PATENT LAW Randy Canis CLASS 11 Infringement pt

PATENT LAW Randy Canis CLASS 11 Infringement pt. 1 1

Infringement (Ch. 11) • So now you have a patent, what comes next? • Make money!!! – Sell the invention – License the invention and let others sell it… – Sell the patent – Sue others for patent infringement 2

Quick Review of the Statute • 271(a)-(i) 3

Infringement Sec. 271. - Infringement of patent (a) Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention during the term of the patent therefor, infringes the patent. (b) Whoever actively induces infringement of a patent shall be liable as an infringer. [Active Inducement] (c) Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination, or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer. [Contributory Infringement] 4

Infringement (d) No patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having done or more of the following: (1) derived revenue from acts which if performed by another without his consent would constitute contributory infringement of the patent; (2) licensed or authorized another to perform acts which if performed without his consent would constitute contributory infringement of the patent; (3) sought to enforce his patent rights against infringement or contributory infringement; (4) refused to license or use any rights to the patent; or (5) conditioned the license of any rights to the patent or the sale of the patented product on the acquisition of a license to rights in another patent or purchase of a separate product, unless, in view of the circumstances, the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned. 5

Infringement (e)(1) It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products. (2) It shall be an act of infringement to submit – (A) an application under section 505(j) of the Federal Food, Drug, and Cosmetic Act or described in section 505(b)(2) of such Act for a drug claimed in a patent or the use of which is claimed in a patent, or – (B) an application under section 512 of such Act or under the Act of March 4, 1913 (21 U. S. C. 151 - 158) for a drug or veterinary biological product which is not primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques and which is claimed in a patent or the use of which is claimed in a patent, if the purpose of such submission is to obtain approval under such Act to engage in the commercial manufacture, use, or sale of a drug or veterinary biological product claimed in a patent or the use of which is claimed in a patent before the expiration of such patent. 6

Infringement (3) In any action for patent infringement brought under this section, no injunctive or other relief may be granted which would prohibit the making, using, offering to sell, or selling within the United States or importing into the United States of a patented invention under paragraph (1). (4) For an act of infringement described in paragraph (2)(A) the court shall order the effective date of any approval of the drug or veterinary biological product involved in the infringement to be a date which is not earlier than the date of the expiration of the patent which has been infringed, (B) injunctive relief may be granted against an infringer to prevent the commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of an approved drug or veterinary biological product, and (C) damages or other monetary relief may be awarded against an infringer only if there has been commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of an approved drug or veterinary biological product. The remedies prescribed by subparagraphs (A), (B), and (C) are the only remedies which may be granted by a court for an act of infringement described in paragraph (2), except that a court may award attorney fees under section 285. (5) Where a person has filed an application described in paragraph (2) that includes a certification under subsection (b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) of section 505 of the Federal Food, Drug, and Cosmetic Act (21 U. S. C. 355), and neither the owner of the patent that is the subject of the certification nor the holder of the approved application under subsection (b) of such section for the drug that is claimed by the patent or a use of which is claimed by the patent brought an action for infringement of such patent before the expiration of 45 days after the date on which the notice given under subsection (b)(3) or (j)(2)(B) of such section was received, the courts of the United States shall, to the extent consistent with the Constitution, have subject matter jurisdiction in any action brought by such person under section 2201 of title 28 for a declaratory judgment that such patent is invalid or not infringed. 7

Infringement (f) (1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. (2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. 8

Infringement (g) Whoever without authority imports into the United States or offers to sell, sells, or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, offer to sell, sale, or use of the product occurs during the term of such process patent. In an action for infringement of a process patent, no remedy may be granted for infringement on account of the noncommercial use or retail sale of a product unless there is no adequate remedy under this title for infringement on account of the importation or other use, offer to sell, or sale of that product. A product which is made by a patented process will, for purposes of this title, not be considered to be so made after (1) it is materially changed by subsequent processes; or (2) it becomes a trivial and nonessential component of another product. (h) As used in this section, the term "whoever" includes any State, any instrumentality of a State, any officer or employee of a State or instrumentality of a State acting in his official capacity. Any State, and any such instrumentality, officer, or employee, shall be subject to the provisions of this title in the same manner and to the same extent as any nongovernmental entity. (i) As used in this section, an "offer for sale" or an "offer to sell" by a person other than the patentee or any assignee of the patentee, is that in which the sale will occur before the expiration of the term of the patent. 9

Where do we start with infringement? • We must construe the claims… • Biggest cases on claim construction – Markman – Phillips v. AWH Corporation 10

Literal Infringement Chapter 15. 1 • Inquiry - Does a device or method literally infringe one or more claims of a patent? 11

Markman v. Westview Instruments, Inc. • Procedural Background – Federal Circuit en banc decision; Supreme court unanimously affirms this decision. • Factual Background • Issue: – Who determines claim construction—a jury or the court? 12

Markman v. Westview Instruments, Inc. • “To ascertain the meaning of claims, we consider three sources: The claims, the specification, and the prosecution history. … Expert testimony, including evidence of how those skilled in the art would interpret the claims, may also be used. ” 13

Markman v. Westview Instruments, Inc. • “Claims must be read in view of the specification, of which they are apart. ” • “For claim construction purposes, the [specification] may act as a sort of dictionary, which explains the invention and may define terms used in the claims. ” • “… [A] patentee is free to be his own lexicographer … [but] any special definition must be clearly defined in the specification. ” • Court may also consider: – Prosecution history (if in evidence) 14

Markman v. Westview Instruments, Inc. • “Extrinsic evidence may demonstrate the state of the prior art at the time of the invention. ” • “Extrinsic evidence consists of all evidence external to the patent and prosecution history, including expert and inventor testimony, dictionaries, and learned treatises … and may demonstrate the state of the art at the time of the invention. ” 15

Markman v. Westview Instruments, Inc. • “An infringement analysis entails two steps. The first step is determining the meaning and scope of the patent claims asserted to be infringed. The second step is comparing the properly constructed claims to the device accused of infringing. ” • “… [I]n a case tried to a jury, the court has the power and obligation to construe as a matter of law the meaning of language used in the patent claim. ” 16

Markman v. Westview Instruments, Inc. • Ruling – Affirmed the judgment of the noninfringement. • Holding – “… [W]e conclude that the interpretation and construction of patent claims, which define the scope of the patentee’s rights under the patent, is a matter of law exclusively for the court. ” • Dicta 17

Markman v. Westview Instruments, Inc. • Supreme Court – Judges are better suited to interpret the patents – Uniformity of interpretation 18

Trial procedure effect of Markman? • Resolution of meaning of disputed patent terms by use of a Markman hearing and ruling by judge can be binding on litigants and may have effect of a final determination so that a full-blown trial before a jury may never occur. 19

Markman v. Westview Instruments, Inc. • This means JUDGE not JURY will construe the language of claims. • Can have major effect on the way patent infringement trials are conducted • Before case is presented to jury, which must decide issues of FACT • Judge may decide issues of LAW by construing claim language. 20

Trial procedure changed by Markman • Or effect of Markman will leave a clearer set of issues of fact which are to be decided by jury at trial. But. . . • Ultimately the jury factually determines whethere is infringement unless the claims have been so construed by judicial ruling after Markman hearing as to preclude an infringing interpretation. he overall effect of Markman v. Westview Instruments had the practical effect of making patent infringement suits a multistage affair in which the Markman hearing often determines the outcome of the litigation before trial before jury occurs. 21

Claim Construction • Intrinsic – Claims – Specification – Prosecution History • Extrinsic – Inventor testimony – Dictionaries – Learned treatises 22

Additional Claim Interpretation Notes • “To literally infringe, an accused product or process must include each and every limitation of a claim. Therefore the omission of any limitation is fatal to literal infringement. ” • “… [W]here the patent documents are unambiguous, expert testimony regarding the meaning of a claim is entitled to no weight. ” 23

Phillips v. AWH Corporation • Procedural Background • Factual Background • Issue(s): – To what extent should the specification be relied on when ascertaining the scope of the claims? How should dictionaries be used in claim interpretation? 24

Phillips v. AWH Corporation • Invention – Modular steel panels that are welded together to form walls – Specification described baffled deployment at an angle other than 90 degrees to wall face to create interlocking • D. C. – no infringement b/c at 90 degrees • Panel – affirmed; baffles at non 90 angle enable deflection of bullets 25

Phillips v. AWH Corporation • Claims – define invention to which the patentee is entitled the right to exclude – “…the words of a claim ‘are generally given their ordinary and customary meaning. ’” … 26

Phillips v. AWH Corporation • “We have made clear, moreover, that the ordinary and customary meaning of a claim term is the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention, i. e. , as of the effective filing date of the patent application. ” 27

Phillips v. AWH Corporation • “[T]he person of ordinary skill in the art is deemed to read the claim term not only in the context of the particular claim in which the disputed term appears, but in the context of the entire patent, including the specification. ” 28

Phillips v. AWH Corporation • Apply well-accepted meaning of commonly understood words • Examine terms that have a particular meaning in a field of art 29

Phillips v. AWH Corporation • “Quite apart from the written description and the prosecution history, the claims themselves provide substantial guidance as to the meaning of particular claim terms. … • “To begin with, the context in which a term is used in the asserted claim can be highly instructive. … • “Other claims of the patent in question, both asserted and unasserted, can also be valuable sources of enlightenment as to the meaning of a claim term. ” 30

Phillips v. AWH Corporation • “[T]he presence of a dependent claim that adds a particular limitation gives rise to a presumption that the limitation in question is not present in the independent claim. ” 31

Phillips v. AWH Corporation • Claims must be read in terms of the specification • “Our cases recognize that the specification may reveal a special definition given to a claim term by the patentee that differs from the meaning it would otherwise possess. In such cases, the inventor’s lexicography governs. … In other cases, the specification may reveal an intentional disclaimer, or disavowal, of claim scope by the inventor. In that instance as well, the inventor has dictated the correct claim scope, and the inventor’s intention, as expressed in the specification, is regarded as dispositive. … 32

Phillips v. AWH Corporation • Prosecution history – evidence of how the PTO and the inventor understood the patent – “lacks the clarity of the specification and thus is less useful for claim construction purposes. ” 33

Phillips v. AWH Corporation • “[W]e have also authorized district courts to rely on extrinsic evidence, which ‘consists of all evidence external to the patent and prosecution history, including expert and inventor testimony, dictionaries, and learned treatises. ’ • “[W]hile extrinsic evidence ‘can shed useful light on the relevant art, ’ we have explained that it is “less significant than the intrinsic record in determining ‘the legally operative meaning of claim language. ’” 34

Phillips v. AWH Corporation • Extrinsic evidence – Less reliable – What five reasons did the court give? – “unlikely to result in a reliable interpretation of patent claim scope unless considered in the context of the intrinsic evidence” 35

Phillips v. AWH Corporation • What happened in Texas Digital? – Too much reliance on dictionaries (and other extrinsic sources) 36

Phillips v. AWH Corporation • “Moreover, we recognize that the distinction between using the specification to interpret the meaning of a claim and importing limitations from the specification into the claim can be a difficult one to apply in practice. ” 37

Phillips v. AWH Corporation • Ruling – Reverse finding of infringement • Holding – Reaffirms Markman. • Dicta 38

Phillips v. AWH Corporation • What is the effect of this ruling on claim construction and claim drafting? 39

Claim Differentiation • Why should you care? • Is it the panacea? • When you review the proposed claims… 40

Indirect Infringement 41

Other Types of Infringement INDIRECT INFRINGEMENT • Active Inducement (§ 271(b)) – “Whoever actively induces infringement of a patent shall be liable as an infringer. ” • Contributory Infringement (§ 271(c)) – “Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer. ” 42

DSU Medical Corporation v. JMS Company, LTD. • 2006 Federal Circuit (Panel + en banc) – Affirmed D. C. finding of infringement • JMS NA and JMS directly and contributorily infringed • JMS actively inducted JMS NA to infringe • Invention – guarded, winged-needle assembly 43

DSU Medical Corporation v. JMS Company, LTD. • How did the Platypus sets come into the United States? 44

DSU Medical Corporation v. JMS Company, LTD. • “[T]he patentee always has the burden to show direct infringement for each instance of indirect infringement. ” • What must DSU show to prevail on contributory infringement? 45

DSU Medical Corporation v. JMS Company, LTD. • “The plaintiff has the burden of showing that the alleged infringer’s actions induced infringing acts and that he knew or should have known his actions would induce actual infringements. ” 46

DSU Medical Corporation v. JMS Company, LTD. • “[I]nducement requires evidence of culpable conduct, directed to encouraging another’s infringement, not merely that the inducer had knowledge of the direct infringer’s activities. ” 47

Process Patents Chapter 15. 7 • Let’s look at an application of 271(g)… 48

Eli Lilly & Co. v. American Cyanamid Co. • “Prior to the enactment of the 1988 statute, a patentee holding a process patent could sue for infringement if others used the process in this country, but had no cause of action if such persons used the patented process abroad to manufacture products, and then imported, used, or sold the products in this country. In that setting, the process patent owner's only legal recourse was to seek an exclusion order for such products from the International Trade Commission … By enacting the Process Patent Amendments Act, the principal portion of which is codified as 35 U. S. C. § 271(g), Congress changed the law by making it an act of infringement to import into the United States, or to sell or use within the United States ‘a product which is made by a process patented in the United States. . . if the importation, sale, or use of the product occurs during the term of such process patent. ’” 49

Eli Lilly & Co. v. American Cyanamid Co. • “A concern raised during Congress's consideration of the process patent legislation was whether and to what extent the new legislation would affect products other than the direct and unaltered products of patented processes -- that is, whether the new statute would apply when a product was produced abroad by a patented process but then modified or incorporated into other products before being imported into this country. ” 50

Eli Lilly & Co. v. American Cyanamid Co. • “Congress … [provided] that a product that is ‘made by’ a patented process within the meaning of the statute ‘will. . . not be considered to be so made after -- (1) it is materially changed by subsequent processes; or (2) it becomes a trivial and nonessential component of another product. ’ 35 U. S. C. § 271(g). ” 51

Eli Lilly & Co. v. American Cyanamid Co. • “We cannot accept the argument that the question whether one compound is ‘materially changed’ in the course of its conversion into another depends on whethere are other products of the first compound that have economic value. We therefore do not adopt Lilly's proposed construction of section 271(g). We look instead to the substantiality of the change between the product of the patented process and the product that is being imported. ” 52

Eli Lilly & Co. v. American Cyanamid Co. • “In the chemical context, a ‘material’ change in a compound is most naturally viewed as a significant change in the compound's structure and properties. Without attempting to define with precision what classes of changes would be material and what would not, we share the district court's view that a change in chemical structure and properties as significant as the change between compound 6 and cefaclor cannot lightly be dismissed as immaterial. ” 53

Jazz Photo Corp. v. International Trade Comm. • 2001 Federal Circuit Panel • Invention – Disposable “single-use” cameras 54

Jazz Photo Corp. v. International Trade Comm. • Who is the commission? • What did the commission decide? – Repair or reconstruction? 55

Jazz Photo Corp. v. International Trade Comm. • What is the nature of the invention? • How are casings acquired? • What does the claim protect? 56

Jazz Photo Corp. v. International Trade Comm. • “While the ownership of a patented article does not include the right to make a substantially new article, it does include the right to preserve the useful life of the original article. ” 57

Jazz Photo Corp. v. International Trade Comm. • “Mere replacement of individual unpatentable parts, one at a time, whether of the same part repeatedly or different parts successively, is not more than the lawful right of the owner to repair his property. ” 58

Jazz Photo Corp. v. International Trade Comm. • “Precedent has classified as repair the disassembly and cleaning of patented articles accompanied by replacement of unpatented parts that had become worn or spent, in order to preserve the utility for which the article was originally intended. ” 59

Jazz Photo Corp. v. International Trade Comm. • “’Reconstruction, ’” precedent shows, requires a more extensive rebuilding of the patented entity…” 60

Jazz Photo Corp. v. International Trade Comm. • “The unrestricted sale of a patented article, by or with the authority of the patentee, ‘exhausts’ the patentee’s right to control further sale and use of that article by enforcing the patent under which it was first sold. ” 61

Patent Opinions 62

Who Should Obtain an Opinion? • (Non)Infringement Opinions should be obtained by both patent owner and the product developer (accused) • Why? • Rule 11 • Willfulness (Knorr Bremse) • Substantive 63

Patent Opinions • Knorr-Bremse Systeme v. Dana Corp. (Fed. Cir. 2004)(en banc) • In re Seagate (Fed. Cir. 2007)(en banc) • Broadcom v. Qualcomm 64

Opinion Basics • • Description of subject matter Interpretation of claim terms Literal analysis Doctrine of equivalents analysis 65

Competent Opinion Summary • Kinds – (Non)infringement, (in)validity – For owner or for alleged infringer • By outside counsel • Well reasoned – Discuss law, claim interpretation, facts, application of interpretation to facts – (Non-infringement) Consider literal and doctrine of equivalents – Address all claims 66

Knorr-Bremse Systeme v. Dana Corp. • Invention – Disk Brake for Vehicles Having Insertable Actuator • E. D. VA – Dana and Haldex liable for infringement and willful infringement • “Air disk brake technology is superior to the previously dominant technology of hydraulically or pneumatically actuated drum brakes…” 67

Knorr-Bremse Systeme v. Dana Corp. • Dana and Haldex collaborated to sell air brakes in the United States • D&H imported about 100 units of Mark II model into the US • Between 1997 and 1999, Mark II installed in approximately 18 trucks of Dana and potential customers 68

Knorr-Bremse Systeme v. Dana Corp. • Dec ‘ 98 – KB orally notified Dana of patent applications pending in US and infringement litigation against Haldex in Europe • Aug ’ 99 – KB similar notification in writing along with notification of issuance of ‘ 445 patent in US • May ’ 00 – filed infringement suit • Sept ‘ 00 – Haldex presented a modified device (i. e. , Mark III) and moved for summary judgment of noninfringement • Nov ’ 00 – summary judgment of infringement of Mark II and trial on Mark III • Jan ’ 01 – DC found literal infringement by Mark III 69

Knorr-Bremse Systeme v. Dana Corp. • Haldex – declined to produce a legal opinion • Dana – did not consult counsel but relied on Haldex 70

Knorr-Bremse Systeme v. Dana Corp. • “… [T]he Federal Circuit ruled that ‘where, as here, a potential infringer has actual notice of another’s patent rights, he has an affirmative duty to exercise due care to determine whether or not he is infringing, ’ including ‘the duty to seek and obtain competent legal advice from counsel before the initiation of any possible infringing activity. ’” 71

Knorr-Bremse Systeme v. Dana Corp. • “The adverse inference that an opinion was or would have been unfavorable, flowing from the infringer’s failure to obtain or produce an exculpatory opinion of counsel, is no longer warranted. ” 72

Knorr-Bremse Systeme v. Dana Corp. • Four questions presented for en banc review: 73

Knorr-Bremse Systeme v. Dana Corp. • Q 1 - When the attorney-client privilege and/or work-product privilege is invoked by a defendant in an infringement suit, is it appropriate for the trier of fact to draw an adverse inference with respect to willful infringement? • Answer - no 74

Knorr-Bremse Systeme v. Dana Corp. • “A defendant may of course choose to waive the privilege and produce the advice of counsel. However, the assertion of attorney-client and/or work-product privilege and the withholding of the advice of counsel shall no longer entail an adverse inference as to the nature of the advice. ” 75

Knorr-Bremse Systeme v. Dana Corp. • Q 2 - When the defendant had not obtained legal advice, is it appropriate to draw an adverse inference with respect to willful infringement? • Answer - no 76

Knorr-Bremse Systeme v. Dana Corp. • “Although there continues to be ‘an affirmative duty of due care to avoid infringement of the known patent rights of others, ’ L. A. Gear Inc. v. Thom Mc. An Shoe Co. , 988 F. 2 d 1117, 1127 (Fed. Cir. 1993), the failure to obtain an exculpatory opinion of counsel shall no longer provide an adverse inference or evidentiary presumption that such an opinion would have been unfavorable. ” 77

Knorr-Bremse Systeme v. Dana Corp. • Q 3 - If the court concludes that the law should be changed, and the adverse inference withdrawn as applied to this case, what are the consequences for this case? • Answer – “Because elimination of the adverse inference as drawn by the district court is a material change in the totality of the circumstances, a fresh weighing of the evidence is required to determine whether the defendants committed willful infringement. This determination is the primary responsibility and authority of the district court. ” 78

Knorr-Bremse Systeme v. Dana Corp. • Q 4 - 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? • Answer – no, no per se treatment 79

Knorr-Bremse Systeme v. Dana Corp. • “We now hold 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. ” 80

In re Seagate • Decided 8/20/07 • En Banc 12 -0 decision • “[W]e clarify the scope of the waiver of attorney-client privilege and work product protection that results when an accused infringer asserts an advice of counsel defense to a charge of willful infringement. ” 81 81

In re Seagate • Background • Convolve sued on 3 patents – ‘ 635 patent, ‘ 267 patent, and ‘ 473 patent • Seagate obtained opinions from opinion counsel on the three patents • Seagate notified trial court of intent to rely on opinions • Convolve moved for discovery on patent counsel and trial counsel 82 82

In re Seagate • Trial court ruled all communications between any counsel relating to the subject matter of the opinions waived 83 83

In re Seagate Questions for en banc review on writ of mandamus 1. Should a party’s assertion of the advice of counsel defense to willful infringement extend waiver of the attorney-client privilege to communications with that party’s trial counsel? See In re Echo. Star Commc’n Corp. , 448 F. 3 d 1294 (Fed. Cir. 2006). 2. What is the effect of any such waiver on work-product immunity? 3. Given the impact of the statutory duty of care standard announced in Underwater Devices, Inc. v. Morrison-Knudsen Co. , 717 F. 2 d 1380 (Fed. Cir. 1983), on the issue of waiver of attorney-client privilege, should this court reconsider the decision in Underwater Devices and the duty of care standard itself? 84 84

In re Seagate Court analysis • Enhanced damages requires a showing of willful infringement • Underwater Devices – “Where. . . a potential infringer has actual notice of another’s patent rights, he has an affirmative duty to exercise due care to determine whether or not he is infringing. Such an affirmative duty includes, inter alia, the duty to seek and obtain competent legal advice from counsel before the initiation of any possible infringing activity. ” 85 85

In re Seagate Echostar • relying on in-house counsel’s advice to refute a charge of willfulness triggers waiver of the attorney-client privilege • asserting the advice of counsel defense waives work product protection and the attorney-client privilege for all communications on the same subject matter, as well as any documents memorializing attorney-client communications. • waiver did not extend to work product that was not communicated to an accused infringer. 86 86

In re Seagate • Willfulness includes reckless behavior • Duty of care in Underwater Devices is more like negligence • “[W]e overrule the standard set out in Underwater Devices and hold that proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness. Because we abandon the affirmative duty of due care, we also reemphasize that there is no affirmative obligation to obtain opinion of counsel. ” 87 87

In re Seagate • “[T]o establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. ” • State of mind not relevant 88 88

In re Seagate • “[F]airness counsels against disclosing trial counsel’s communications on an entire subject matter in response to an accused infringer’s reliance on opinion counsel’s opinion to refute a willfulness allegation. ” • “[A]s a general proposition, that asserting the advice of counsel defense and disclosing opinions of opinion counsel do not constitute waiver of the attorney-client privilege for communications with trial counsel. We do not purport to set out an absolute rule. Instead, trial courts remain free to exercise their discretion in unique circumstances to extend waiver to trial counsel, such as if a party or counsel engages in chicanery. “ 89 89

In re Seagate • “[R]elying on opinion counsel’s work product does not waive work product immunity with respect to trial counsel. Again, we leave open the possibility that situations may arise in which waiver may be extended to trial counsel, such as if a patentee or his counsel engages in chicanery. And , of course, the general principles of work product protection remain in force, so that a party may obtain discovery of work product absent waiver upon a sufficient showing of need and hardship, bearing in mind that a higher burden must be met to obtain that pertaining to mental processes. ” • Also applies to making attorneys available 90 90

In re Seagate • What is objective recklessness? CAFC says: – A person is reckless who acts in the face of unjustifiably high risk of harm that is either known or so obvious it should have been known. – To establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. – The state of mind of the accused infringer is not relevant to this objective inquiry. – We leave it to future cases to further develop this standard. – In a footnote by Judge Newman the CAFC stated that the standards of commerce would be among factors a court may consider. – Standards of fair commerce – including reasonableness of the actions taken in particular circumstances. 91 91

Broadcom v. Qualcomm • Background – Broadcom alleged Qualcomm infringed 3 patents related to chipsets for cell phones. – Qualcomm obtained invalidity opinions on all 3 patents, but elected not to rely on those opinions as a defense in order to preserve attorney-client privilege. – Qualcomm did not obtain non-infringement opinions. • Why not? They already paid for 3 invalidity opinions. • Would an infringement opinion say you didn’t trust your invalidity opinion? 92 92

Broadcom v. Qualcomm • Procedure – Jury found Qualcomm infringed on 3 patents, including induced infringement. Jury also found willful infringement. – Seagate issued 10 days later. – Trial Court vacates willfulness verdict. – Damages awarded on 2 of 3 patents based solely on indirect inducement. – Qualcomm appeals to the Fed. Cir. – Qualcomm contends that the pre-Seagate jury instructions, which led the district court to set aside the willfulness verdict based essentially on Qualcomm’s not having obtained non-infringement opinion letters, also requires [the CAFC] to overturn the indirect inducement verdict predicated on the intent necessary to find inducement. 93 93

Broadcom v. Qualcomm • Analysis – CAFC says the inducement standard was clarified in DSU Medical Corp. v. JMS Company, 471 F. 3 d 1293(Fed. Cir. 2006). – Inducement requires evidence of culpable conduct, directed to encouraging another’s infringement, not merely that the inducer had knowledge of the direct infringer’s activities. • Trial Court’s Jury Instruction on Inducement: – When considering whether Qualcomm knew or should have known that the induced actions would constitute infringement, in the totality of the circumstances, you may consider all of the circumstances, including whether or not Qualcomm obtained the advice of a competent lawyer. 94 94

Broadcom v. Qualcomm • Trial Court’s Jury Instruction on willfulness: – In considering whether Qualcomm acted in good faith, you should consider all the circumstances, including whether or not Qualcomm obtained and followed the advice of a competent lawyer with regard to infringement. The absence of a lawyer’s opinion, by itself, is insufficient to support a finding of willfulness, and you may not assume that merely because a party did not obtain an opinion of counsel, the opinion would have been unfavorable. However, you may consider whether Qualcomm sought a legal opinion as one factor in assessing whether, under the totality of the circumstances, any infringement by Qualcomm was willful. 95 95

Broadcom v. Qualcomm • Qualcomm argues: – The district court erred in its instruction to consider failure to obtain an opinion of counsel as a factor in determining whether Qualcomm had the requisite level of intent to induce infringement. – Seagate altered the standard for establishing the intent of inducement, because after Seagate there is no affirmative duty of due care to avoid infringement, and there is no affirmative obligation to obtain opinion of counsel. 96 96

Broadcom v. Qualcomm • Result – CAFC disagrees with Qualcomm that opinion-of-counsel evidence is no longer relevant in determining the intent of an alleged infringer in the inducement context. – CAFC find’s no legal error in Jury’s finding of induced infringement. – The affirmative intent to cause inducement is a two-prong test: • First – the plaintiff must show that the defendant intended to cause the acts that constitute the direct infringement. • Second – the defendant knew or should have know that its actions would cause another to directly infringe. – Opinion-of-counsel evidence remains relevant to the second prong of the analysis. 97 97

Broadcom v. Qualcomm • Result (cont. ) – A patentee may prove direct infringement or inducement of infringement by either direct or circumstantial evidence. – The totality of the circumstances presented in the evidence supports the jury’s findings: • • A failure to investigate A failure to explore design around approaches A failure to take remedial steps, and A failure to seek legal advice. – Qualcomm conceded that evidence of its invalidity opinions were properly excluded. 98 98

Broadcom v. Qualcomm • Qualcomm has filed a Petition for en banc rehearing. • Issues – Did the Panel improperly resurrect the duty of care rejected in Seagate to evaluate intent to induce infringement? – Does the result contradict Knorr-Bremse? – Should inferences inappropriate to support the recklessness standard of willful infringement be permitted to support the knowing standard of the second prong of the inducement test? 99 99

Willfulness and the Opinion Defense • Conclusions – Opinions remain important just as they were pre-Knorr but the reasons underlying the importance have changed. – Knorr-Bremse • No adverse assumption when defendant fails to get an opinion or asserts attorney-client privilege regarding the opinion. – Seagate • No affirmative duty to get opinions – Broadcom v. Qualcomm • Opinion is a defense for induced infringement • A jury should consider that the defendant did not get an opinion letter • In many circumstances, Broadcom contradicts Knorr and Seagate 100

Program Completed All course materials - Copyright 2002 -12 Randy L. Canis, Esq. 101