Jurgens v. McKasy , 927 F.2d 1552, 1562 (Fed. Cir. 1991).

The Opinion Of CounselAs Defense To Willful Infringement

Robert L. Baechtold, Esq.

FITZPATRICK, CELLA, HARPER & SCINTO30 Rockefeller Plaza

New York, NY

Fitzpatrick, Cella, Harper & Scintowww.fitzpatrickcella.com

Robert L. Baechtold, Esq. 2

“[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.2d 1380, 1390 (Fed. Cir. 1983) (emphasis in original).



The Duty to obtain competent advice arises before initiating infringement or when infringer has knowledge of patent, if later.

Jurgens v. McKasy, 927 F.2d 1552, 1562 (Fed. Cir. 1991).



• Infringer got opinion 3-1/2 months after product launch

• USPTO initiated reexamination and rejected all claims

• Infringement held willful

• Double damages for 3 yearsStryker Corp. v. Intermedics Orthopedics, Inc., 891 F.Supp. 751, 813-18 (E.D.N.Y. 1995); affirmed 96 F.3d 1409 (Fed. Cir. 1996).

Stryker v. Intermedics



Crystal Semiconductor Corp. v. Tritech Microelecs. Int’l, Inc., 246 F.3d 1336, 1351-52 (Fed. Cir. 2001) (discussing Gustafson, Inc. v. Intersystems Indus. Prods., Inc., 897 F.2d 508 (Fed. Cir. 1990)).

“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.”

PUTTING ON A GOOD DEFENSEIS NOT GOOD ENOUGH.



SRI Int’l Inc. v. Advanced Tech. Labs., Inc., 127 F.3d 1462, 1468 (Fed. Cir. 1997).

“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].”

THE FEDERAL CIRCUIT DID NOT DECIDE IF INFRINGEMENT COULD CEASE TO BE

WILLFUL AFTER AN OPINION IS OBTAINED



“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.2d 1565, 1580 (Fed. Cir. 1986).

ADVERSE INFERENCE FROM ASSERTINGATTORNEY CLIENT PRIVILEGE



“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.2d 772, 775 (4th Cir. 1990) (internal citations omitted).

Compare:



“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.2d 1568, 1572-73 (Fed. Cir. 1988).

With:



• 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

CONSEQUENCES:



• 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

WHAT PROBLEMS DOES THIS RAISE?



“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.2d 642, 643-44 (Fed. Cir. 1991).

THE FEDERAL CIRCUIT SUGGESTED BIFURCATION FOR LATER TRIAL



IPPV Enterprises v. Cable/Home Comm. Corp., 26 U.S.P.Q.2d 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).

MOST COURTS DECLINE TO DO THAT



“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)).

SOME INDICATION OF BUCKING THAT TREND



GENERAL AGREEMENT

• All opinions obtained pre-complaint (including trial counsel)

• All “work-product” that is communicated to client

SCOPE OF WAIVER



AREAS OF NON-UNIFORMITY

• Post-complaint advice from trial counsel• Post-complaint advice from others• Work-product not communicated to client

SCOPE OF WAIVER



• 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.2d 212 (D. Mass. 2000).

WORK-PRODUCT NOT COMMUNICATED TO CLIENT NEED NOT BE PRODUCED



• Whether or not communicated to client

• But legal analysis need not be

• Rationale: Competency of opinion is based on factualpredicates 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. SciMed 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).

WORK-PRODUCT THAT FORMED FACTUAL BASIS FOR OPINIONMUST BE PRODUCED



Mushroom Assocs. v. Monterey Mushrooms,Inc., 24 U.S.P.Q.2d 1767 (N.D. Cal. 1992).Frazier Indus. Co. Inc. v. Advance Storage Prods., 33 U.S.P.Q.2d 1702 (C.D. Cal. 1994).Hoover Universal, Inc. v. Graham Packaging Corp., 44 U.S.P.Q.2d 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.2d 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).

• 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

ALL WORK-PRODUCT OF OPINION COUNSELMUST BE PRODUCED



• 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.2d 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).

WHAT ABOUT TRIAL COUNSEL WORK-PRODUCT WHEN TRIAL COUNSEL IS NOT OPINION COUNSEL?



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).



MUST GIVE UP TRIAL COUNSEL’S PRE-COMPLAINT DOCUMENTS BEARING ON ANY ISSUE ADDRESSED IN OPINION COUNSEL’S OPINION (INFRINGEMENT,

VALIDITY, ENFORCEABILITY)

Electro Scientific Indus. Inc. v. General Scanning, Inc., 175 F.R.D. 539 (N.D. Cal. 1997).

• But not “strategy” documents and with procedural limitations• Outside counsel eyes only• Only usable on showing of inconsistency with

opinion counsel’s opinion



PRE-COMPLAINT V. POST-COMPLAINT

• Courts are especially sensitive about invading post-complaint advice and strategy

• If criterion is state of mind before initiating infringement, why is later advice relevant?



SOME COURTS DRAW BRIGHT LINEPROTECTING POST-COMPLAINT

WORK-PRODUCTMicron 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 GmbH 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.2d 1596 (C.D. Cal. 1996).

OTHERS DON’T RECOGNIZE THATAS 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).



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.2d 1908 (S.D.N.Y. 1999).



• Trial counsel consulted with opinion counsel on opinion rendered after complaint

OTHER UNIQUE FACTS (USUALLY INVOLVING TRIAL COUNSEL) MAY JUSTIFY

POST-COMPLAINT DISCOVERY

• Trial counsel rendered the opinion relied on after complaint

Michlin v. Canon, Inc., 2002 U.S. Dist. LEXIS 8079 (E.D. Mich. 2002).

Mosel Vitelic Corp. v. Micron Tech. Inc., 162 F. Supp.2d 307 (D. Del. 2000).



“Eon has not only elected to engage in the unconven-tional 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.2d 1908 (S.D.N.Y. 1999) (although trial counsel rendered the pre-complaint opinion relied on, discovery of post-complaint, possibly inconsistent advice was limited to the (in-house) attorney who gave that advice).

WHAT EFFECT ON POST-COMPLAINT DISCOVERY IF TRIAL COUNSEL IS ALSO OPINION COUNSEL?



DR 5-101(b)1

(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.

(These are New York Rules, but typical)

DR 5-102(a)2

(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.

1. Recently changed to 5-102(a).2. Recently changed to 5-102(c).3. Recently changed to 5-102(d).

ANOTHER COMPLICATION WHEN OPINION COUNSEL BECOMES TRIAL COUNSEL - DISQUALIFICATION



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



• 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 opinionsRohm & 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

Rohm & Haas Co. v. Lonza



• 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.2d 1662 (S.D.N.Y. 2000).

Compare Bristol Myers v. RPR:

Jurgens v. McKasy , 927 F.2d 1552, 1562 (Fed. Cir. 1991).

Documents

Transcript of Jurgens v. McKasy , 927 F.2d 1552, 1562 (Fed. Cir. 1991).