Many companies obtain opinions of counsel with respect to certain threatening patents as a form of “insurance” to demonstrate good faith and ward off the enhanced damages and attorneys’ fees associated with willful infringement. 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[under 35 U.S.C. § 271(b)].”i The court’s opinion did not describe the kind of proof needed to show good faith, but it is reasonable to expect that a competent opinion of counsel may meet this requirement. This holding potentially underscores the value of invalidity opinions, particularly in the context of method of treatment claims. In fact, in Commil, the court reiterated that opinions of counsel regarding non-infringement are admissible to show the defendant’s state of mind and its bearing on indirect infringement.ii The Federal Circuit has now further opened the door to allowing the existence of an invalidity opinion to negate the intent required to demonstrate inducement of infringement. The Supreme Court granted certiorari and heard oral arguments in this case on March 31, 2015.
In-house counsel tasked with asserting their companies’ patent rights, as well as generic and biosimilar companies, are no doubt watching this case closely, especially with regard to enforcement of medical and diagnostic method claims. Generally, clinicians directly infringe such claim. However, deeper pocketed companies manufacturing the relevant kits and products are pursued by patentees under a theory of inducement of infringement. If a good-faith belief of invalidity is sufficient to negate the specific intent for induced infringement, opinions of counsel regarding invalidity will become critical to generics and biosimilar manufacturers alike. For example, under the Federal Circuit’s holding, an accused induced infringer could escape liability even if the court finds that the asserted patent is valid. In other words, the accused inducer could assert a defense of patent invalidity and lose, but ultimately prevail by asserting an opinion of counsel to show a good-faith belief of invalidity. This strategy raises the stakes for outside counsel’s invalidity opinions, the importance of which were somewhat diminished in 2004.
Until 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 failed to meet this obligation, the jury could draw an “adverse inference” against the defendant during trial with respect to having engaged in willful infringement. In 2004, the Federal Circuit eliminated the jury’s ability to draw such an adverse inference.iii
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.”iv This statute thus addresses both willful infringement and induced infringement, eliminating negative inferences in cases where formal opinions had not been obtained. However, the new statute does not address whether the existence of an opinion as to patent invalidity has a bearing on whether a defendant had the intent required to induce infringement under 35 U.S.C § 271(b).
While the Knorr-Bremse case and 35 U.S.C. § 298 moderately diminished the importance of opinions of counsel, the Supreme Court’s decision in the Commil case has the potential to again render formal opinions of counsel critical to defending against charges of induced infringement under 35 U.S.C. § 271(b).
ii Commil, 383 F.3d at 1367-68.
iii Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337 (Fed. Cir. 2014).
iv 35 U.S.C. § 298.