Until the Federal Circuit issued its en banc decision in Knorr-Bremse Systeme Fuer Nutzfahrzeuge Gmbh v. Dana Corp., 2004 WL 2049342 (Fed. Cir. Nos. 01-1357, 02-1221, -1256), if an opinion of counsel was not produced in patent infringement litigation in defense of an allegation of willful infringement, an inference could be drawn either that no opinion was obtained or that the opinion was unfavorable to the accused infringer. See, e.g., Kloster Speedsteel AB v. Crucible Inc., 793 F.2d 1565, 1580 (Fed. Cir. 1986), cert. denied, 479 U.S. 1034 (1987); Fromson v. Western Litho Plate and Supply Co., 853 F.2d 1568, 1572-73 (Fed. Cir. 1988).
However, the Federal Circuit changed this law and held in Knorr-Bremse that "no adverse inference that an opinion of counsel was or would have been unfavorable flows from an alleged infringer’s failure to obtain or produce an exculpatory opinion of counsel." Knorr-Bremse, slip op. at 3. The court reaffirmed that the determination of whether an accused infringer has willfully infringed a patent must be made based upon a consideration of the totality of the circumstances.
The Federal Circuit also considered whether a substantial defense to infringement should be sufficient to defeat liability for willful infringement even if no legal advice has been secured. The court concluded that a substantial defense is one factor to be considered with others under the totality of the circumstances analysis, but the court rejected giving this factor per se treatment, preferring to have it be given different weight in different cases.
The Knorr-Bremse decision has given accused infringers more choice. They can choose whether to obtain an opinion of counsel and, if they choose to do so, they can choose whether to disclose it in the litigation. However, because an accused infringer still must show that it acted with due care, and because having a substantial defense is likely to become an important factor in the totality of circumstances analysis, an accused infringer still will want to give significant consideration to obtaining opinion of counsel. In fact, a prudent company may not want to begin a potentially infringing activity unless a substantial defense is found or unless an opinion is obtained. That company will not want to risk that subsequent litigation will uncover no substantial defense after the company has committed resources to the allegedly infringing conduct and has damages exposure.
The Knorr-Bremse decision does leave uncertainty concerning some issues involved in willfulness allegations. One such area is the determination of the scope of waiver if the opinion is produced. When an opinion of counsel is produced, questions are raised inevitably as to what the scope of waiver of documents and communications is beyond the opinion itself. There can be no question that communications between the attorney and client concerning the legal opinion being relied upon are waived (i.e., a narrow waiver of privilege). But the tougher question is whether the patentee can obtain all documents reviewed by or prepared for legal counsel and/or trial counsel, including all drafts, notes and opinion, and mental impression work product, even when such documents were not communicated to the client (i.e., a broad waiver of privilege)?
Litigating this dispute as to the scope of waiver can be expensive. In addition, the lack of certainty as to where the scope of waiver will be drawn makes the already difficult choice of whether to produce an opinion of counsel that much more difficult. In light of the Knorr- Bremse decision, while fewer accused infringers may choose to produce their opinions of counsel, for those who do choose to do so, the problem of different courts — and sometimes judges in the same district — applying different standards to the scope of waiver issue will continue.
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