A finding of willful infringement in patent litigation is the nightmare scenario that all defendants fear because it allows the patent owner to request that the judge enhance the damages, up to three times compensatory damages. 35 U.S.C. § 284.
A recent decision from the Federal Circuit, however, will likely make it harder for a patent owner to prove willful infringement. The Federal Circuit recently held that the threshold determination of objective recklessness under the Seagate standard for willful infringement is a question of law to be decided by the judge and subject to de novo review. Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 682 F.3d 1003, 1006-07 (Fed. Cir. 2012). Further, the America Invents Act prohibits the use of an accused infringer’s failure to obtain or to present advice of counsel to prove willful infringement or inducement to infringe. See 35 U.S.C. § 298. Nevertheless, opinions of counsel can still help negate the intent required for willfulness and can weigh in a defendant’s favor under this threshold prong of the willful infringement test.
Two-Prong Test for Willful Infringement Under Seagate
In Seagate, the Federal Circuit created a two-prong test for proving willful infringement. In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc). First, the patent owner must prove by clear and convincing evidence that the alleged infringer acted despite “an objectively high likelihood that its actions constituted infringement of a valid patent.” Id. Second, the patent owner must then show that this objectively high risk was “either known or so obvious that it should have been known” to the alleged infringer. Id. The first prong of this test is objective and typically turns on whether the infringer’s defenses were or were not reasonable. The second prong is subjective and involves the accused infringer’s state of mind.
After Seagate, the two-pronged test for willfulness was treated as a question of fact where the decision-maker for both prongs was the jury. But the Federal Circuit’s recent decision in Bard held that the two prongs should have different legal standards.
The Objective Prong Is A Question of Law Under Bard
In Bard, the Federal Circuit reasoned that “while the ultimate question of willfulness based on an assessment of the second prong of Seagate may be a question of fact,” the “threshold determination of objective recklessness … is best decided by the judge as a question of law subject to de novo review.” Bard, 682 F.3d at 1006-07. Thus, the Federal Circuit concluded that it was best for a judge, rather than a jury, to decide whether a patent infringement defense is reasonable. Ultimately, this decision may help patent litigants obtain a better understanding of the scope of potential damages before proceeding to trial. But what does this decision mean for parties evaluating whether to obtain an opinion from patent counsel when faced with an infringement assertion?
Willful Infringement Under The America Invents Act
The America Invents Act (AIA) provides that the failure of an infringer to obtain the advice of counsel or present such advice to the court or jury may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent. 35 U.S.C. § 298 (effective Sept. 16, 2012). In essence, the AIA merely codified the holding from Seagate, that “there is no affirmative obligation to obtain opinion of counsel.” Seagate, 497 F.3d at 1371.
Benefits of Obtaining Opinions of Counsel In Light of Bard And AIA
Despite the recent developments in case law and the AIA that make it harder to prove willful infringement, there continue to be important reasons for seeking formal opinions from patent counsel. It should not be forgotten that the Federal Circuit has found that an opinion of counsel concluding either noninfringment or invalidity “would provide a sufficient basis for [a potential infringer] to proceed without engaging in objectively reckless behavior….” Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1339 (Fed. Cir. 2008). Indeed, the Federal Circuit has described opinions of counsel as serving “to provide an objective assessment for making informed business decisions….” Seagate, 497 F.3d at 1373 (emphasis added).
In light of the Bard decision, judges have greater discretion to keep questions of willfulness out of the hands of a jury by determining as a matter of law that a defendant’s reliance on advice of counsel was reasonable. Thus, obtaining a non-infringement and/or invalidity opinion still remains the most effective insurance against a willfulness finding.