Intellectual Property – AIA Series
Two provisions of the September 2011 Leahy-Smith America Invents Act (“AIA”) were adopted in an apparent attempt to reform certain aspects of patent litigation - Section 299 related to joinder of multiple defendants and section 298 related to advice of counsel and willful infringement. But that begs the question - will these provisions have any significant effect on U.S. patent litigation? The apparent answer so far is no.
Joinder of Parties
This section was Congress’ attempt to codify in the Patent Act the joinder standards of Rule 20 of the Federal Rules of Civil Procedure and reconfirm that there is no “patent-specific” joinder standard. In doing so, it seems Congress hoped to stem the tide of massive multi-defendant patent infringement cases filed, primarily, by non-practicing entities, sometimes also known as “patent trolls”. The new law states that a plaintiff may only join multiple defendants where the claims arise out of “the same transaction, occurrence, or series of transactions, or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process” and “questions of fact common to all defendants or counterclaim defendants will arise in the action,” and specifies that accused infringers may not be joined together “based solely on allegations that they each have infringed the patent or patents in suit.”
Unfortunately, in the real world the effect of this change in the law has been mostly nonexistent. The fly in the ointment for those hoping to slow down the trolls with this provision is the fact that the new law only relates to trial. Thus, what plaintiffs can no longer accomplish by way of joinder, they are often able to accomplish through pre-trial consolidation. Ultimately, while many were hoping this change in the law would help defendants, in reality, most cases under the AIA are still being handled in a consolidated manner.
Advice of Counsel
A second provision of the AIA also sought to codify recent developments in the case law. This provision specifies that an infringer’s decision not to obtain the advice of counsel with respect to alleged patent infringement, or the decision not to present such advice to the court or jury, is not admissible as evidence that any alleged infringement was willful.
This language is a codification and minor extension of the recent Federal Circuit case law on opinions of counsel and willful infringement and represents a change from the prior jurisprudence on the issue whereunder a failure to obtain an opinion of counsel could result in an adverse jury instruction that the jurors should presume any infringement was willful. Of course, because a finding of willfulness can result in enhanced damages (up to three times the actual damages), the issue of willful infringement is, quite literally, a big-ticket item.
In view of the Federal Circuit’s new take on opinions of counsel and its codification in the AIA, it is only natural to ask if opinions remain relevant. The answer here is clearly yes. Despite the change in the law, which is positive for accused infringers and likely to lead to a diminishment in both the allegations and findings of willful infringement, opinions continue to play an important role for a number of reasons.
Perhaps the biggest litigation advantage of opinions continues to be as a defense to enhanced damages. While the lack of an opinion is not evidence of willful infringement, it can still be a relevant consideration in awarding enhanced damages, which is a separate question.
Under U.S. patent law, the issues of: (1) whether a defendant’s infringement was willful; and (2) if it was willful, whether to award the patent owner enhanced damages are two completely separate inquiries. A jury typically answers the first question and a judge always answers the second one. So, while the lack of an opinion of counsel cannot be considered by the jury in determining willfulness, once willfulness is found, whether the infringer relied on a competent opinion of counsel is often among the most important factors considered by the judge in deciding whether and by what amount to enhance the jury’s damages award.
Second, having a favorable opinion of counsel can reduce the risk of an adverse verdict in the first place. Although it is not the primary purpose of admitting the opinion, allowing the patent attorney who prepared the opinion an opportunity to testify can often serve a useful opportunity to bolster and review the defendant’s case on the merits.
Finally, although perhaps most importantly, the opinion of counsel is itself valuable legal advice that can often allow a company to avoid patent infringement lawsuits altogether. For example, opinions can help technical personal highlight design around options or alternative, non-infringing designs for the relevant devices. Or, opinions can identify patents that are good candidates for patent office proceedings such as Reexamination or Inter Partes review, which are a significantly less expensive litigation alternative for patents where invalidity is the strongest defense.
In sum, while the AIA is Congress’ first major attempt to reform the patent statutes in many years, and it is clear that some of the focus was directed to fixing perceived problems with patent litigation, it seems that so far not much has changed.