The U. S. Court of Appeals for the Federal Circuit affirmed a district court on the issue of inducing infringement, finding that notwithstanding the Federal Circuit’s Seagate “objective recklessness” rule on willfulness, and its earlier Knorr-Bremse decision abolishing the adverse inference rule, opinion-of-counsel evidence is nevertheless probative of specific intent to induce infringement. Broadcom Corp. v. Qualcomm Inc., Case No. 08-1199 (Fed. Cir., Sept. 24, 2008) (Linn, J.).

Broadcom sued Qualcomm over three patents covering “third generation” (3G) processor chips. 3G chips enable the communication, graphics and sound functionalities of cell phones. The jury found that Qualcomm willfully infringed Broadcom’s patents and also that Qualcomm induced infringement. Based on In re Seagate, (see IP Update, Vol. 10, No. 8) the district court invited a motion for reconsideration of the willfulness verdict and subsequently vacated that verdict. Broadcom was offered the choice of accepting the remaining liability and damages verdicts or being granted a new trial. Broadcom chose the former, and Qualcomm appealed.

Although the Court agreed with Qualcomm that, based on Knorr-Bremse (IP Update, Vol. 7, No. 9), there is no affirmative duty to seek an opinion of counsel regarding infringement and that it is improper to allow an “adverse inference or evidentiary presumption that such an opinion would have been unfavorable” and also that in the wake of its en banc Seagate decision, the new standard for willful infringement is “objective recklessness”—which renders the alleged infringer’s state of mind irrelevant and obviates the necessity to obtain an opinion of counsel as to non-infringement—it nevertheless sustained the district court ruling that whether an accused infringer sought advice of counsel is relevant to the specific intent required to prove inducement under DSU v. JMS. (See IP Update, Vol. 9, No. 12.)

In appealing the inducement verdict, Qualcomm took the position that obtaining an opinion of counsel should no longer be relevant to inducement. Qualcomm argued that the specific intent requirement for proving inducement (under DSU) is a stricter standard than objective recklessness and that, since opinion-of-counsel evidence is irrelevant to objective recklessness, so it should likewise be irrelevant to specific intent.

The Federal Circuit disagreed, explaining that to be liable for inducing infringement under DSU, a defendant must have had the “specific intent to encourage another’s infringement.” Specific intent means that the defendant knew, or should have known, that his actions would induce actual infringement. In view of this requirement for specific intent, the Federal Circuit found that opinion-of-counsel evidence is relevant to whether a defendant knew, or should have known, that its acts would cause direct infringement. The Court explained that “it would be manifestly unfair to allow opinion-of-counsel evidence to serve an exculpatory function … and yet [exclude] such advice as circumstantial evidence of intent to infringe.”

Practice Note: Although it is no longer necessary to obtain an opinion of counsel to avoid willful infringement, anyone concerned about possible liability for inducement to infringe should consider seeking an opinion of counsel with regard to its proposed activities.