Best Practices for Obtaining and Using Opinions of Counsel

03 August 2009 Publication


By C. Edward Polk, Jr., Annora A. Bell, and Debra A. Lange, Foley & Lardner LLP

This article is part of our Summer 2009 edition of Legal News: China Quarterly Newsletter, Eye on China.

In the high-stakes world of U.S. patent litigation, an opinion of counsel can be a useful weapon for defending against claims of patent infringement. This article presents practical tips for obtaining and using opinions of counsel under U.S. patent law.

1. Historical Perspective of U.S. Case Law Regarding Opinions
For more than 20 years, U.S. case law held that a potential patent infringer had to “exercise due care to determine whether or not he is infringing,” which normally included a “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., 717 F.2d 1380, 1389-90 (Fed. Cir. 1983)). U.S. law further held that a defendant’s failure to produce an opinion in litigation warranted an “adverse inference” that any opinion would have been unfavorable to the alleged infringer. (Fromson v. W. Litho Plate & Supply Co., 853 F.2d 1568, 1572-73 (Fed. Cir. 1988)).

2. Current Relevancy of an Opinion
Several recent U.S. decisions redefined the consequences of obtaining or not obtaining an opinion. As a result, a jury may no longer make an adverse inference regarding willful infringement if an opinion is not produced during trial (Knorr-Bremse Sys. Fuer Nutzfahrzeuge v. Dana, 383 F.3d 1337, 1343 (Fed. Cir. 2004)); an alleged infringer who relies on an opinion at trial waives attorney-client privilege for the opinion and communications relating to the opinion (In re EchoStar Commc’ns Corp., 448 F.3d 1294, 1304 (Fed. Cir. 2006)); and the resulting waiver typically does not extend to trial counsel (In re Seagate Tech. LLC, 497 F.3d 1360, 1373 (Fed. Cir. 2007)). Even without the adverse inference, opinions are still relevant to determining willful infringement, enhanced damages, an award of attorneys’ fees to the winning party, and induced infringement.

3. When to Obtain the Opinion
A company does not need to get an opinion before marketing a device. However, it may be advisable to do so if there is a competitor that routinely seeks patents for competitive devices. Indeed, a freedom-to-operate opinion can be useful when initially deciding whether to invest in a particular technology.

4. Who Should Write the Opinion
A disinterested U.S. patent attorney — that is, an attorney who does not have a stake in the case — should author the opinion. While U.S. courts have held that it is appropriate to rely upon the opinion of in-house counsel in some instances, the courts have not clearly defined the scope of privilege waiver when in-house counsel authors the opinion. Thus, any reliance on in-house counsel opinion should be carefully contemplated.

Some precaution should be taken when using the same attorney as both opinion and trial counsel because the scope of waiver in this situation remains unsettled. Recent case law, however, suggests that opinion and trial counsel may work for the same law firm if they operate independently and do not communicate regarding the subject matter of the opinion.

Unlike U.S. attorneys, U.S. patent agents can opine only on invalidity and not on infringement. Furthermore, U.S. case law is split on whether and what types of communication with a patent agent are privileged.

5. Substance and Form of the Opinion
All opinions must be competent and should provide a sufficient level of detail. Written opinions usually carry more weight in court than oral opinions. Generally speaking, an opinion needs to address only invalidity or non-infringement.

6. When to Update the Opinion
An opinion may need to be updated after any material product changes or changes in the law. Indeed, periodic consultation with opinion counsel on the product shows good faith.

7. Who Should Review the Opinion
An opinion should be reviewed, for example, by an executive with decision-making authority or in-house legal counsel with product or marketing responsibilities. Ultimately, an opinion must be reviewed and relied upon in the business context of deciding to proceed with the allegedly infringing conduct.

8. When to Rely on an Opinion During Litigation
Strategic and legal considerations help determine whether to rely on an opinion at trial. Strategic considerations include the opinion’s strength, competency, and consistency with current litigation strategy.

Important legal considerations include the scope of waiver, related third-party communications, deadlines for disclosing the opinion, and consequences of not producing the opinion.

Waiver: Attorney-client privilege is waived for opinion counsel for any communications relating to the same subject matter as the opinion. Jurisdictions are split as to what “subject matter” means. Some courts construe waiver to include all potential defenses (i.e., non-infringement, invalidity, or unenforceability), while others limit waiver to the specific defense contained in the opinion. As for work-product privilege, normally only actual communications and documents discussing actual communications between opinion counsel and the client are waived. When trial counsel is not   also opinion counsel, attorney-client privilege and work-product privilege for trial counsel are not waived absent exceptional circumstances such as chicanery.

Third parties: In general, disclosure of attorney-client communications to third parties waives privilege. The joint defense and common interest doctrines provide an exception to this rule. The applicability of the exception depends on the specific facts and circumstances of each situation.

Deadlines: Different jurisdictions provide different deadlines for producing the opinion during trial. For example, the Northern District of California requires disclosure 50 days after the court’s claim construction ruling while the Eastern District of Texas has required disclosure 15 to 68 days after the court’s claim construction ruling.

Negative inferences: Although there is no longer an adverse inference if an opinion is not produced at trial, the trier of fact may consider the failure to obtain or produce an opinion as evidence in determining willfulness, induced infringement, and enhanced damages as well as awarding attorneys fees.

Although U.S. case law no longer requires a company to obtain an opinion of counsel before initiating or continuing potentially infringing activity, the failure to do so can be considered when a company is involved in U.S. patent litigation under “the totality of the circumstances.”

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