In Commil v. Cisco Systems, the Federal Circuit held that “evidence of an accused inducer’s good-faith belief of invalidity may negate the requisite intent for induced infringement.” CITE. The court’s opinion did not explore the proof needed to show good faith, but it is reasonable to expect that a competent opinion of counsel may meet this requirement, potentially resurrecting the importance of invalidity opinions.
The relevance of opinions of counsel during litigation has been diminished in the willfulness context. Before 2004, accused infringers who were aware of a competitor’s patent had a duty to obtain competent legal advice before engaging in any potentially infringing activity. If they didn’t fulfill this duty, the jury was allowed to draw an “adverse inference” against the defendant during trial. In 2004, the Federal Circuit eliminated the jury’s ability to draw such an adverse inference. Knorr-Bremse Systeme Fuer Nuetzfahrezeuge GMBH v. Dana Corp., et al.
Congress has since codified the Knorr-Bremse holding for AIA patents, stating that “[t]he failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.” 35 U.S.C. § 298. This statute thus addresses both willful infringement and induced infringement, eliminating negative inferences from the failure to produce such evidence. But the statute, of course, does not prohibit using opinions of counsel as evidence of lack of intent.
Indeed, citing previous case law, the Federal Circuit in Commil v. Cisco Systems reiterated that opinions of counsel regarding non-infringement were admissible to show the defendant’s state of mind and its bearing on indirect infringement. CITE. The Federal Circuit has now opened the door for using opinions of counsel to show good faith belief of invalidity. The Supreme Court granted certiori and heard oral arguments in this case on March 31, 2015, and may keep that door open in its final opinion.
If the Court agrees with the Federal Circuit, it appears up for debate whether opinions of counsel of invalidity under the PTAB standards of claim construction and burden of proof will be sufficient. The Federal Circuit has affirmed that the broadest reasonable construction standard is appropriate at the PTAB, making it easier to invalidate patents than in District court in most instances. Also, the well-known lower burden of proof to show invalidity at the PTAB makes this a more attractive venue for patent challengers. For example, if a patent is upheld in district court, will a competent opinion of counsel of invalidity under the PTAB standards be sufficient to show good faith?
In-house counsel charged with asserting patent rights, as well as generic and biosimilar counsel at life science companies no doubt are watching this case closely, especially with regard to method claim patents. Most of the time, if direct infringement of such claims occurs, it is by physicians, whereas the companies manufacturing the drug will be the inducers. Of course, the drug manufacturers will be who the patent holders will want to go after for damages. If a good-faith belief of invalidity is sufficient to negate the specific intent for induced infringement, opinions of counsel regarding invalidity will become very important to generics and biosimilar manufacturers alike.