In a major decision today, the en banc Federal Circuit saved Seagate’s patent litigation counsel from having to produce confidential communications with the company and turn over attorney work product. On its way, the court clarified the patent law standard for a finding of "willful infringement" — a finding that may trigger a doubling of damages. It also restricted the waiver of privilege that arises from asserting advice of counsel as a defense to a willful infringement claim. In re Seagate Technology, LLC, Misc. No. 830 (Fed. Cir. Aug. 20, 2007) (en banc).
Reviewing its own brief history, the court concluded that its 1983 formulation of what counts as willfulness will no longer do. The old test seemed to the court "more akin to negligence" than to the "recklessness" that sets the threshhold for enhancing damages in non-patent contexts. So the court redid the standard. From now on:
[T]o establish willful infringement, 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. . . . The state of mind of the accused infringer is not relevant to this objective inquiry. If this 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.
Slip op. at 12 (citation omitted). But the court left "it to future cases to further develop the application of this standard." Id. (footnote omitted).
The second part of the opinion will bring joy to patent litigators who represent defendants. In it, the court held that asserting advice of counsel normally waives privilege only as to the pre-lawsuit work of the counsel who gave the advice. The waiver thus doesn’t extend to what litigation counsel does — stuff that most of the time will happen after a lawsuit begins.
The waiver analysis underscores yet again the importance of keeping your "opinion" counsel separate from your litigation. Mixing the two can have volatile results.