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Wealth of Ideas, October 2004
Intellectual property law doesn’t change quickly,
so despite the wealth of patent infringement lawsuits
filed each year, precedent-setting cases tend to be
few and far between. (Perhaps that also explains why
none of the lawyer dramas on television are about patent
attorneys.) So the IP world sat up and paid attention
when, on September 13 of this year, the Court of Appeals
for the Federal Circuit (the CAFC, which is the “patent
court”) handed down a decision creating a new standard
for what constitutes willful infringement.
The case, Knorr-Bremse Systeme Fuer Nutzfahrzeuge GMBH
v. Dana Corporation, et al., was originally in favor
of the plaintiff. Although there were no damages because
there had been no sales of the infringing product (a
type of disc brake), partial attorneys’ fees were
awarded. The defendants, Dana Corp., Haldex Brake Products
Corporation, and Haldex Brake Products AB, appealed
on the grounds that a negative inference should not
have been drawn from Dana’s failure to obtain an
infringement opinion and Haldex’s withholding of
an opinion of counsel. In other words, the defendants
argued that these actions did not necessarily mean that
they had “something to hide”.
The CAFC took the case en banc (in full court), requested
additional briefing from the parties as well as amicus
curiae briefs, and vacated their ruling of willful infringement,
stating that “no adverse inference that an opinion
of counsel was or would have been unfavorable flows
from an alleged infringer's failure to obtain or produce
an exculpatory opinion of counsel. Precedent to the
contrary is overruled.”
Previously, if a defendant failed to obtain an infringement
opinion on a disputed patent or withheld the contents
of an existing infringement opinion, the court would
almost automatically infer from either of these actions
an admission of willful infringement. There were at
least two problems with this assumption, namely: 1)
perhaps the defendant had a monetary reason for not
seeking an opinion (an additional team of lawyers, after
all, is not cheap); and 2) allowing the defendant to
withhold the contents of an infringement opinion from
the court helps to preserve attorney-client privilege.
As the IP world continues to buzz about this new precedent,
patent attorneys debate the pros and cons of the CAFC’s
ruling. Has the search for truth been subjugated to
preserve the sanctity of attorney-client privilege?
Or should it instead be considered positive that willful
infringement must now be proved by direct evidence?
Either way, two things are certain: the new precedent
is here to stay, and this is one case you won’t
see on a TV courtroom drama.
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