Advice of Counsel Defense in Patent Litigation
and Protecting Attorney-Client PrivilegeLimiting Scope of Discovery, Safeguarding Confidential Communications and Information
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TUESDAY, OCTOBER 2, 2018
Presenting a live 90-minute webinar with interactive Q&A
Krupa K. Parikh, Atty, Latham & Watkins, Washington, D.C.
April E. Weisbruch, Atty, Sheppard Mullin Richter & Hampton, Washington, D.C.
Eleanor M. Yost, Shareholder, Carlton Fields Jorden Burt, Tampa and Washington, D.C.
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Advice of Counsel Defense and Waiver of Privilege: An Overview
Establishing A-C Privilege
❖ Holder is or seeks to be a client;
❖ Communicates to a member of the Bar of a Court;
❖ Confidentially;
❖ For the purpose of securing primarily legal advice or
services;
❖ Not for crime or fraud;
❖ The privilege is claimed and not waived by the
client.United Shoe, 89 F. Supp. 357 (D. Mass. 1950)
66
Purposes of Privilege
❖ Encourage clients to seek legal
advice.
❖ Promote frank and full discussions
with counsel.
❖ Aid clients to conform conduct to
requirements of the law.
77
Establishing Work Product
❖ Protects attorney.
❖ A document or tangible thing;
❖ Prepared in anticipation of litigation or for
trial; and
❖ Prepared by or for a party, or by or for his
representative.
Hickman v. Taylor, 329 U.S. 495 (1947)
88
Purpose of Work Product
❖ Establish zone of privacy for strategic
litigation planning.
❖ Requires counsel to do their own
work.
❖ Prevents piggybacking.
99
Two Types of Work Product
❖ Fact work product:
❖ Factual information that pertains to the
litigation and is prepared or gathered in
connection with it.
❖ Opinion work product:
❖ Mental impressions, conclusions, opinions, or
theories concerning the litigation.
Upjohn v. United States, 101 S. Ct. 677 (1981)
1010
Qualified Immunity
❖ Fact work product:
❖ Potentially discoverable upon showing of
substantial need, inability to obtain from
alternative source without undue expense.
❖ Opinion work product:
❖ Generally absolutely immune from discovery.
Fed. R. Civ. P. 26(b)(3)(A) & (B)
1111
Willfulness & Opinions
12
Willful Patent Infringement
❖“The court may increase the damages
up to three times the amount found.”
35 U.S.C. § 284
❖ Willfulness may support “exceptional
case” finding and award of attorneys’
fees.
35 U.S.C. § 285
1313
In The Beginning . . . .
❖ Underwater Devices, 717 F.2d 1380
(Fed. Cir. 1983)
❖ Infringers with actual notice of another’s
patent rights have “affirmative duty” to use
due care to avoid infringement.
❖ Such care normally requires that the
infringer consult with an attorney.
1414
Birth of the “Adverse Inference”
❖ Kloster, 793 F.2d 1565 (Fed. Cir. 1986)
Infringer’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.”
1515
Willfulness Factors – Read v. Portec (Fed. Cir. 1992)
❖ Deliberate copying.
❖ Good faith belief of accused infringer.
❖ Infringer’s litigation behavior.
❖ Size and financial condition.
❖ Closeness of case.
❖ Duration of misconduct.
❖ Remedial action by defendant.
❖ Motivation for harm.
❖ Whether defendant attempted to conceal misconduct.
16
Willfulness-Privilege Quagmire
❖Either get an opinion, produce the opinion and waive the attorney-client privilege, or…
❖Suffer the consequences and risks of an adverse inference that you received no opinion or that the opinion was bad.
1717
2004: End Of The Inference
“We now hold that no adverse inference thatan opinion of counsel was or would have beenunfavorable flows from an alleged infringer’sfailure to obtain or produce an exculpatoryopinion of counsel.”
Knorr-Bremse, 383 F.3d 1337 (Fed. Cir. 2004)
1818
Opinions & Waiver
19
Value of Opinions
❖ Study found willfulness alleged in 92% of complaints.
❖ Moore, Empirical Statistics on Willful Patent Infringement, 14 FED. CIR. B.J. 227 (2004)
❖ Post-Knorr - Opinions of counsel still valuable even if not required.
❖ Right opinion testimony could be excellent defense to willfulness allegation.
2020
Reliance on Opinions & Scope of Waiver
“Precedent is inconsistent on the scope of the waiverthat ought to apply to the attorney-client privilege whenthe infringer relies upon an opinion of counsel--namely,whether the waiver applies to only pre-opinion work orpre-complaint work or whether it includes everythingright up to trial and whether it applies only to opinioncounsel or to opinion and trial counsel.”
Moore, 14 Fed. Cir. B.J. at 233
2121
Inconsistent Scope of Waiver Cases
-Novartis v. Eon (D. Del. 2002) – if opinion counsel is trial counsel, all post-complaint legal advice discoverable.
-Thermos v. Starbucks (N.D. Ill. 1998) – Trial counsel work product must be produced if contradicts or casts doubt on opinion counsel’s opinion.
-Thorn v. Micron (D. Del. 1993) – opinion counsel work-product need not be produced unless communicated to client
2222
EchoStar, 448 F.3d 1294 (Fed. Cir. 2006)
❖ TiVo sues EchoStar for infringement.
❖ EchoStar asserts advice of counsel defense.
❖ Pre-suit: In-house counsel advice.
❖ Post-suit: Obtained additional advice from outside opinion firm (Merchant & Gould) but decided not to rely on it.
2323
EchoStar – District Court
❖ Reliance on advice of in-house counsel waived A/C and W/P privilege relating to advice of any counsel regarding infringement.
❖ Waiver scope included communications made either before or after complaint filed and any work product of M&G, even if not communicated.
2424
EchoStar – CAFC
❖ Applies Fed. Circuit law to scope
of waiver when advice of counsel
defense raised as defense to willful
infringement.
2525
EchoStar – CAFC First Waiver Category
❖ Waiver of privilege applies to all other communications relating to same subject matter.
❖ EchoStar’s choice to rely on opinion of in-house counsel waived privilege with regard to any communications on subject matter with any counsel, including M&G.
2626
EchoStar – CAFC Second Waiver Category
❖ W/P waiver only extends to inform
court of infringer’s state of mind.
❖ What counsel prepared but did not
communicate to client not relevant to
willfulness.
❖ Therefore uncommunicated W/P
not discoverable.
2727
EchoStar – CAFC Third Waiver Category
❖ A/C and W/P waived for documents in atty’s file that reference client communications, but were not themselves communicated to client. Discoverable.
❖ Non-communicated W/P should be redacted from materials that may be otherwise discoverable.
2828
EchoStar Temporal Scope of Waiver
❖ M&G (post-suit) communications
waived.
❖ Footnote 4 says waiver extends
to A/C and W/P communicated to
client post-litigation.
2929
Post-EchoStar Temporal Scope of Waiver
❖ Some courts extended waiver to communications post-suit with trial counsel when material to subject of opinion.
❖ Others extended waiver to trial counsel communications contradicting opinion counsel.
❖ Others extended waiver to any communications with trial counsel on subject matter of opinion.
3030
Change of Willfulness Standard & Impact on Waiver: Seagate
31
Seagate, 497 F.3d 1360 (Fed. Cir. 2007)
❖ Two-part test for willfulness.
❖ Part 1 – Threshold showing of objective recklessness. No duty of care to avoid infringement. Could be based on strength of defenses at trial.
❖ State of mind of infringer not relevant.
3232
Seagate, 497 F.3d 1360 (Fed. Cir. 2007)
❖ Part 2 - Only if satisfy Part 1
does court consider whether
objectively high risk either
known or should have been
known to accused infringer.
3333
Seagate and Privilege Waiver Scope
❖ Court recognizes proper legal standard for willfulness informs relevance of evidence and proper scope of discovery.
❖ Reiterates scope of waiver extends to all communications on same subject matter. Broad scope.
3434
Seagate and Privilege Waiver Scope
❖ Different functions of trial and opinion counsel advise against extending waiver to trial counsel.
❖ Temporal limit: usually “willfulness will depend on an infringer’s pre-litigation conduct.”
❖ Trial counsel communications generally shielded from waiver stemming from advice of counsel defense. Exception for “chicanery.”
3535
Seagate and W/P Waiver Scope
❖ Absent exceptional circumstances, waiver will not extend to trial counsel work product.
❖ “Chicanery” exception.
❖ Exceptional circumstances/ substantial need exception per Hickman and 26(b)(3).
3636
Seagate Impact
❖ Exceptional circumstance example:
When opinion-authoring counsel an
active member of trial team, discovery
of trial counsel’s privileged
communications and W/P allowed.
Tyco v. E-Z-EM (E.D. Tex. 2010)
3737
Change of Willfulness Standard Again: Halo
38
Halo v. Pulse, 136 S. Ct. 1923(2016)
❖ Reverses Seagate two-part willfulness test.
❖ 35 U.S.C. § 284: “the court may increase the damages up to three times the amount found or assessed.”
❖ No explicit limitation or condition.
❖ Punishment should be reserved for egregious cases typified by willful misconduct.
3939
Halo v. Pulse, 136 S. Ct. 1923(2016)
❖ Court notes that “culpability is generally measured against the knowledge of the actor at the time of the challenged conduct.”
❖ But Court does not say that post-suit conduct is irrelevant to willfulness.
❖ No discussion of privilege, work product, opinions of counsel, or scope of waiver.
4040
Post-Halo: Now What Do We Do?
WBIP, LLC v. Kohler Co.
• Westerbeke Corporation and Kohler are competitors who manufacture and sell
marine generators (“gen-sets”) that are used on houseboats to create electrical
power for appliances such as refrigerators and air conditioners.
• Timing Matters: Kohler cannot insulate itself from liability for enhanced damages by
creating an (ultimately unsuccessful) invalidity defense for trial after engaging in
the culpable conduct of copying, or “plundering,” WBIP's patented technology prior
to litigation.
• Proof of an objectively reasonable litigation-inspired defense to
infringement is no longer a defense to willful infringement.
829 F.3d 1317, 1340 (Fed. Cir. 2016)
42
Yes, Things Have Changed
No Waiver; Full Privilege; Willfulness Risk Goes Up?
Goldilocks
Complete Waiver
43
Visteon Global Techs., Inc. v. Garmin Int’l, Inc.
• Garmin obtains opinions of counsel; elects not to waive attorney-client privilege and not to use the opinions at trial
• Visteon seeks to introduce evidence at trial that Garmin obtained opinions of counsel but has elected not to produce them for consideration by the jury at trial
• Garmin moves in limine to prevent Visteon from making arguments regarding Garmin's opinions of counsel
• Is evidence of the fact that an alleged infringer obtained an opinion of counsel, but elected not to waive the attorney-client privilege and rely on the opinion at trial, admissible?
2016 WL 4396085, *5, E.D. Michigan (August 18, 2016)
44
Visteon Global Techs., Inc. v. Garmin Int’l, Inc.
The Court concludes that permitting Visteon to submit evidence of Garmin's
failure to provide an opinion of counsel at trial, but prohibiting Visteon from
submitting evidence that Garmin did in fact procure such an opinion but
elected to maintain the attorney-client privilege and not produce that
opinion at trial, strikes an appropriate balance between disallowing the
prohibited adverse inference to Garmin of an unfavorable opinion of counsel
while at the same time preserving Visteon's right to argue to the jury that
Garmin's failure to produce such an opinion for trial can be considered as a
factor in the jury's determination of willfulness.
45
Greatbatch Ltd. v. AVX Corp.
• AVX sought and obtained invalidity and non-infringement opinions of
counsel before litigation and developed designs and processes to avoid
infringement.
• AVX waived privilege, and the court assessed the merits of the
opinion.
• Length of Opinion?
• Conclusory?
• Incompetent?
• Preliminary?
• Incomplete?
• Cited art used in litigation proceedings?
• Date of Opinion relative to infringement?
2016 WL 7217625 (D. Del. Dec. 13, 2016)
46
Johns Hopkins Univ. v. Alcon Labs., Inc.
• Johns Hopkins
University (“JHU”)
sued Alcon for direct,
induced,
contributory, and
willful infringement.
• Alcon asserts opinion
of counsel defense.
47
2017 WL 3013249 (D. Del. Jul. 14, 2017)
Alcon produces 2006 and 2007 opinions of counsel
Johns Hopkins seeks all documents “related to” opinions of
counsel
Alcon refuses, producing only a privilege log of privileged
documents from 2009-2015
• Agreed to consider producing documents on the privilege log where
Johns Hopkins could show related to the subject matter of the opinions
Opinion Letters
2006-2007
Patent
issued
Patent filed
Suit was filed2000 2006 2009 2015
Privilege log
Johns Hopkins Univ. v. Alcon Labs., Inc.
48
Categories of potentially waived documents
• Pre-issuance
• Before/after certain time periods (e.g., notice of allowance, final
amendment of claims)
• Foreign patents/patent applications/proceedings
• Work product documents
• Communicated to client
• Not communicated to client likely not waived
• Post-complaint
• In-house counsel
• Outside counsel
• Opinion counsel
49
Considerations
There is often an inherent interest in using opinions, which are likely viewed as valuable
and having been worth the cost/effort
But the risk can be high: can’t undo it once privilege is waived
Consider structuring in-house counsel’s role in opinions-of-counsel and subsequent
litigation to reduce risk/impact of waiver extending to litigation issues
Appearance of client’s behavior (both pre- and post-complaint) may affect outcome
(misconduct of party seeking privilege protection was raised upfront in briefs here)
Before relying on opinions of counsel:
• Consider timing issues
• Review potentially waived documents
• Consider what other documents may need to be collected/produced, and what those documents would
say
• Consider whether certain categories might be excluded from the waiver, and how they would affect
strategy
• Consider seeking guidance from the Court on the potential scope of waiver, where appropriate
Could PTAB post-grant proceeding achieve same objective as opinions?
50
Practical Tips
• Post-Halo, motivation to seek formal legal opinions on issues of non-infringement
and invalidity as a preemptive defense against a willfulness claim goes up
• Opinion counsel has lots of good information but don’t make them part of your
trial team; keep opinion counsel completely separate
―Not prosecution counsel; not post-grant proceedings counsel; just opinion
counsel; treat them like an expert witness
• Courts will find waiver for trial counsel communications, even if opinion counsel
is not on the communications
• Waiver of privilege for in-house counsel and his own client/employer is scary
• Use the phone!
51
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