WASHINGTON, D.C. (August 22, 2007) On August 20, 2007, a unanimous U.S. Court of Appeals for the Federal Circuit issued a precedent-setting victory for McDermott Will & Emery client Seagate Technology LLC. The court overturned 24 years of precedent by abolishing the "duty of due care" standard imposed on defendants in the context of willful patent infringement. The Court's decision will make it far more challenging for companies to prove that opponents are engaged in willful patent infringement, which can result in treble damages.
Prior to yesterday's ruling, companies would typically obtain an opinion letter regarding the potential infringement from "opinion counsel" following an accusation of patent infringement. During trial, the company could waive privilege and rely on the opinion letter in court to defend against the claim of willful infringement. In Convolve, Inc. v. Seagate Technology LLC, the district court extended this waiver to include communications between Seagate and its trial counsel, McDermott Will & Emery. The district court also ordered that trial counsel's work product was subject to discovery. Seagate then petitioned to the Federal Circuit for a writ of mandamus vacating the district court's orders.
The Federal Circuit, recognizing the importance of these issues, took the extraordinary step of hearing the case "en banc" and ordered the parties to address: (1) whether the duty of due care standard should be eliminated; (2) whether the waiver with regard to opinion counsel should extend to communications with trial counsel; and (3) whether any such waiver should extend to trial counsel's work product.
As argued by Seagate, the duty of due care standard improperly shifted the requirement to prove willful infringement to the defendant who had to then prove it did not willfully infringe. Further, the district court's orders took away Seagate's right to effective trial counsel by allowing the patentee to "listen in" on the client's communications with its trial counsel.
The Federal Circuit agreed with Seagate. It abolished the duty of due care standard and established a new test for proving willful infringement: a patentee must show by clear and convincing evidence that the defendant acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. Thus, the court held that the state of mind of the accused infringer was not relevant to the objective inquiry. It also held that there was...