The Opinion Of Counsel As Defense To Willful

The Opinion Of Counsel As Defense To Willful Infringement Robert L. Baechtold, Esq. FITZPATRICK, CELLA, HARPER & SCINTO 30 Rockefeller Plaza New York, NY Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq.

“[The] affirmative duty includes, inter alia, the duty to seek and obtain competent legal advice from counsel before the initiation of any possible infringing activity. ” Underwater Devices, Inc. v. Morrison-Knudsen Co. , Inc. , 717 F. 2 d 1380, 1390 (Fed. Cir. 1983) (emphasis in original). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 2

The Duty to obtain competent advice arises before initiating infringement or when infringer has knowledge of patent, if later. Jurgens v. Mc. Kasy, 927 F. 2 d 1552, 1562 (Fed. Cir. 1991). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 3

Stryker v. Intermedics • Infringer got opinion 3 -1/2 months after product launch • USPTO initiated reexamination and rejected all claims • Infringement held willful • Double damages for 3 years Stryker Corp. v. Intermedics Orthopedics, Inc. , 891 F. Supp. 751, 813 -18 (E. D. N. Y. 1995); affirmed 96 F. 3 d 1409 (Fed. Cir. 1996). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 4

PUTTING ON A GOOD DEFENSE IS NOT GOOD ENOUGH. “Gustafson did not hold, as a matter of law, that a party that continues its accused infringing activity after a patentee files suit cannot be guilty of willful infringement as long as that party presents a non-frivolous defense to infringement. ” Crystal Semiconductor Corp. v. Tritech Microelecs. Int’l, Inc. , 246 F. 3 d 1336, 1351 -52 (Fed. Cir. 2001) (discussing Gustafson, Inc. v. Intersystems Indus. Prods. , Inc. , 897 F. 2 d 508 (Fed. Cir. 1990)). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 5

THE FEDERAL CIRCUIT DID NOT DECIDE IF INFRINGEMENT COULD CEASE TO BE WILLFUL AFTER AN OPINION IS OBTAINED “We need not decide whether infringement can ever be purged by subsequent legal advice, for we have affirmed the district court’s conclusion that the counsel opinions of record did not merit a reasonable confidence in the noninfringement or invalidity or unenforceability of the [patent in suit]. ” SRI Int’l Inc. v. Advanced Tech. Labs. , Inc. , 127 F. 3 d 1462, 1468 (Fed. Cir. 1997). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 6

ADVERSE INFERENCE FROM ASSERTING ATTORNEY CLIENT PRIVILEGE “Stora’s silence on the subject, in alleged reliance on the attorney-client privilege, would warrant the conclusion that it either obtained no advice of counsel or did so and was advised that its importation and sale of the accused products would be an infringement of valid U. S. patents. ” Kloster Speedsteel AB v. Crucible, Inc. , 793 F. 2 d 1565, 1580 (Fed. Cir. 1986). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 7

Compare: “The privilege was created to protect the right to effective counsel. ‘[A]n individual in a free society should be encouraged to consult with his attorney whose function is to counsel and advise him and he should be free from apprehension of compelled disclosures by his legal advisor. ’ To protect that interest, a client asserting the privilege should not face a negative inference about the substance of the information sought. ” Parker v. Prudential Ins. Co. , 900 F. 2 d 772, 775 (4 th Cir. 1990) (internal citations omitted). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 8

With: “Where the infringer fails to introduce an exculpatory opinion of counsel at trial, a court must be free to infer that either no opinion was obtained or, if an opinion were obtained, it was contrary to the infringer’s desire to initiate or continue its use of the patentee’s invention. ” Fromson v. Western Litho Plate & Supply Co. , 853 F. 2 d 1568, 1572 -73 (Fed. Cir. 1988). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 9

CONSEQUENCES: • In reality, who bears the burden of proof on willfulness? • Anyone who foresees litigation will get an opinion • When pressed, they will disclose it and waive privilege to avoid the inference Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 10

WHAT PROBLEMS DOES THIS RAISE? • When do you have to waive? • What is the scope of the waiver? –Other opinions –Work-product before suit –Work-product after suit –Implications for trial counsel Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 11

THE FEDERAL CIRCUIT SUGGESTED BIFURCATION FOR LATER TRIAL “An accused infringer, therefore, should not, without the trial court’s careful consideration, be forced to choose between waiving the privilege in order to protect itself from a willfulness finding, in which case it may risk prejudicing itself on the question of liability, and maintaining the privilege, in which case it may risk being found to be a willful infringer if liability is found. Trial courts thus should give serious consideration to a separate trial on willfulness whenever the particular attorney-client communications, once inspected by the court in camera, reveal that the defendant is indeed confronted with this dilemma. ” Quantum Corp. v. Tandon Corp. , 940 F. 2 d 642, 643 -44 (Fed. Cir. 1991). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 12

MOST COURTS DECLINE TO DO THAT IPPV Enterprises v. Cable/Home Comm. Corp. , 26 U. S. P. Q. 2 d 1714 (S. D. Cal. 1993). Spectra-Physics Lasers, Inc. v. Uniphase Corp. , 144 F. R. D. 99 (N. D. Cal. 1992). THK America, Inc. v. Nippon Seiko K. K. , 141 F. R. D. 463 (N. D. Ill. 1991). Johns Hopkins Univ. v. Cellpro, Inc. , 160 F. R. D. 30 (D. Del. 1995). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 13

SOME INDICATION OF BUCKING THAT TREND “The court recognizes that the scope of discovery allowed at bar is relatively broad and potentially prejudicial to plaintiffs. Therefore, rather than requiring disclosure consistent with this order at this time, the court will bifurcate the issue of willfulness, stay discovery relating to willfulness, and conduct a separate trial with a new jury in the event plaintiffs are found to infringe valid patents. ” Allergan v. Pharmacia, 2001 U. S. Dist. LEXIS 23952 (D. Del. 2001) (citing Novartis Pharms. Corp. v. Eon Labs Mfg. Inc. , 206 F. R. D. 396 (D. Del. 2002)). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 14

SCOPE OF WAIVER GENERAL AGREEMENT • All opinions obtained pre-complaint (including trial counsel) • All “work-product” that is communicated to client Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 15

SCOPE OF WAIVER AREAS OF NON-UNIFORMITY • Post-complaint advice from trial counsel • Post-complaint advice from others • Work-product not communicated to client Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 16

WORK-PRODUCT NOT COMMUNICATED TO CLIENT NEED NOT BE PRODUCED • Test is good faith of client, not opinion counsel • Things not disclosed are not relevant to client’s good faith Thorn EMI North America Inc. v. Micron Tech. Inc. , 837 F. Supp. 616 (D. Del. 1993). Micron Separations, Inc. v. Pall Corp. , 159 F. R. D. 361 (D. Mass 1995). Steelcase Inc. v. Haworth Inc. , 954 F. Supp. 1195 (W. D. Mich. 1997). Thermos Co. v. Starbucks Corp. , 1998 U. S. Dist. LEXIS 17753 (N. D. Ill. 1998). Solomon v. Kimberly-Clark Corp. , 1999 U. S. Dist. LEXIS 1594 (N. D. Ill. 1999). Nitinol Med. Techs. , Inc. v. AGA Med. Corp. , 135 F. Supp. 2 d 212 (D. Mass. 2000). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 17

WORK-PRODUCT THAT FORMED FACTUAL BASIS FOR OPINION MUST BE PRODUCED • Whether or not communicated to client • But legal analysis need not be • Rationale: Competency of opinion is based on factual predicates and client is able to (should? ) evaluate them Matsushita Elecs. Corp. v. Loral Corp. , 1995 U. S. Dist. LEXIS 12880 (S. D. N. Y. 1995). Cordis Corp. v. Sci. Med Life Systems, Inc. , 980 F. Supp. 1030 (D. Minn. 1997). D. O. T. Connectors, Inc. v. J. B. Nottingham & Co. , Inc. , 2001 U. S. Dist. LEXIS 739 (N. D. Fla. 2001). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 18

ALL WORK-PRODUCT OF OPINION COUNSEL MUST BE PRODUCED • Whether or not communicated to client • Whether factual or legal • Rationale: Necessary to test competence • They could reflect things communicated orally to client (especially if contradictory) • Otherwise encourage counsel to hide bad facts Mushroom Assocs. v. Monterey Mushrooms, Inc. , 24 U. S. P. Q. 2 d 1767 (N. D. Cal. 1992). Frazier Indus. Co. Inc. v. Advance Storage Prods. , 33 U. S. P. Q. 2 d 1702 (C. D. Cal. 1994). Hoover Universal, Inc. v. Graham Packaging Corp. , 44 U. S. P. Q. 2 d 1596 (C. D. Cal. 1996). Electro Scientific Indus. Inc. v. General Scanning, Inc. , 175 F. R. D. 539 (N. D. Cal. 1997). Dunhall Pharms. , Inc. v. Discus Dental, Inc. , 994 F. Supp. 1202 (C. D. Cal. 1998). Mosel Vitelic Corp. v. Micron Tech. Inc. , 162 F. Supp. 2 d 307 (D. Del. 2000). Chiron Corp. v. Genentech, Inc. , 2001 U. S. Dist. LEXIS 22408 (E. D. Cal. 2001). Novartis Pharms. Corp. v. Eon Labs Mfg. Inc. , 206 F. R. D. 396 (D. Del. 2002). Michlin v. Canon, Inc. , 2002 U. S. Dist. LEXIS 8079 (E. D. Mich. 2002). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 19

WHAT ABOUT TRIAL COUNSEL WORK-PRODUCT WHEN TRIAL COUNSEL IS NOT OPINION COUNSEL? • Still must give up all pre-complaint opinions on same subject and work-product communicated to client Allergan Inc. v. Pharmacia Corp. , 2001 U. S. Dist. LEXIS 23952 (D. Del. 2001). Frazier Indus. Co. Inc. v. Advance Storage Prods. , 33 U. S. P. Q. 2 d 1702 (C. D. Cal. 1994). D. O. T. Connectors, Inc. v. J. B. Nottingham & Co. , Inc. , 2001 U. S. Dist. LEXIS 739 (N. D. Fla. 2001). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 20

MUST GIVE UP TRIAL COUNSEL WORK-PRODUCT TO THE EXTENT IT CONTRADICTS OR CASTS DOUBT ON OPINION COUNSEL’S OPINION (BUT NOT IF CONSISTENT) Clintec Nutrition Co. v. Baxa Corp. , 1996 U. S. Dist. LEXIS 4001 (N. D. Ill. 1996). Micron Separations, Inc. v. Pall Corp. , 159 F. R. D. 361 (D. Mass 1995). Thermos Co. v. Starbucks Corp. , 1998 U. S. Dist. LEXIS 17753 (N. D. Ill. 1998). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 21

MUST GIVE UP TRIAL COUNSEL’S PRE-COMPLAINT DOCUMENTS BEARING ON ANY ISSUE ADDRESSED IN OPINION COUNSEL’S OPINION (INFRINGEMENT, VALIDITY, ENFORCEABILITY) • But not “strategy” documents and with procedural limitations • Outside counsel eyes only • Only usable on showing of inconsistency with opinion counsel’s opinion Electro Scientific Indus. Inc. v. General Scanning, Inc. , 175 F. R. D. 539 (N. D. Cal. 1997). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 22

PRE-COMPLAINT V. POST-COMPLAINT • Courts are especially sensitive about invading postcomplaint advice and strategy • If criterion is state of mind before initiating infringement, why is later advice relevant? Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 23

SOME COURTS DRAW BRIGHT LINE PROTECTING POST-COMPLAINT WORK-PRODUCT Micron Separations, Inc. v. Pall Corp. , 159 F. R. D. 361 (D. Mass 1995). Dunhall Pharms. , Inc. v. Discus Dental, Inc. , 994 F. Supp. 1202 (C. D. Cal. 1998). Carl Zeiss Jena Gmb. H v. Bio-Rad Labs. , Inc. , 2000 U. S. Dist. LEXIS 10044 (S. D. N. Y. 2000). Hoover Universal, Inc. v. Graham Packaging Corp. , 44 U. S. P. Q. 2 d 1596 (C. D. Cal. 1996). OTHERS DON’T RECOGNIZE THAT AS A GENERAL RULE Chiron Corp. v. Genentech, Inc. , 2001 U. S. Dist. LEXIS 22408 (E. D. Cal. 2001) (but did not ask for trial counsel’s documents). D. O. T. Connectors, Inc. v. J. B. Nottingham & Co. , Inc. , 2001 U. S. Dist. LEXIS 739 (N. D. Fla. 2001). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 24

POST-COMPLAINT DISCOVERY MAY BE JUSTIFIED BY CHANGE IN ACCUSED INFRINGER’S POSITION • Client discontinued manufacture of accused compound in U. S. • Client discontinued use of another accused compound in research • Court held that might implicate change in reliance on earlier opinion • But - discovery limited to advice, analysis and reasoning of counsel on whom executive relied for change in position Bristol Myers Squibb, v. Rhone-Poulenc Rorer, Inc. , 52 U. S. P. Q. 2 d 1908 (S. D. N. Y. 1999). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 25

OTHER UNIQUE FACTS (USUALLY INVOLVING TRIAL COUNSEL) MAY JUSTIFY POST-COMPLAINT DISCOVERY • Trial counsel consulted with opinion counsel on opinion rendered after complaint Mosel Vitelic Corp. v. Micron Tech. Inc. , 162 F. Supp. 2 d 307 (D. Del. 2000). • Trial counsel rendered the opinion relied on after complaint Michlin v. Canon, Inc. , 2002 U. S. Dist. LEXIS 8079 (E. D. Mich. 2002). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 26

WHAT EFFECT ON POST-COMPLAINT DISCOVERY IF TRIAL COUNSEL IS ALSO OPINION COUNSEL? “Eon has not only elected to engage in the unconventional and risky arrangement of having opinion and trial counsel from the same law firm, but Eon’s opinion counsel, Mr. Pontani, has actually entered an appearance in this matter. Because the Court cannot differentiate between opinion and trial counsel, the Court will grant Novartis’ Motion To Compel to the extent it seeks the production of all legal advice Eon received from the Cohen, Pontani law firm relating to the subject matter of Mr. Pontani’s opinion. ” Novartis Pharms. Corp. v. Eon Labs Mfg. Inc. , 206 F. R. D. 396, 399 (D. Del. 2002). But see Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc. , 52 U. S. P. Q. 2 d 1908 (S. D. N. Y. 1999) (although trial counsel rendered the pre-complaint opinion relied on, discovery of postcomplaint, possibly inconsistent advice was limited to the (in-house) attorney who gave that advice). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 27

ANOTHER COMPLICATION WHEN OPINION COUNSEL BECOMES TRIAL COUNSEL - DISQUALIFICATION DR 5 -101(b)1 DR 5 -102(a)2 (b) A lawyer shall not act, or accept employment that contemplates the lawyer's acting, as an advocate before any tribunal if the lawyer knows or it is obvious that the lawyer ought to be called as a witness on behalf of the client, except that the lawyer may act as an advocate and also testify: (1) If the testimony will relate solely to an uncontested issue. (2) If the testimony will relate solely to a matter of formality and there is no reason to believe that substantial evidence will be offered in opposition to the testimony. (3) If the testimony will relate solely to the nature and value of legal services rendered in the case by the lawyer or the lawyer's firm to the client. (4) As to any matter, if disqualification as an advocate would work a substantial hardship on the client because of the distinctive value of the lawyer as counsel in the particular case. (a) If, after undertaking employment in contemplated or pending litigation, a lawyer learns or it is obvious that the lawyer ought to be called as a witness on behalf of the client, the lawyer shall withdraw as an advocate before the tribunal, except that the lawyer may continue as an advocate and may testify in the circumstances enumerated in DR 5 -101(b)(1) through (4). DR 5 -102(b)3 (b) If, after undertaking contemplated or pending litigation, a lawyer learns or it is obvious that the lawyer or a lawyer in his or her firm may be called as a witness other than on behalf of the client, the lawyer may continue the representation until it is apparent that the testimony is or may be prejudicial to the client at which point the lawyer and the firm must withdraw from acting as an advocate before the tribunal. (These are New York Rules, but typical) Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 1. Recently changed to 5 -102(a). 2. Recently changed to 5 -102(c). 3. Recently changed to 5 -102(d). 28

WHEN IS IT A LAWYER “OUGHT TO BE CALLED” OR IS “LIKELY TO BE NECESSARY” AS A WITNESS • Client can testify as to request for opinion, receipt and reliance Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 29

Rohm & Haas Co. v. Lonza • Opinion counsel disqualified • Adverse party intended to call them to examine on qualifications and objectivity • As trial counsel, they will urge the jury to accept the opinions Rohm & Haas Co. v, Lonza, Inc. , 1999 U. S. Dist. LEXIS 13919 (E. D. Pa. 1999). • Recall Novartis v. Eon: “Unconventional and risky arrangement” • Rationale would create automatic disqualification in all cases where opinion counsel is trial counsel Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 30

Compare Bristol Myers v. RPR: • Long delay in raising issue • Client has committed not to call opinion counsel/trial counsel as a witness • No prejudice to adverse party if they are precluded from calling him • Did not show his testimony would be adverse to his client • Disqualification is disfavored and heavy burden Bristol Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc. , 55 U. S. P. Q. 2 d 1662 (S. D. N. Y. 2000). Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 31

Fitzpatrick, Cella, Harper & Scinto www. fitzpatrickcella. com Robert L. Baechtold, Esq. 32