United States: Patent Happenings

Role of Litigation Defenses Post-Seagate

Before Seagate,¹ defenses to infringement developed during the course of litigation had an uncertain role in determining whether the accused infringer willfully infringed the patent. Federal Circuit precedent instructed that it was "generally inappropriate" to find willful infringement "when the infringer mounts a good faith and substantial challenge to the existence of infringement."² Putting teeth into the "substantial" requirement, other Federal Circuit precedent instructed that a defense merely passing muster under Rule 11 would normally not defeat a charge of willful infringement.³ But other precedent instructed that "defenses prepared for a trial are not equivalent to the competent legal opinion of non-infringement or invalidity which qualify as ‗due care' before undertaking any potentially infringing activity."⁴ This led one to question whether litigation defenses could ever show that an accused infringer had "mount[ed] a good faith and substantial challenge to the existence of infringement." But, even where a court refused to treat litigation defenses as a "defense" to a charge of willful infringement, the court had to consider the strength of the asserted litigation defenses (i.e., did the defenses show a substantial challenge to the existence of infringement) in considering the Read factor of the "closeness of the case" when determining whether to enhance the damage award.⁵

In 2004, when faced directly with the question "Should the existence of a substantial defense to infringement be sufficient to defeat liability for willful infringement even if no legal advice has been secured?" the Federal Circuit answered the question "No" in its en banc opinion of Knorr-Bremse.⁶ But the court refused to adopt a per se rule excluding reliance on litigation defenses. Instead, the court instructed that litigation defenses were one of the factors that the district court should consider under the "totality of the circumstances."⁷

When the Federal Circuit repudiated the "affirmative duty of due care" standard in Seagate, it did not address in detail the role of litigation defenses in its new two-part standard for finding willful infringement.⁸ It did instruct, however, that "the patentee must also demonstrate that th[e] objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer."⁹ The reference to the "record developed in the infringement proceeding" strongly suggests that the fact-finder should consider the accused infringer's litigation defenses in assessing the whether there was an objectively high risk of infringement.

In its first opinion substantively addressing the new willful infringement standard, the Federal Circuit instructed, albeit in dicta, that "[u]nder this objective standard, both legitimate defenses to infringement claims and credible invalidity arguments demonstrate the lack of an objectively high likelihood that a party took actions constituting infringement of a valid patent."¹⁰

Following this instruction, courts have accepted the view that defenses developed during the litigation can be used to defend against a charge of willful infringement.¹¹ For example, in DePuy Spine, the Federal Circuit affirmed the grant of a judgment as a matter of law (JMOL) of no willful infringement since the non-infringement defense presented by the accused infringer during the litigation to the charge of infringement under the doctrine of equivalents showed that the infringement issue was a close question.¹² In Cohesive Technologies, the Federal Circuit held that a dispute during the course of the litigation as to the proper scope of one claim limitation precluded a finding of willful infringement under Seagate where the accused infringer's proposed construction was reasonable, even though ultimately not adopted, and under that construction the accused product did not infringe.¹³

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