After a few recent discussions with clients, my heart goes out to in-house attorneys who are handling a wide variety of legal issues and must try and keep straight various aspects of patent law where the legal standards and best practices continue to shift and change. So-called patent opinions are a perfect example of this changing landscape. In the 1980s and 90s, it was borderline malpractice not to get such an opinion as the Federal Circuit had established a “duty of care” to avoid infringement, and willfulness was found in nearly two-thirds of cases. After the Seagate decision from the Federal Circuit in 2007 removed the duty of care, willful infringement and enhanced damages decreased significantly, and almost any reasonable defense at trial negated willfulness, so opinions were used much less frequently. With the Halo decision from the Supreme Court in 2016, the landscape shifted again to where willful infringement and the specter of enhanced damages were again on the table. Additionally, the timing for culpability is now at the time of alleged infringement, so a reasonable but unsuccessful defense at trial is no longer helpful. This was further reinforced in 2018 when twice the Supreme Court vacated reversals by the Federal Circuit of enhanced damages. Since Halo, the Federal Circuit has continued to define the contours of willful infringement and “egregious” conduct. This article will consider the questions of whether opinions are still helpful (spoiler alert: they definitely have their uses), and when that opinion should be obtained.
A patent opinion is a written legal analysis that typically comes in one of two varieties. An opinion of non-infringement compares an existing patent for which the opinion is sought (which we will refer to as the patent at issue) to a product and provides reasons why the product does not infringe the patent at issue. An opinion of invalidity compares the patent at issue to prior art and provides reasons why the patent at issue is invalid in light of the prior art. Typically, a patent opinion is sought to provide cover for possible litigation relating to an entity’s products that may infringe on the patent at issue because a rigorous assessment of non-infringement or invalidity with respect to the patent at issue can help show that the party was not willful in any infringement, and did not subjectively believe their actions (or the actions of their customers) infringed the patent at issue. Such a showing can assist the party to avoid willful or induced infringement of the patent at issue, or otherwise mitigate any enhanced damages even if the party is found to have willfully infringed the patent at issue.
When Should a Party Seek a Patent Opinion?
Parties should seek a patent opinion when they suspect a risk of patent litigation exists involving a new or existing product or service offered by the party, or in other words, once the party is “on notice” of the patent at issue. For example, when a new product or service is being released, parties often perform freedom-to-operate analyses, and that may provide an indication of one or more patents for which opinions may be beneficial. This may be particularly applicable in a technology space that is known to be especially competitive or crowded with participants. Having knowledge of patents in such technology spaces, especially of specific patents that could read onto new products or services, would be suitable subjects for patent opinions.
As to what qualifies as “notice,” it is a highly fact-based analysis that should be conducted with counsel. For example, an infringement letter is often found as providing notice (see, e.g., Halo Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 101 (2016)), but not always (see Evolved Wireless, LLC v. Samsung Elecs. Co. Ltd., 2016 WL 1019667, *3-*4 (D. Del. Mar. 15, 2016) (letter with list of 85 patents was not notice)). As another example, the patent at issue being cited on the face of a patent of the party may not qualify as notice (see, e.g., Elbit Sys. Land and C4I Ltd. v. Hughes Network Sys., LLC, 2016 WL 3878246, *2-*3 (E.D. Tex. Mar. 30, 2016) (finding notice); but cf. Radware, Ltd. V. FR5 Networks, 2016 WL 4427490 (N.D. Cal. Aug. 22, 2016) (finding no notice)), but the patent at issue being used in an Office Action may qualify as notice. See Intellectual Ventures I LLC v. Symantec Corporation, 2017 WL 639638, *8 (D. Del. Feb. 13, 2017).
In What Ways are Patent Opinions Beneficial?
In a simple response, opinions can be an important tool when new products are launched, potential infringement is discovered, or other times when the party might be “on notice” of potential infringement to avoid a finding of willful infringement or induced infringement. And while such an opinion may not avoid a finding of willfulness, it might still help to avoid enhanced damages anyway. In particular, the Halo decision bifurcated the findings of willfulness, and enhanced damages. Willfulness is a pre-requisite, but the court must find “egregious” conduct before enhanced damages are awarded. A post-Halo empirical study of willful infringement and enhanced damages cases conducted by Karen Sandrik indicates that 37.1% of cases before Halo included a finding of willful infringement and 64.9% of cases after Halo included a finding of willful infringement. Karen Sandrik, An Empirical Study: Willful Infringement & Enhanced Damages in Patent Law After Halo, 26 Mich. Tech. Law Rev. 61 (2021). Before Halo, cases included enhanced damages 60.3% of the time, while 69.0% of cases included enhanced damages after Halo. In total, Halo has increased findings of willful infringement by 27.8% and findings of enhanced damages by 8.7%.
After a finding of willfulness and when considering enhanced damages, courts have almost universally applied the Read factors, which relate to whether an infringer acted in good faith. See Read Corp. v. Portec, Inc., 970 F.2d 816, 827 (Fed. Cir. 1992). The Read factors include: (1) whether the infringer deliberately copied the ideas or design of another, (2) whether the infringer investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed, (3) the infringer’s litigation behavior, (4) the infringer’s size and financial condition, (5) the closeness of the case, (6) the duration of the misconduct, (7) the infringer’s remedial actions, (8) the infringer’s motivation for harm, and (9) whether the infringer attempted to conceal any misconduct. Id. at 826-28. Based on the Read factors, securing a patent opinion before performing any potentially infringing acts or within a reasonable amount of time after being on notice can have a substantial effect on factors (2) and (8). Given the significant impact on these factors, even if willfulness is found, having an opinion can give a judge good reason to decline to enhance damages for a party or decrease the magnitude of any enhanced damages.
Lastly, we note that a policy of burying your head in the sand to avoid discovering others’ patents has its risks, whether for willfulness or enhanced damages. For example, in Motiva Patents LLV v. Sony Corp., HTC Corp. filed a motion dismiss the claim for willful infringement based on no pre-suite knowledge of the patent. See Motiva Pats. LLC v. Sony Corp., 408 F. Supp. 2d 876, 884 (E.D. Va. 2013). However, because of a policy to not review the patents of others, the court found that “willful blindness” can supply the requisite knowledge to keep the motion in the suit. Id. at 833-34. Similarly, when addressing enhanced damages, a 2011 opinion stated, “even if  [defendant’s] belief of non-infringement was subjectively in good faith, this is negated by the Court’s finding that the Defendants evinced ostrich-like, head-in-the-sand behavior.” See Mestso Mins., Inc. v. Powerscreen Int’l Distrib. Ltd., 833 F. Supp. 2d 333, 338 (E.D. N.Y. 2011).
By working with your patent counsel and being proactive in addressing issues upfront rather than ignoring or avoiding knowledge of high-risk patents, parties can better protect themselves from claims of willful infringement and the associated potential for enhanced damages.
Adam Smoot is a shareholder in Maschoff Brennan’s Salt Lake City office. Adam’s practice focuses primarily on post-grant proceedings before the United States Patent and Trademark Office, patent prosecution and counseling, and complex intellectual property litigation. Adam has handled numerous inter partes review proceedings, as well as inter partes reexamination proceedings. He also has experience with other post-grant proceedings before the USPTO. Adam has represented both Petitioners and Patent Owners before the Patent Trial and Appeal Board.
Anthony Zhang is a registered patent attorney in Maschoff Brennan’s Salt Lake City office. Tony’s practice focuses on patent prosecution and intellectual property litigation support in a variety of technologies. He has also worked on Office Action responses, provisional applications, intellectual property due diligence, and prior art searches in technical fields such as computer architecture, cybersecurity, chemical compositions, and mechanical devices.
About Maschoff Brennan
Maschoff Brennan provides legal counsel and representation to some of the world’s most innovative companies. With over 30 attorneys and offices in the technology-focused regions of Utah and California, our attorneys are known for having the breadth of experience and the forward-thinking insight needed to handle complex technological and business issues across all industries and geographic boundaries. In addition, we have extensive experience representing clients before the ITC, PTAB, TTAB, and other administrative agencies in Washington D.C
 We note that there are other interesting findings supported by the data in the study conducted by Karen Sandrik, such as the effect of venue on the finding of willfulness, and on the enhancement of damages post-Halo, However, this article does not address those other findings.
*Republished with permission from Patent Lawter Magazine