Federal Circuit Narrows Willful Infringement Standard, Clarifies Waiver Issue With Respect to Opinion Letters

In Re Seagate Technology, LLC

Federal Circuit, Miscellaneous Docket No. 830, Aug. 20, 2007
Slip Opinion

On August 20, the Federal Circuit, en banc, changed its standard for evaluating the willfulness of patent infringement for the purpose of awarding enhanced damages under 35 U.S.C. § 284, making it much more difficult for patentees to demonstrate willful infringement.

The court also clarified the application of attorney-client privilege in proving willful infringement, an important issue because opinion letters are often the best defense against allegations of willful infringement.

Commentary:
Morrison & Foerster: In Re Seagate Technology, LLC: The Federal Circuit Abolishes the Duty of Care in Willfulness Cases
Intellectual Property Today, Michael Bonella: A Reasonable, Balanced Answer to In Re Seagate Tech.

Overruling Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (1983), the court replaced the "affirmative duty of due care" it imposed on parties notified of potential infringement in Underwater Devices with a requirement that the alleged infringer must have:

acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.

On the issue of attorney-client privilege, Seagate clarifies previously unsettled jurisprudence. Several courts, most importantly the Federal Circuit itself in In re EchoStar Comm'n Corp., 448 F.3d 1294 (2006) had held or implied that presenting an opinion letter waived privilege completely, even with respect to trial counsel, forcing defendants to choose between waiving privilege -- which might well make the infringement claim itself difficult to defend -- and potentially conceding willfulness. The Seagate court held:

as a general proposition, . . . asserting the advice of counself defense and disclosing opinions of opinion counsel do not constitute waiver of the attorney-client privilege for communications with trial counsel.

The court, however, emphasized that this rule could be modified at the trial court's discretion "in unique circumstances." The court also addressed the scope of work product protection in this situation, holding that "relying on opinion counsel's work product does not waive work product immunity with respect to trial counsel."