The Western District of North Carolina issued an opinion on July 14, 2011 ordering the plaintiff, Precision Links Incorporated, to pay attorneys’ fees and litigation costs to the defendants, USA Products Group, Inc. and Home Depot U.S.A., Inc., in part due to the plaintiff’s failure to obtain a “reasonable, comprehensive, and competent” infringement opinion from its counsel prior to initiating an infringement case against the defendants.
Under 35 U.S.C. § 285, a district court has the authority to award attorneys’ fees to a prevailing party in a patent case upon determining that the case is “exceptional.” A finding that a case is exceptional is warranted when there has been some material inappropriate conduct related to the matter in litigation, including conduct that violates Federal Rule of Civil Procedure (“FRCP”) 11, which requires that by presenting a matter to the court, the party certifies that the claims are warranted by a nonfrivolous argument. In the present case, the defendants argued that the plaintiff’s claim interpretation and infringement theory were objectively baseless, and thus the litigation was pursued in bad faith such that the plaintiff had violated FRCP 11. The plaintiff denied any bad faith in bringing the litigation, arguing that it had conducted an appropriate pre-suit investigation and obtained an opinion of counsel as to infringement prior to filing suit.
In its opinion, the court set forth a the standard for pre-litigation opinions of counsel. The court noted that the fact that an infringement opinion may not have mentioned every detail of the patented or the accused design does not necessarily render the opinion wrong or unreliable, nor does a patentee’s ultimately incorrect view of how a court will find establish bad faith. However, the opinion should adhere to the standard canons of claim construction and provide reliable fundamental analysis and evidentiary support such that the party’s reliance on the opinion as a basis for alleging infringement is reasonable and reflects good faith. The court found that the plaintiff had met none of these requirements in this case, concluding that the opinion letter was so lacking that no reasonable litigant could believe than an infringement claim could succeed based on that opinion. The unreasonableness of counsel’s opinion, and of the plaintiff’s reliance on that opinion, the court noted, stemmed not from the quality of the conclusion reached but rather from the complete lack of analysis underlying that conclusion.
In view of the foregoing, it is imperative that a patentee contemplating an infringement action not only obtain a pre-litigation opinion of counsel, but one which will meet the court’s criteria of being reasonable, comprehensive, and competent. The opinion should comprise reliable analysis and evidentiary support for its conclusions, such that it would be reasonable and demonstrate good faith for a patentee to rely on such conclusions when initiating litigation.