circuit instead instituted a two-prong test for proving willful infringement. First, the patent owner must establish that the alleged infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. Second, the patent owner must then show that this objectively high risk was either known or so obvious that it should have been known to the alleged infringer. The first prong of this test is objective and turns on whether the infringer’s defenses were reasonable. The second prong is subjective and involves the accused infringer’s state of mind.
At about the same time, the Federal Circuit reached a somewhat different conclusion in the context of indirect infringement. In its 2008 Broadcom decision, the Federal Circuit stated that for induced infringement, the plaintiff has the burden of showing that the alleged infringer’s actions induced infringement, and that he knew or should have known his actions would induce infringement. In this context, because opinion-of-counsel evidence may reflect whether the accused infringer “knew or should have known” that its actions would cause another to directly infringe, such evidence is relevant to the second prong of the intent analysis. Thus, the failure to obtain an opinion of counsel may be probative of intent in induced infringement.
The enactment of section 298 of the AIA was seen as essentially codifying Seagate and legislatively overruling Broadcom in derogation of opinions of counsel. Even with enactment of section 298, however, opinions of counsel continue to play an important role in patent litigation.
As implemented, section 298 of the AIA only applies to patents issued on or after Sept. 16, 2012. Thus, section 298 has no applicability to patents issued prior to this date. Further, for patents issued on or after Sept. 16, 2012, section 298 of the AIA only affects the determination of willfulness and not, should willfulness be found, whether enhanced damages should be awarded. The distinction between a determination of whether infringement is willful and a separate determination of whether to award enhanced damages after a willfulness determination was clarified by the Federal Circuit in its 2010 i4i decision, where it held that “the test for willfulness is distinct and separate from the factors guiding a district court's discretion regarding enhanced damages.”
In indirect infringement, the value of an opinion of counsel currently remains largely unchanged. Most patents asserted today were issued prior to Sept. 16, 2012, and therefore the court is required to follow the Broadcom decision rather than section 298. Thus, the absence of an opinion will remain particularly probative when addressing whether an accused infringer “knew or should have known” that its actions would cause another to directly infringe patents for the near future. Further, regardless of the issue date of the asserted patent, affirmative reliance on an opinion of counsel that addresses issues of patent non-infringement or invalidity may negate the intent required for a finding of induced infringement. The Federal Circuit has recently confirmed that such evidence is relevant and should be admitted where it relates to a good-faith belief of non-infringement or invalidity in the inducement context.
In Part 2 of this article, we will discuss the Federal Circuit’s continued acceptance of opinions of counsel in district court litigation and their applicability to the two-pronged Seagate test for willfulness. Additionally, we will discuss the effect that opinions of counsel have on the atmospherics of trial.