Seagate's Progeny

Posted on February 2, 2008 by Brian Wm. Higgins

     As promised in my earlier post regarding In re Seagate, 497 F.3d 1360 (Fed. Cir. 2007), below is a summary of cases citing the much talked about Federal Circuit opinion. This survey includes opinions published on or before January 31, 2008, but is not inclusive.

  • Federal Circuit: "Under this [objectively high likelihood that its actions constituted infringement of a valid patent] standard, both legitimate defenses to infringement claims and credible invalidity arguments demonstrate the lack of an objectively high likelihood that a party took actions constituting infringement of a valid patent." The court did not elaborate on the meanings of "legitimate" and "credible". Black & Decker, Inc. v. Robert Bosch Tool Corp. (Fed. Cir. 2008)

  • E.D. New York: Motion to bifurcate liability and willfulness issues denied on several grounds, including the overlap of evidence between the two issues. Computer Assoc. Intl., Inc. v. Simple.com, Inc. (E.D.N.Y. 2007)

  • N.D. Illinois: "Because willfulness depends on an infringer's prelitigation conduct, in most circumstances, communications of trial counsel have little, if any, relevance. Thus, trial counsel opinions and work product of trial counsel are not subject to waiver, absent exceptional circumstances." Se-Kure Controls, Inc. v. Diam USA, Inc. (N.D. Ill. 2008)

  • N.D. Illinois: Knowledge of patentee's pending patent application at time of launching new product is not enough to demonstrate willfulness; determination generally is based on post-patent, rather than pre-patent conduct; failure to assert a noninfringement defense and reliance solely on an invalidity defense is not sufficient to establish defendant acted despite an objective likelihood of infringement. Trading Techs. Intl., Inc. v. eSpeed, Inc. (N.D. Ill. 2008)

  • N.D. Illinois: At the time Sandoz launched its product in the market, there was an appellate judicial opinion stating that the claims of the patents at issue were susceptible to invalidity and unenforceability challenges. Trial court said that “proves an objectively low likelihood that marketing a product that reads on those same claims would be infringing upon a valid patent.”  Abbott Labs. v. Sandoz, Inc. (N.D. Ill. 2007)

  • N.D. California: Summary judgment of no willful infringement by Ivax denied because of "ample evidence upon which a reasonable juror could base the conclusion that Ivax sold its Metformin ER product despite an objectively high likelihood that its actions constituted infringement of a valid patent." Depomed, Inc. v. Ivax Corp. (N.D. Cal. 2007)

  • C.D. California: Granting motion for reconsideration of post-trial rulings in view of In re Seagate because court’s instructions to jury were “drawn from a now-discredited line of authority”; noting that “absent a finding of willfulness, the Court’s award of enhanced damages cannot stand”; and “the award of attorney’s fees…cannot stand.” Broadcom Corp. v. Qualcomm Inc. (N.D. Cal. 2007)

  • D. Massachusetts: “In determining whether infringement was willful, a court should consider: (1) whether there was a bona fide disagreement regarding patent invalidity or infringement, (2) whether the infringer solicited or followed the advice of counsel, (3) whether there was continued infringement after notice of probable infringement was received, (4) whether there was a degree of similarity between the patented and accused devices, (5) whether the infringer took efforts to avoid infringement, and (6) whether the infringer was indemnified against infringement costs.” No citation given. Cohesive Technologies, Inc. v. Waters Corp. (D. Mass 2007)

  • W.D. Wisconsin: Evidence of defendant’s failure to seek advice of counsel prior to selling the accused devices, defendant’s effort to obtain a license from plaintiff’s predecessor, customer demand for a waterproof system, and letters from the patentee accusing defendant of infringement relate to the second prong of the willfulness test: what defendant knew or should have know with respect to a high likelihood of infringement. Franklin Elec. Co. v. Dover Corp. (W.D. Wis. 2007)

  • M.D. Pennsylvania: Defendant did not act “with an objectively high likelihood that its actions constituted infringement of a valid patent” when he read patent and attempted to design around claims. Rhino Assoc., LP v. Berg Mfg. and Sales Corp. (M.D. Pa. 2007)

  • E.D. Texas: Although defendant ultimately did not prove its invalidity defense by clear and convincing evidence, it received and relied upon opinion letters from outside counsel that concluded that the patents were invalid and not infringed by Defendant’s product, and it sent letters to plaintiff setting forth its position before litigation, which prompted Plaintiff to reexamine own patent. This was “hardly objectively unreasonable” as to whether there was a high likelihood of infringement. TGIP, Inc. v. AT&T Corp. (E.D. Tex. 2007)

  • See previous related posts about In re Seagate on this website:
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Seagate vs. Patent Reform Act of 2007

Posted on August 29, 2007 by Brian Wm. Higgins

Summary:  Don't get too comfortable with Seagate's "objective recklessness" standard for determining willfulness in patent litigation: the Patent Reform Act of 2007 could change everything.

 

     35 U.S.C. § 284, enacted in 1952, provides that a court "may increase damages up to three times the amount found or assessed" in the case of willful patent infringement. In 1983, the Federal Circuit established the standard for evaluating willfulness: 

“Where . . . a potential infringer has actual notice of another’s patent rights, he has an affirmative duty to exercise due care to determine whether or not he is infringing. Such an 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., 717 F.2d 1380, 1389-90 (Fed. Cir. 1983)(emphasis added).  Thus, an accused infringer could establish that its continued accused activities were done in good faith if it reasonably relied on advice from counsel. The duty of care standard survived until just recently, when the Federal Circuit overruled the standard and held that:

"Proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness." 

In re Seagate Technology, LLC, Civ. No. 830 (Fed. Cir. 2007) (en banc) (Newman, J., Garjarsa, J., concurring).  Under Seagate, a patentee must show by clear and convincing evidence "that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent."  Once the threshold objective standard is satisfied, the patentee "must also demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer." According to the Federal Circuit, the state of mind of the accused infringer is not relevant to this objective inquiry.

     The Patent Reform Act of 2007, if enacted, would include a new § 284 concerning willful patent infringement (see Senate and House bills S.1145 and H.R.1908, respectfully; see also related posts here).  The new law would allow a court to find willfulness only if the patent owner presented clear and convincing evidence that the accused did one of the following three things:

"(A) after receiving written notice from the patentee...alleging acts of infringement...the infringer, after a reasonable opportunity to investigate, thereafter performed one or more of the alleged acts of infringement;

"(B) the infringer intentionally copied the patented invention with knowledge that it was patented; or

"(C) after having been found by a court to have infringed that patent, the infringer engaged in conduct that was not colorably different from the conduct previously found to have infringed the patent, and which resulted in a separate finding of infringement of the same patent."

     Part of the new law, if enacted in its current form, would limit willfulness damages where the infringer has an informed good faith belief that the patent was invalid or unenforceable, or would not be infringed by the conduct later shown to constitute infringement of the patent.  An "informed good faith belief" may be established by:

(1) "reasonable reliance on advice of counsel;"

(2) "evidence that the infringer sought to modify its conduct to avoid infringement once it had discovered the patent;" or

(3) "other evidence a court may find sufficient to establish such good faith belief."

     Under the new law, there is no requirement, like in Seagate, to perform an objective risk of infringement assessment or establish that an accused infringer knew or should have known of the risks.  However, like in Seagate, the new law would also not impose a requirement that infringers obtain advice of counsel as a prerequisite to making, using, or selling a product or performing a method.  As William Lafuze and Michael Valek noted in their recent article [1]:

"If [patent reform is] enacted, the advice-of-counsel defense will remain an option, but accused infringers will not face the same pressure to waive privilege over such advice because there will be additional, statutorily defined limits and defenses to willfulness." 

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