Trouble is brewing for patent infringement defendants who use lawyers from one law firm to act as trial counsel and other lawyers from the same or different firm (albeit perfectly screened off from the trial team) to prepare a non-infringement opinion as an advice of counsel defense to allegations of willful infringement. The 2006 Federal Circuit decision in EchoStar has set off a veritable feeding frenzy of attacks by patentees' counsel on the most sacred of attorney client communications and work product: that of trial counsel. In a case of first impression, one federal court has even granted a motion to disqualify the trial counsel shortly before the jury trial was to begin, when a member of that firm had given the client an opinion relevant to non-willfulness, thereby turning the advice of counsel defense to willfulness on its head. Consequently, the potential for grave abuses of, and misguided extensions of, the EchoStar decision is rife with confusion and threatens to invade and destroy a defendant's ability not only to rely on the defense but to deny it effective assistance of trial counsel if it does. Was the motion to disqualify the law firm mandated by ethics or merely motivated by gamesmanship? Is this a case of first impression from a renegade court or a prescient avant-garde likely to trigger cascading decisions that follow suit? The current state of flux in the law forecasts dire consequences if an opinion of counsel may be used as fodder for declaring open season on trial counsel, thereby morphing the defense into the troubled water instead of a "bridge over troubled water" as intended. The article proposes a coherent and equitable balancing test that will bring clarity and fairness to the potentially chilling effect on discussions between trial counsel and its client in the wake of EchoStar.

I.    Introduction

¶ 1         You've got mail. It is a nasty-gram naming you a patent infringer and threatening you with a federal lawsuit, or it is a complaint for patent infringement.

¶ 2         After consulting with your patent attorney, you are told that the complaint (or the letter) has put you on notice of the infringement allegations. Under either scenario, the patentee may later, if it has not already, allege willful infringement if you continue selling the accused product. In patent law, willfulness may well be the pot of gold at the end of the patentee's rainbow, because it could subject the defendant¹ to treble damages and attorneys' fees. If the accused product is one of your primary moneymakers, then a business decision might well militate in favor of continuing sales as opposed to pulling the product off the market, but that strategy translates into the possibility that you may be required to pay up to three times any damages the plaintiff proves at trial, and patent damages have been known to reach millions and hundreds of millions.

¶ 3         What do you do?

¶ 4         Get an opinion. Although it has been estimated that opinions can cost $40,000 each and possibly as much as $100,000 apiece,² if the product is found to have infringed any valid claim of the patent, the opinion has the potential of staving off treble damages - like buying insurance against an otherwise staggering amount of damages stemming from a finding of willfulness. Even if the opinion is ultimately wrong and the fact finder concludes that the product infringed any patent claim, the opinion (if competent and sufficient) goes to the defendant's state of mind and could possibly vitiate a finding of willfulness and bad faith.

¶ 5         One such opinion might be that the accused product does not infringe any valid claim. Although there are also opinions that the asserted patent is invalid, the non-infringement opinion tends to be the most expedient given that patents are presumed to be valid as a matter of law,³ and it is a defendant's burden⁴ to overcome that presumption by the hefty weight of clear and convincing evidence.⁵

¶ 6         Who should give the opinion? Many potential defendants elect to engage the same law firm to both write the opinion and serve as trial counsel, perhaps thinking the matter will never go to trial. Or perhaps they have a longtime relationship with the law firm, feel comfortable with a group of attorneys there, and those attorneys have over the years become intimately familiar with the client's business and products such that there is a real comparative advantage, savings, and fewer interruptions from using the same law firm. Other potential infringers use two law firms, one for the trial team and the other for the opinion of counsel. Either way, the potential infringer follows the rules and intentionally keeps the opinion counsel and trial counsel completely separate and independent such that trial counsel plays no role in, makes no contribution to, and does not influence the drafting of the opinion or otherwise breach the screening wall between itself and opining counsel.

¶ 7         The doctrine of attorney-client privilege is ubiquitous in law. Every client, attorney, and law student knows of it, and it is protected by the Federal Rules of Civil Procedure.⁶ Seemingly every communication between client and lawyer for the purpose of rendering legal advice will be covered by the privilege. Clearly, the opinion letter from patent counsel to the client discussing the issue of non-infringement meets the definition of the privilege.

¶ 8         But a defendant is at a crossroads when willful infringement becomes an issue: risk treble damages by exercising the attorney-client privilege on the one hand or assert the opinion in defense of willfulness allegations and thereby waive the privilege on the other. In response to a defendant's asserting the opinion letter, a plaintiff commonly serves discovery requests seeking production of all legal advice given by all opining attorneys to the client that relates to the subject matter of the legal advice no matter how tenuous, and files motions to compel production if necessary. Moreover, the Federal Circuit's recent EchoStar⁷ decision might give fodder to extending those discovery requests and that motion to compel to all work product of the trial counsel, including depositions and document requests served upon the trial team. What's next?

¶ 9         The next invasion into and abrogation of the attorney-client privilege - one of great importance and stark consequences to law firms and their clients - could very well be to disqualify the trial counsel from participating at trial once a defendant asserts the opinion letter as a defense to willful infringement. In such circumstances, the plaintiff stands to gain much leverage in negotiations or at trial by removing the defendant's trial counsel of choice and by forcing new counsel to learn the case at the later stages of complex patent litigation. Under this novel theory of disqualification, the trial counsel might be removed from the trial of the case even when there is a perfect screening wall between the opining counsel and the trial counsel. Critics who argue that non-infringement opinions are just self-serving get-out-of-jail free cards should be cheering this decision as foretelling a day when those opinions will be "plutoed."

¶ 10         The possibility that a patentee may obtain full discovery of all communications between the trial team and the client, or even disqualification of the trial team if they comment on the opinion of counsel, has stunning implications. Out of fear that their attorney-client communications will need to be revealed to the opposing party, trial counsel will stop communicating with the client regarding the litigation, views on the issues in the cases, or even the evaluations of the case for settlement. But those communications about the case form the very fabric of what trial attorneys do. This will result in the trial team never consulting with the client and thereby depriving the client of the effective assistance of counsel, or it will result in the preclusion of any defendant ever receiving or relying on advice of counsel as a defense to willful infringement. Either result is untenable.

¶ 11         Now, for those defense attorneys who are not already burning the author in effigy, let's all just exhale, put down those pitchforks, and listen. This article is not wedded to the novel disqualification theory or the open season on trial counsel's communications with the client, and takes no credit or blame for it, depending on which side of the aisle one finds oneself in enforcing patents or defending against them. But an ostrich with its head in the sand does not see the device to be used in the attack or how to defend against it. Simply put, attorneys need to be forewarned of this novel theory and to advise their clients appropriately of the risks that a court might strictly prohibit all members of the testifying lawyer's firm from serving as trial counsel.

¶ 12         Specifically, Part II provides a background discussion on the law of willful infringement. Part III explores the "advice of counsel" defense to willful infringement and the Hobson's choice that some courts are placing on the accused infringers. Part IV constructs an analysis that might prove useful in bringing clarity, balance, and fairness to case law that has the potential of turning the defense of advice of counsel on its head.

II.    Background

¶ 13         In order to understand the risk of treble damages and attorneys' fees that may be awarded based on a finding of willfulness, one must first understand how courts struggle to interpret patents and then how the fact finder applies that interpretation to the accused product. Accordingly, the discussion begins with an overview of the elements of patent infringement.

¶ 14         A patent infringement analysis involves two steps: the threshold construction of the meaning and scope of the claims, and then the determination of whether the product or method in question infringes the properly construed claim.⁸

¶ 15         The Patent Act of 1952,⁹ as amended, requires that every patent "shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention."¹⁰ The claims, however, do not stand alone, but are part of "a fully integrated written instrument."¹¹

¶ 16         At first blush, then, some may analogize the patent, as a written instrument, to a contract, and interpret it to the same extent. They would be wrong.¹² The law of interpreting a patent involves intricate sets of its own technical rules,¹³ and therefore it is wholly inappropriate to think that one may simply borrow from traditional notions of contract law.¹⁴

¶ 17         Given the complexity of claim construction, the Supreme Court in 1996 put to rest the issue of who decides the meaning of a claimed invention: "We hold that the construction of a patent, including terms of art within its claim, is exclusively within the province of the court."¹⁵ The object of claim construction is to determine what is meant by the terms used in the patent claims,¹⁶ and the end result is the court's "statement of what is and is not covered by the technical terms and other words of the claims."¹⁷

¶ 18         Claim construction is a little like building lasagna when there are too many cooks in the kitchen - all cooks trying to add their own pasta, cheeses, and topping it off with their own sauce. The combinations are almost limitless and constrained only by the cooks' imaginations, from a variety of choices for noodles to a wide range of cheeses and, of course, to the sauce that may be meat or vegetarian and may have different spices as well as many other ingredients. Similarly, the court's recipe for claim construction is extremely complicated by the parties' battles over what goes into the final dish, and how everything is argued and spun one way or the other. To make its determination, the court considers intrinsic evidence and, sometimes, extrinsic evidence. Three sources of intrinsic evidence are the claim language, the specification and, if in evidence, the prosecution history.¹⁸

¶ 19         It is not an easy task for courts to construe the claims, because "the claims of patents have become highly technical in many respects as the result of special doctrines relating to the proper form and scope of claims that have been developed by the courts and the Patent Office."¹⁹ In theory, the terms used in a claim are given the ordinary and customary meaning that the terms would have had to a person of ordinary skill in the art in question at the time of the invention.²⁰ In practice, courts must be particularly nimble as they juggle evidence submitted by the parties of what the mythical person of ordinary skill in the art would have known as of the effective filing date of the patent application (a date that sometimes is as much as twenty years before the time when the court is supposed to construe the claim), and who is deemed to have read the term not only in the context of the claim in which it appears but also in the context of the entire patent specification.²¹

¶ 20         The specification "is always highly relevant to the claim construction analysis"²² as the best tool for determining the meaning of a claim term. The specification's statements of what a term means are less likely to be litigation-inspired because they were made when the application was filed, before the patent issued and, thus, before there could have been alleged patent infringement. But while the specification may act as a sort of dictionary²³ in explaining the invention and in defining the claim terms, the specification too often lacks clarity and provides only a nebulous description of the scope²⁴ of a claimed invention that almost always has changed during prosecution.²⁵

¶ 21         The prosecution history also plays an important role in claim interpretation. The prosecution history helps to demonstrate how the inventor and the PTO understood the patent.²⁶ As part of the intrinsic record, the prosecution history is relevant to determining how the inventor understood the invention and whether the inventor limited the invention by narrowing the claim scope.²⁷ Also, an applicant who distinguishes the claimed invention over the prior art necessarily indicates what the claims do not cover.²⁸ Moreover, an applicant's statements during prosecution are relevant to claim interpretation regardless of whether the examiner relied upon them.²⁹ Furthermore, arguments made by the applicant in the prosecution history are given the same weight as claim amendments.³⁰

¶ 22         In addition to arguments relating to intrinsic evidence and what that evidence shows and does not show, the court can expect one or both parties to argue extrinsic evidence in support of the party's proffered claim construction. Extrinsic evidence consists of any evidence external to the patent and its file history, such as technical articles, inventor testimony, expert testimony, and, when relevant, statements made in the prosecution of a related foreign application.³¹

¶ 23         A patent gives the patentee the right to exclude for twenty years³² all others from practicing the claimed invention.³³ A defendant "directly" infringes a patent by making, using, offering to sell, selling, or importing into the United States any product that embodies the patented invention.³⁴ That is not, however, the only way to infringe a patent. A defendant might be found liable for "indirect" infringement, such as by "inducement of infringement"³⁵ or by "contributory infringement."³⁶ Both theories of indirect infringement depend on a preliminary finding of direct infringement, such that there can be no liability of active inducement of infringement or contributory infringement without the existence of direct infringement.³⁷ The plaintiff need only prove patent infringement by a preponderance of the evidence (more likely than not).³⁸

¶ 24         For literal infringement, every element and limitation³⁹ set forth in a claim must be found in the product or process in question - "exactly."⁴⁰ Any deviation from the claim precludes a finding of literal infringement.⁴¹

¶ 25         While claim construction is a matter of law, infringement is a question of fact,⁴² although factual questions of infringement are frequently resolved by a court's construction of the claims because "to decide what the claims mean is nearly always to decide the case."⁴³ Yet, any differences between the claim construction and the accused product might seem subtle to the casual observer. Moreover, as the uncertainties increase, the patentee may be more likely to enforce the patent and the defendant may be less likely to settle, thereby leading the parties to trial. This uncertainty is exacerbated by the second method by which infringement may be proven.

¶ 26         When there is no literal infringement, infringement can only be found under the doctrine of equivalents, which is an objective inquiry applied to individual elements or limitations of the claim, not to the invention as a whole.⁴⁴ Whether an element of the accused device is equivalent to a claim limitation depends on whether the substitute element performs substantially the same function, in substantially the same way, and achieves substantially the same result as the claim limitation.⁴⁵ The jury will be asked to return a verdict of infringement if any difference between a claim limitation and the accused product is insubstantial, such as when persons of ordinary skill in the art would consider that element of the product to be interchangeable with the corresponding claim requirement.⁴⁶

¶ 27         The doctrine of equivalents is the "exception, however, not the rule," or else the public will come to believe that it cannot rely on the language of patent claims.⁴⁷ Indeed, the patentee is prevented by prosecution history estoppel from relying on the doctrine when the patentee relinquished subject matter during the prosecution "by amendment or argument."⁴⁸ Under the "all elements rule," the doctrine of equivalents may not be applied so broadly as to effectively eliminate a claim limitation in its entirety, such as when the limitation is missing from the accused product and is not replaced with an equivalent substitute.⁴⁹ The application of prosecution history estoppel and the all elements rule is a question of law.⁵⁰

¶ 28         Moreover, when a claim amendment is an amendment related to patentability, there arises a presumption of estoppel against the doctrine of equivalents, which presumption may only be overcome in a few "narrow ways."⁵¹ The burden of rebutting the presumption lies with the patentee and is a question of law for the court.⁵² First, the patentee may attempt to show that the equivalent was unforeseeable as of the date of the claim amendment.⁵³ Under this first criterion, the patentee generally tries to show that allegedly invalidating technology was "after-arising."⁵⁴ Second, the patentee may demonstrate that the amendment was merely tangential to the alleged equivalent.⁵⁵ If the prior art that the patentee sought to overcome contained the alleged equivalent, then the amendment was not merely tangential.⁵⁶ Third, the patentee might establish another reason why it could not have reasonably been expected to have described the alleged equivalent at the time of the amendment.⁵⁷ The Federal Circuit has suggested that "the third criterion may be satisfied when there was some reason, such as the shortcomings of language, why the patentee was prevented from describing the alleged equivalent when it narrowed the claim."⁵⁸

¶ 29         Whether under literal infringement or the doctrine of equivalents, if the independent claims are not infringed, then any claims that depend from those independent claims also are not infringed.⁵⁹ The accused product may not avoid infringement, however, by including additional features and components.⁶⁰

¶ 30         Even innocent parties may be liable for patent infringement,⁶¹ because while culpability of the infringer may come into play in determining the amount of damages owed to the patent owner, an innocent infringer is no less liable than a willful infringer.⁶² Rather, there must be a finding of actual infringement, and then a separate determination of whether the defendant's infringement was willful, as explained below.

¶ 31         When a person becomes aware that a patent may be relevant to a product it sells, a duty arises to exercise due care and to investigate whether or not the product infringes any valid, enforceable claim of the patent.⁶³ In other words, a defendant who intentionally blinds itself to the facts and law, and then continues to infringe, may be found to be a willful infringer.⁶⁴

¶ 32         When is the duty triggered? As a general rule, as soon as there is "actual notice of another's patent," there is an affirmative duty to investigate whether it is being infringed.⁶⁵ Sometimes, that notice comes in the form of the complaint. Oftentimes, however, it might come in the form of a cease and desist letter to the would-be defendant, or in a letter offering to license the patent in a way that ostensibly seeks to avoid giving rise to jurisdiction under the Declaratory Judgment Act's requirement of an "actual controversy."⁶⁶ When a case arises under patent law, courts apply the substantive law of the Federal Circuit.⁶⁷ Notably, the Federal Circuit in 2005 had made it more difficult to establish an actual controversy by demanding that the declaratory judgment plaintiff "demonstrate that it has a reasonable apprehension of imminent suit."⁶⁸ Although the Supreme Court in its 2007 decision in Medimmune, Inc. v. Genentech, Inc.⁶⁹ found there to be an actual controversy based on a letter that made a clear threat to enforce a newly issued patent and the belief that the patent covered the licensee's product,⁷⁰ the Supreme Court signaled that the Federal Circuit's heightened test had a limited future life expectancy. In footnote 11 to the Medimmune decision, the Supreme Court strongly hinted that it was calling into question the continued viability of "the Federal Circuit's 'reasonable apprehension of suit' test (or in its evolved form, the 'reasonable apprehension of imminent suit test [of Teva])."⁷¹ The impact of footnote 11 from Medimmune would likely make district courts reluctant to employ the Federal Circuit's "reasonable apprehension of imminent suit" test in patent declaratory judgment actions. Stated another way, declaratory judgment plaintiffs would be more likely to overcome a motion to dismiss⁷² that tests the federal subject matter jurisdiction of a patent declaratory judgment complaint. If there was any doubt as to the impact footnote 11 might have, the Federal Circuit removed all doubt on March 26, 2007 when it put the reasonable apprehension of suit test to rest.⁷³

¶ 33         Any safe haven once afforded to patentees, who could engage in scare-and-run tactics of threatening a patent infringement suit and expensive litigation under the guise of offering a patent license with a so-called promise not to sue in order to avoid creating declaratory judgment jurisdiction, was dealt a fatal blow by the Federal Circuit's recent decision in SanDisk Corporation v. STMicroelectronics, Inc.⁷⁴ The district court had found that SanDisk lacked a reasonable apprehension of being sued by ST for patent infringement given ST's statement that it "has absolutely no plan whatsoever to sue SanDisk"⁷⁵ and ST's failure to make "express charges of infringement carrying with them the threat of enforcement."⁷⁶ In view of footnote 11 of the Supreme Court's decision in MedImmune, the Federal Circuit scrapped the reasonable apprehension of suit prong⁷⁷ in favor of an adverse positions test: "We hold only that where a patentee asserts rights under a patent based on certain identified ongoing or planned activity of another party, and where that party contends that it has the right to engage in the accused activity without license, an Article III case or controversy will arise and the party need not risk a suit for infringement by engaging in the identified activity before seeking a declaration of its legal rights."⁷⁸ Before the ink was dry on the SanDisk decision, another panel of the Federal Circuit, in Teva Pharmaceuticals USA, Inc. v. Novartis Pharmaceuticals Corp., reaffirmed that its reasonable apprehension test had been overruled.⁷⁹ The Novartis decision further shaped the adverse positions test by emphasizing an "all circumstances" analysis as the standard by which the adverse legal interests ought to be weighed in determining whether there was sufficient evidence of standing and ripeness to make the controversy justiciable under Article III of the Constitution.⁸⁰

¶ 34         To the extent that the test in patent declaratory judgment actions is a moving current, under a state of flux and to undergo further morphing until there in an en banc decision, the present flow of current may have been reflected in the concurring opinion in SanDisk by Judge Bryson, who expressed reservations about the new standard. According to Judge Bryson, "virtually any invitation to take a paid license relating to the prospective licensee's activities would give rise to an Article III case or controversy if the prospective licensee elects to assert that its conduct does not fall within the scope of the patent."⁸¹ Therefore, unless circumscribed to facts where a patentee identifies specific products or activities by the would-be licensee together with specifying particular patent claims and an explanation of how those claims cover the accused products or activities, the adverse positions test will usher in sweeping changes to declaratory judgment actions involving patents. As a result, an unbounded adverse positions test has the potential of making declaratory relief virtually limitless in its availability to parties who are merely approached by patentees seeking to license their patents.⁸²

¶ 35         At a minimum, whatever circumstances satisfy the Federal Circuit's lower standard for finding patent declaratory judgment jurisdiction will in turn directly impact the advice of counsel defense. Put differently, the court's standard would necessarily trigger a would-be defendant's duty to exercise due care and to investigate whether or not the product infringes any valid, enforceable claim of the patent.⁸³

¶ 36         The "actual notice" of another's patent is arguably a still lower standard, however, than the "actual controversy" requirement for Declaratory Judgment Action. Stated another way, an affirmative duty to investigate another's patent might arise even when the patent owner has not asserted the patent against the would-be infringer. Indeed, at least one court held that notice had occurred when in-house counsel saw a patent that had been referenced in the Official Gazette of the United States Patent and Trademark Office.⁸⁴ While the defendant argued that it did not recognize the infringement issue, the Federal Circuit gave weight to the fact that in-house counsel associated the patent with the accused product in the capacity as counsel for the potential infringer.⁸⁵ One district court had found the potential infringer to be on notice, however, when the asserted patent appeared among prior art references cited by the defendant in its own patent applications,⁸⁶ even though the defendant's patents had no direct relationship with the allegedly infringing product.⁸⁷ That district court rejected the defendant's argument that actual notice "requires both knowledge of the patents and knowledge of a problem of infringement."⁸⁸ These cases seem to be wrongly decided to the extent they convert the standard of what the potential infringer "had known" into a standard more resembling what the defendant "should have known," especially given Federal Circuit precedent that "constructive notice" is not tantamount to actual notice and shall not trigger the duty of care.⁸⁹

¶ 37         Also, any lowering of the standard of actual knowledge is especially problematic given that the potential infringer's duty arguably may be triggered by notice received by any corporate employee, including engineers.⁹⁰ Moreover, imputing any corporate employee's knowledge of the patent to the corporation itself would encourage a policy of corporate ignorance in order to avoid the notice requirement of willful infringement and thereby "impede rather than 'promote the Progress of Science and useful Arts,' the constitutional objective of patent and copyright protection."⁹¹

¶ 38         Even when the accused had knowledge of the asserted patent, willful infringement does not lie based on "the simple fact of infringement."⁹² Rather, a finding of actual infringement is necessary but not sufficient for willfulness, which is a question of fact.⁹³

¶ 39         To establish willful infringement, the Federal Circuit has adopted a two-part test. The first step asks the fact finder to consider the "totality of circumstances"⁹⁴ in making its determination of whether the plaintiff met its burden of proving willfulness, which totality of circumstances include the following non-exclusive factors:

(1) whether the infringer deliberately copied the ideas or design of another; (2) whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed; . . . (3) the infringer's behavior as a party to the litigation; (4) defendant's size and financial condition; (5) closeness of the case; (6) duration of defendant's misconduct; (7) remedial action by the defendant; (8) defendant's motivation for harm; and (9) whether defendant attempted to conceal its misconduct.⁹⁵

¶ 40         If the plaintiff proves by clear and convincing evidence⁹⁶ that the defendant did not meet this duty of due care, then a jury may find that the infringement was willful. The plaintiff bears both burdens of persuasion and production.⁹⁷ The burden of production shifts to the accused to put on evidence that it acted with due care only after the plaintiff meets its initial burden of production.⁹⁸ An express finding of willfulness is necessary before the second step.⁹⁹

¶ 41         In the second step, the court may exercise its discretion in determining whether to increase the damage award based on the jury's finding of willfulness.¹⁰⁰ A jury's finding that the defendant willfully infringed the patent merely authorizes - it does not mandate - treble damages and attorneys' fees,¹⁰¹ "even when there is an express finding of willful infringement."¹⁰² The paramount determination in deciding to grant enhancement and the amount of those enhanced damages is the defendant's culpable conduct or bad faith.¹⁰³

¶ 42         Indeed, the failure of the infringer to avoid infringement by not attempting to design around the patent, or by otherwise failing to take remedial measures, may justify enhanced damages.¹⁰⁴ Another important factor in determining whether a potential infringer lacked a good faith belief that it did not infringe a patent is whether or not the infringer obtained an opinion of counsel, as discussed next.¹⁰⁵

¶ 43         Oftentimes, a defendant to a patent infringement lawsuit expects to rely on the advice of counsel in order to avoid a finding of willful infringement. That opinion can take the form of a non-infringement opinion or an invalidity opinion.¹⁰⁶ But before expecting to parade the opinion in front of the jury to vitiate willfulness and to show a good faith belief that it did not infringe the patent or that the patent was invalid, the defendant must show that the belief in the opinion was reasonable under all the circumstances.¹⁰⁷

¶ 44         Indeed, willfulness may still be found despite the presence of an opinion of counsel in those cases when it is shown that the opinion was "either ignored or found to be incompetent."¹⁰⁸ It must be incompetent in at least two respects.

¶ 45         First, the opinion must be given by a "competent" attorney. The Model Rules of Professional Conduct promulgated by the American Bar Association and followed in some version by forty-seven states¹⁰⁹ requires that the lawyer possess the required "legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation."¹¹⁰ The attorney ought to be registered to practice¹¹¹ before the United States Patent and Trademark Office.¹¹²

¶ 46         Second, the opinion itself must be independent and competent.¹¹³ Generally, this requires that the opining attorney has analyzed the patent, its prosecution history, relevant prior art, and the accused product.¹¹⁴ Indeed, an oral opinion given without analyzing the accused device, the patent's file wrapper, or any prior art may not be relied upon to show a good faith belief in non-infringement.¹¹⁵ Moreover, the potential infringer must be sure to give its opining counsel all of the important technical documents and the best information available or else "the opinion can no longer serve its prophylactic purpose of negating a finding of willful infringement."¹¹⁶

¶ 47         Until 2004, a plaintiff's burden of production was satisfied by a defendant's assertion of the attorney-client privilege to withhold an opinion of counsel. Consequently, the jury received an instruction allowing it to infer that the defendant either did not seek an opinion of counsel (thereby failing to exercise due care) or that the opinion was incompetent or unfavorable. Either way, the jury could find that the defendant did not hold a reasonable, good-faith belief that it did not infringe the patent. In Knorr-Bremse, the Federal Circuit held that "[t]he adverse inference that an opinion was or would have been unfavorable, flowing from the infringer's failure to obtain or produce an exculpatory opinion of counsel, is no longer warranted."¹¹⁷

¶ 48         Therefore, when the opinion is open to attack, such as by challenging or discrediting it as a mere oral opinion or a conclusory written opinion that did not review the best information available and all documents that a reasonable opining attorney can be expected to rely upon in forming the opinion, then according to one Federal Circuit decision it might be better strategy to assert the attorney-client privilege and forsake the advice-of-counsel defense.¹¹⁸ Because there is no longer an adverse inference that a legal opinion was or would have been unfavorable when the defendant invokes the attorney-client and/or work-product privileges,¹¹⁹ nor an adverse inference from such defendant's failure to consult with counsel,¹²⁰ the defendant effectively keeps the plaintiff from using an otherwise shaky opinion against the defendant by invoking these privileges. Otherwise, the incompetent opinions, taken together with other evidence under the totality of circumstances, might support the finding of willfulness.¹²¹

¶ 49         When the defendant both knows of the patent and fails to carry out its duty of care by avoiding the infringement of a valid and enforceable patent, then there might be a verdict of willful infringement. As a result, the plaintiff may be entitled to treble damages¹²² as well as its attorneys' fees.¹²³ And those attorneys' fees in patent litigation can really sting.¹²⁴

¶ 50         The trebling is of all actual damages. By statute, a plaintiff may recover only actual damages accruing after the date it placed the alleged infringer on "notice of infringement."¹²⁵ Here, the notice for purposes of willfulness and the notice for actual damages deviate.

¶ 51         Willfulness is a more lenient notice and focuses on when the potential infringer had knowledge of the patent, while the purpose of the notice statute for actual damages focuses on the patentee and is designed to ensure that the plaintiff gave the defendant knowledge of the adverse patent and alleged infringement.¹²⁶ Consequently, for actual damages to accrue, mere "notice of the patent's existence or ownership" is not "notice of infringement" and is not an "affirmative communication [to the potential infringer] of a specific charge of infringement by a specific accused product or device."¹²⁷ The plaintiff may meet its burden by giving the potential defendant "constructive" notice,¹²⁸ as when the plaintiff and its licensees mark with the patent number substantially all products covered by the patent.¹²⁹ Absent marking, however, actual damages may be recovered only after actual notice is given by the plaintiff¹³⁰ to the defendant, such as with the filing of the lawsuit or with a letter that accuses the defendant's product of infringing the plaintiff's patent.¹³¹

¶ 52         For its actual damages, the plaintiff may seek to recover lost profit damages, which are the profits the plaintiff lost because of the infringement.¹³² Lost profit damages are not based on defendant's profits but instead are based on the profits the plaintiff would have realized if the defendant had not taken away those sales with the infringing product.¹³³ The plaintiff must show that it would have made the sales "but for" the defendant's infringing product.¹³⁴ Moreover, the lost profits test mandates proof of demand for the product, ability to manufacture and market to the demand, the absence of non-infringing alternatives, and the profit it would have made on the lost sales.¹³⁵ In lieu of the greater standard of proving lost profits, the Patent Act guarantees the patent owner (even if it never commercializes a single product) a minimum royalty on all of defendant's sales.¹³⁶ The plaintiff need not even prove an established royalty (i.e., where the value of a patent had been set through a series of existing licenses), and may in that case still recover a reasonable royalty from the defendant if the royalty means that the defendant would be selling the product at a significant loss.¹³⁷

III.    A Hobson's Choice and the Advice of Counsel Defense

¶ 53         The intersection of a defendant's right to rely on the advice of counsel defense and the plaintiff's right to all discovery relating to that defense is in a critical state of flux. On the one hand, by offering up the opinion of counsel, the defendant might successfully defend against the charges of willful infringement and avoid the treble damages and attorneys' fees that might follow a finding of willfulness. On the other hand, by offering up the opinion, the defendant waives any attorney-client privileged communications concerning the opinion,¹³⁸ and the Federal Circuit held in 2006 that the defendant may also relinquish attorney work product.¹³⁹ But the bad news for defendants does not end there. At least one court has held that the defendant might have to give up its trial counsel.¹⁴⁰

¶ 54         Until 2004, the Federal Circuit's precedent on proving willful infringement had aided the plaintiff in making its case on willfulness by permitting the trier of fact to infer from an alleged infringer's failure to produce an opinion letter that such an opinion, if rendered, was or would have been unfavorable to the alleged infringer.¹⁴¹ In its 2004 Knorr-Bremse decision, the Federal Circuit specifically addressed the question of whether it is appropriate to draw an adverse inference with respect to willfulness when an accused infringer had not obtained legal advice.¹⁴² The court answered that question in the negative.¹⁴³ In that case, while early receipt of legal advice would have strengthened the defendants' argument that they had not willfully infringed, failure to have solicited such advice does not give rise to an inference of willfulness.¹⁴⁴

¶ 55         In other words, there would be no adverse inference drawn against a potential infringer who fails to obtain legal advice or who in fact obtains a counsel's opinion but refuses to produce it based on invoking the attorney-client privilege. Knorr-Bremse does not address, however, the scope of the waiver that results from a party waiving privilege and asserting the advice of counsel defense. The starting point in resolving such disputes is the Federal Circuit's recent decision of In re EchoStar.¹⁴⁵

¶ 56         In 2006, the Federal Circuit addressed, in EchoStar, the documents¹⁴⁶ that a plaintiff may obtain in discovery that are relevant to the critical inquiry of the defendant's "state of mind"¹⁴⁷ at the time of infringement so that there can be a determination of whether the defendant has willfully infringed the patent in suit. To adequately make that determination, the Echostar court held that all communications relating to the subject matter of the opinion must be disclosed. In that case, the defendant had produced an opinion from in-house counsel, but withheld an opinion from outside counsel on which EchoStar chose not to rely.

¶ 57         First, the court held that "when EchoStar chose to rely on the advice of in-house counsel, it waived the attorney-client privilege with regard to any attorney-client communications relating to the same subject matter, including communications with counsel other than in-house counsel."¹⁴⁸ The court reasoned that "selective waiver of the privilege may lead to the inequitable result that the waiving party could waive its privilege for favorable advice while asserting its privilege on unfavorable advice."¹⁴⁹ To prevent such abuse, the court held that "when a party defends its action by disclosing an attorney-client communication, it waives the attorney-client privilege as to all such communications regarding the same subject matter."¹⁵⁰

¶ 58         Second, regarding the work-product immunity, the Federal Circuit held that reliance on the advice-of-counsel defense resulted in a waiver of (1) documents that comprise traditional written communications exchanged between attorney and client concerning the subject matter of the opinion, and (2)documents that reflect or memorialize any oral communication of work product that the attorney conveyed to the client concerning the subject matter of the opinion whether or not those documents were forwarded to the client.¹⁵¹ The court held, however, that waiver did not reach attorney work-product documents analyzing the law, facts, trial strategy, and so forth that reflect the attorney's mental impressions but that were not communicated to the client, because "[i]t is what the alleged infringer knew or believed, and by contradistinction not what other items counsel may have prepared but did not communicate to the client, that informs the court of an infringer's willfulness."¹⁵² In arriving at this conclusion, the court commented that, "[b]y asserting the advice-of-counsel defense to a charge of willful infringement, the accused infringer and his or her attorney do not give their opponent unfettered discretion to rummage through all of their files and pillage all of their litigation strategies."¹⁵³

¶ 59         In addition, in discussing the work-product privilege, the Federal Circuit addressed the temporal limits to waiver. Specifically, the court rejected such limits, stating that, while it "may be true" that waiver "does not extend to advice and work product given after litigation began . . . when the work product is never communicated to the client, it is not the case when the advice is relevant to ongoing willful infringement, so long as that ongoing infringement is at issue in the litigation."¹⁵⁴

¶ 60         The court in EchoStar did not directly address whether the same subject matter waiver extends beyond the specific defense at issue to include all defenses. And, predictably, the courts that have reviewed this issue post-EchoStar are split.¹⁵⁵ Moreover, EchoStar did not involve trial counsel.

¶ 61         In the wake of EchoStar, however, some courts have concluded that any EchoStar waiver ought to extend to trial counsel, other courts have disagreed, and still others have found waiver but only on a limited basis. In short, courts that have considered the issue of waiver with respect to trial counsel have not arrived at any consistent rulings.¹⁵⁶ Still, others have adopted a "middle ground" approach under which "waiver extends only to those trial counsel work-product materials that have been communicated to the client and contained conclusions or advice that contradict or cast doubt on the earlier opinions."¹⁵⁷

¶ 62         Underscoring the assault on the effective assistance of trial counsel when a defendant dares rely on an advice of counsel defense is the district court decision of Crossroads Systems (Texas), Inc. v. Dot Hill Systems Corp.¹⁵⁸ In that case, the court disqualified the defendant's trial firm and ordered that no member of the firm "may assist in the presentation of this case at trial."¹⁵⁹

¶ 63         In Crossroads, some members of the law firm, although not acting as the trial team, provided the opinions of counsel that the defendant relied on to defend against a charge of willful infringement. The plaintiff brought a motion to disqualify the defendant's trial law firm. In granting that motion, the district court relied on ethical canons and rules¹⁶⁰ that an attorney shall not serve as trial counsel when it becomes clear that "he or she will be a necessary witness in the trial of the case."¹⁶¹ Under the circumstances presented to the court, the court extended those canons and rules to the entire firm, holding that "a strict prohibition on all members of the testifying lawyer's firm serving as trial counsel is appropriate."¹⁶² The court specifically found that the scenario would invite "jury confusion" if the law firm's trial team "were permitted to serve as trial counsel when their partners will be taking the stand as witnesses."¹⁶³

¶ 64         Moreover, the Crossroads court found the absence of any "prejudice" to the defendant based on several factors. First, the trial attorneys knew, for almost two years, that the court would not permit them to act as trial counsel if the opinions of other members of the firm were offered in support of the defense to plaintiff's willfulness allegations.¹⁶⁴ Second, the trial attorneys assured the court that they would not serve as trial counsel for the defendant if the firm's opining attorneys were called to testify.¹⁶⁵ That the trial counsel later "disavowed" that commitment obviously concerned the court. Third, the court relied on the trial counsel's earlier statement that, in the event the opining attorney were called to testify and trial counsel would not participate, the defendant would still be "ably represented by several competent attorneys from two law firms besides"¹⁶⁶ trial counsel, which other firms had been involved with the case for some time.

¶ 65         On the heels of the disqualification of trial counsel, the case settled soon thereafter for over ten million dollars.¹⁶⁷

IV.    "A Bridge Over Troubled Water":¹⁶⁸ Proposing a Coherent and Equitable Balancing Test

¶ 66         Each of the district courts that addressed the issue of whether the waiver should extend to trial counsel had read and parsed the same EchoStar decision. Each considered its ruling consistent with EchoStar. Yet, reading the same opinion and the same exact words from the opinion, they came to flatly diverging conclusions of what is and is not off limits. Because the repercussions affect virtually every patent case, a patent defendant faces the stark reality of being forced to decide between giving up a critical defense to charges of willful infringement or preserving its privilege with trial counsel.

¶ 67         Courts, counsel, and parties need a coherent and equitable balancing test that will offer them clarity and predictability without compromising equity and fairness to either side. The proposed test weighs the competing policy against selective disclosure of opinions of counsel (sword-and-shield litigation tactics) and policy for protecting trial counsel's work product, weighs any prejudice that might befall the accused infringer, weighs any irreparable harm to the patentee, and weighs the objective need for the evidence.

¶ 68         The post-EchoStar district court decisions that interpreted EchoStar to extend the waiver to trial counsel had applied what in effect was a bright-line rule or an automatic waiver. That simplistic interpretation of EchoStar sacrifices equity and fairness.

¶ 69         Any "bright-line rule" or "automatic waiver" that exposes an accused infringer to treble damages and attorneys' fees aimed at deterrence and retribution while vitiating that party's right to the effective assistance of trial counsel directly conflicts with the teachings of Knorr-Bremse,¹⁶⁹EchoStar,¹⁷⁰ procedural and substantive due process under the Due Process Clause of the Fourteenth Amendment to the Constitution of the United States,¹⁷¹ the Seventh Amendment¹⁷² right to a fair trial, and fundamental fairness. The bright-line approach or automatic waiver has the effect of forcing an accused infringer into choosing between the advice of counsel defense to charges of willful infringement on the one hand, and effective assistance of trial counsel on the other. That choice is unacceptable.

¶ 70         While straightforward in its application, a bright-line rule is rife with potential abuses that counter, rather than further, the truth-finding function of patent trials, the goal of judicial integrity, and the hope to bring "civil" back to civil litigation. In the slippery slope of an absolute waiver, it is wholly foreseeable (indeed, probable) that, upon a defendant's exercising its right to defend itself based on the advice of counsel, the defendant's trial counsel will be deluged with an onslaught of discovery intended to harass and to pressure the defendant into a quick settlement. Seemingly there would be no stopping a plaintiff from immediately bombarding the defendant's trial counsel with document requests directed to the trial counsel's own litigation files, and no doubt the plaintiff will barrage trial counsel with demands for depositions of every attorney on the trial team.

¶ 71         Plaintiff's frenzied attempts at invasive discovery of trial counsel will utterly destroy the work-product immunity and attorney-client privilege that is essential and fundamentally necessary to carrying out its representation of a client that is innocent until proven liable. Indeed, the dire situation can predict a scenario where plaintiff's counsel will be entitled to sit in on any face-to-face meetings or join any telephone conference between trial counsel and its client just in case the conversation might utter the words "non-infringement," "invalidity," "unenforceability," or "opinion." Simply put, this is tantamount to denying the accused infringer's right to effective assistance of trial counsel. It is an unconstitutional, unacceptable, and misguided extension of Federal Circuit precedent.

¶ 72         A bright line in the context of punitive damages - which in reality is what treble damages and attorneys' fees amount to in today's rising costs of patent litigation - exacts too much from the accused infringer and furthers no legitimate end. Treble damages and attorneys' fees can literally exceed tens of millions and hundreds of millions of dollars thereby leading a defendant directly into bankruptcy. What can be more punitive than that?

¶ 73         Plainly stated, too much is at stake in patent cases for a bright-line rule or automatic waiver that gives an opposing party unfettered carte blanche access (without exception) to all of trial counsel's communications with the accused infringer in preparing for trial, discussing the merits of litigation strategy, or evaluating settlement. Either there would be a chilling effect on any and all communications between the defendant and its trial counsel, or the bright line would effectively eradicate the advice of counsel defense if it can only be used in exchange forfeiture of any further communications with trial counsel, which will likely result from a district court order that automatically trumps the work-product protection of trial counsel.

¶ 74         The bright-line rule radically hinders an accused infringer from working with its trial counsel in order to defend itself and, consequently, deprives the accused infringer from its "day in court," forcing coercive settlement where it is held hostage to the automatic waiver, and forfeiting any notion of fair play, fundamental fairness, and the right to participate fully in its defense. And when it becomes open season by patent trolls on any would-be defendants, there will be great social costs that actually cripple legitimate research and development, stymie innovation, and chill healthy competition.¹⁷³ Nor does the bright-line rule comport with - in fact, it is at odds with - both Knorr-Bremse and EchoStar.

¶ 75         Simply put, the Federal Circuit never intended an all-or-nothing, everything is fair game, wholesale invasion of all communications between trial counsel and client concerning infringement, validity, and enforceability issues in the case as soon as the accused infringer asserts the opinion of counsel.¹⁷⁴ It is inconceivable that the same court that would do away with the adverse inference¹⁷⁵ instruction - which posed a threat to the attorney-client privilege and work-product immunity if a defendant exercised them in lieu of asserting the advice of counsel defense - would then nullify those privileges by substituting an equally perilous consequence to all who assert that very defense. There must be a counterbalance.

¶ 76         A balancing test would adequately take into account the longstanding right to rely on the opinion of counsel in defense of willfulness charges on the one side of the scale, and factors sufficient to find that a defendant waived the most sacrosanct of attorney client communications (that of trial counsel) on the other side of the scale. A balancing test is consistent with the teachings of EchoStar and Knorr-Bremse, which emphasized the public interest in protecting the attorney-client privilege¹⁷⁶ and work-product immunity.¹⁷⁷ Under EchoStar, therefore, a district court should "balance" two competing policies:

We recognize that the line between "factual" work product and "opinion" work product is not always distinct, especially when, as here, an attorney's opinion may itself be "factual" work product. When faced with the distinction between where that line lies, however, a district court should balance the policies to prevent sword-and-shield litigation tactics with the policy to protect work product.¹⁷⁸

¶ 77         In contrast, an automatic waiver and bright-line rule abdicates the district court's obligation (and responsibility) of weighing the evidence in order to determine whether there had been any sword-and-shield tactics at play as shown by, for example, a defendant's selective disclosure of opinions of counsel. Furthermore, the automatic waiver and bright line rule ignore the policy in favor of the time-honored¹⁷⁹ protection of attorney-client privilege and work-product immunity of trial counsel.

¶ 78         A balancing test is also faithful to the Federal Circuit's approach to willful infringement, which itself is a balancing test. In fact, the en banc decision in Knorr-Bremse reaffirmed that willfulness depends on the trier of fact considering the "totality of the circumstances"¹⁸⁰ and held that failure to obtain an opinion of counsel "shall no longer provide an adverse inference or evidentiary presumption that such an opinion would have been unfavorable."¹⁸¹ Moreover, the balancing test applies to district courts, because it is a bedrock principle of patent law that Federal Circuit precedent governs the issue of privilege and discoverability arising from assertion of the advice-of-counsel defense in response to charges of willful infringement.¹⁸²

¶ 79         And a plaintiff should not back-door an absolute privilege waiver by resorting to the accused infringer's ongoing duty of care. True, the Federal Circuit in Knorr-Bremse reaffirmed that "there continues to be 'an affirmative duty of due care to avoid infringement of the known patent rights of others.'"¹⁸³ The Federal Circuit got it right, but a plaintiff should not take that "duty" out of context. In its proper context, the duty stems from the Federal Circuit's decision in Underwater Devices¹⁸⁴ where the infringer's attorney, without first reviewing the PTO records¹⁸⁵ relating to the patents at issue, had advised the client to "continue to refuse to even discuss the payment of a royalty."¹⁸⁶ Under those facts, the court stressed the legal obligation to respect patents when the court pronounced the duty of care.¹⁸⁷ But Underwater Devices neither raised nor addressed the attorney-client privilege.

¶ 80         The Federal Circuit's decision in Knorr-Bremse trumpeted the attorney-client privilege and work-product immunity by overruling any adverse inference to be drawn from a defendant's exercising those privileges. In other words, Federal Circuit precedent militates against an outcome whereby the duty of care overrides an accused infringer's privilege the moment it asserts the advice of counsel defense to willful infringement that might subject that party to treble damages and attorneys' fees.¹⁸⁸ Such an outcome would render the privilege hollow and thereby inevitably relegate the advice of counsel defense so perilous as to be foisted into the annals of bygone times. A precarious privilege, or one that becomes null and void the moment a defendant asserts the advice of counsel defense, is little better than no privilege at all. But if the purposes of the attorney-client privilege, the advice of counsel defense, and the duty of care are to be served, then the defendant should not face such ominous consequences unless the district court first engages in a balancing test in order to determine whether the accused infringer had played fast-and-loose with its opinion of counsel, had embarked on opinion shopping, or had engaged in selective production of opinions of counsel that it received in carrying out its duty to seek and obtain competent legal advice from counsel.

¶ 81         Should it matter whether patent infringement defendants use lawyers from one law firm to act as trial counsel and other lawyers from the same firm to prepare a non-infringement opinion as a defense to allegations of willful infringement? According to the balancing test, that factor may be considered but would not be dispositive without weighing the evidence and making a finding based on underlying factors discussed below. The rationale for the balancing test applies equally to all trial counsel, because if there is a bright-line rule or automatic waiver as to one trial counsel then the waiver could not be cured even if the defendant were to hire new trial counsel. Otherwise stated, once the privilege is destroyed between the former trial counsel and the client, the opposing party would be free to comb through the files of, and take depositions of, former trial counsel over such broad topics as the strengths and weaknesses of the accused defendant's positions on non-infringement, invalidity, and unenforceability. That is too much.

¶ 82         The balancing test requires that the district court consider the extent to which the trial counsel and the lawyers from the same or different firm were screened off from each other. The proper balance would give the plaintiff sufficient leeway to pursue discovery from both the defendant and the counsel who rendered the opinion on which the accused infringer is relying in support of the advice of counsel defense, but the plaintiff cannot pursue discovery of the trial counsel without more. For instance, if the potential infringer follows the rules and intentionally keeps the opinion counsel and trial counsel completely separate and independent such that trial counsel plays no role in, makes no contribution to, and does not influence the drafting of the opinion or otherwise breach the screening wall between itself and opining counsel, and the accused infringer did not engage in "opinion shopping," then the discovery door leading to trial counsel ought to be closed to a plaintiff. If plaintiff is in fact able to "pierce" the privilege, however, by showing through this discovery that trial counsel and opining counsel were not screened off from each other, that they collaborated, that the defendant engaged in opinion shopping, or that trial counsel contributed to or influenced the opinion either during preliminary drafts or with supplemental opinions after the initial formal opinion, then the district court may find that the work-product immunity and the attorney-client privilege have been waived as to trial counsel.

¶ 83         Looking at another aspect of the scale, this factor of the coherent and equitable balancing test asks the district court to determine whether the defendant has been unfairly prejudiced. As with the other factors, district courts are particularly suited for this factor of the balancing test. For instance, district courts are regularly asked to decide preliminary questions of the existence (or waiver) of a privilege.¹⁸⁹ Similarly, district courts are called on to decide the metes and bounds of discovery, from the scope of permissible discovery that is not privileged,¹⁹⁰ to claims of privilege or protection of trial preparation materials,¹⁹¹ to limits on the scope and manner of discovery in order to preserve a privilege.¹⁹² Likewise, district courts are adept at ruling on issues of whether or not evidence is sufficiently prejudicial to be excluded.¹⁹³

¶ 84         The district court can weigh and consider the plaintiff's discovery tactics and make a judgment of whether the discovery hints at abuses. Here, the court should be skeptical of a plaintiff whose initial discovery propounds document requests and deposition notices of trial counsel before the plaintiff has any reliable basis for piercing the privilege. But the court might view the plaintiff's attempted discovery differently if the plaintiff has first deposed opinion counsel or the defendant's witnesses, and based on that discovery the plaintiff can show that the trial counsel played a role in, made contributions to, and influenced the drafting of the opinion, or that there was a breach of the screening wall between trial and opining counsel.

¶ 85         Also, the time that has elapsed between the date when the accused infringer received the opinion (on which it is relying) and the date on which it was served with the complaint might give rise to prejudice based on the defendant's detrimental reliance. For instance, if a defendant relies on an opinion of counsel prepared promptly after receiving a cease and desist letter, but the plaintiff sits on its rights for some time before suing the defendant, then there has been sufficient time to cause a break between the opinion of counsel and the trial counsel. In weighing the evidence, the court can "borrow" from familiar common law principles of laches and estoppel.¹⁹⁴

¶ 86         As another example, a defendant who first receives actual notice of plaintiff's patent rights at the time it received the patent infringement complaint and promptly receives an opinion of counsel, might assert the opinion of counsel. How entrenched is trial counsel in the case? The longer plaintiff waits, the more prejudice to the accused infringer. In the foregoing scenario of a post-litigation opinion, if the plaintiff relied on (or possessed) purported privilege piercing evidence, then the plaintiff must not wait months or years into the case before requesting the court to decide whether to allow discovery into trial counsel communications. Given that plaintiff seeks to invade trial counsel communications, the integrity of the patent litigation system can brook no delay. There should be no signs of ambush or gamesmanship.¹⁹⁵

¶ 87         Furthermore, the district court is in the best position to decide how much weight to give to the defendant's relationship to the trial counsel. If trial counsel is the national patent counsel for the defendant, the only patent counsel to have appeared in the case, and has a comparative advantage to new counsel based on previous trials over the accused products or intimate knowledge of the defendant's business, then the court ought to be allowed to weigh these factors in the prejudice calculus, and of course the plaintiff's counsel should be heard in response.¹⁹⁶

¶ 88         A plaintiff may be expected to counter with arguments that a waiver (or even disqualification of trial counsel) is mandated by ethical canons. Those are misplaced. Federal Circuit law controls the issue of advice of counsel defense and its impact on any waiver of attorney-client privilege or attorney work product.¹⁹⁷

¶ 89         In Crossroads,¹⁹⁸ for example, no prejudice was argued by the defendant, no prejudice was shown, and no prejudice was found. Rather, the court found the "absence of any colorable argument for prejudice"¹⁹⁹ for at least two reasons. First, the defendant had known relatively early in the case (and long before the disqualification motion) the court's position that it would not allow trial counsel to present the defendant's case to the jury when opining counsel was a member of trial counsel's firm.²⁰⁰ Second, the defendant's trial counsel admitted there would be no prejudice if they were disqualified, because there were two other patent firms that had sufficient knowledge of the case and had been intimately involved from the beginning.²⁰¹

¶ 90         Having found no prejudice resulting from disqualifying only one of the defendant's three trial counsel, the court granted the plaintiff's motion to disqualify because the court believed such a result was mandated by ethical canons. Not so.

¶ 91         To the contrary, proper reliance on the applicable ethical canons in Crossroads would not have required disqualification. Of the Model Code,²⁰² the Model Rules,²⁰³ and the Texas Rules,²⁰⁴ only the Model Code prohibits a lawyer, or the lawyer's "firm," from serving as trial counsel when another lawyer in the "firm" may be a witness. In contrast, the Model Rules (which Texas follows) firmly rejected this strict provision of the Model Code and, by doing so, gave greater weight to the client's interest, thereby concluding that a client should be allowed to consent to be represented by the law "firm."²⁰⁵ This distinction, and the fact that the Texas Rules follow the Model Rules, thereby rejecting the Model Code, does not appear to have been made by the defendants. As a result, the court never considered this argument, and thereby placed its reliance on the Model Code, as opposed to the Model Rules upon which the Texas Rules are based. Indeed, the Crossroads decision held that "under these circumstances" all members of the "firm" would be disqualified. But the court cited for its support neither the Texas Rules nor the Model Rules. Instead, it cited a case that was based on the Model Code.²⁰⁶

¶ 92         All "helpful" evidence to a plaintiff's cause will naturally be "needed" by a plaintiff. The objectively reasonable need for the evidence factor of the proposed coherent and equitable balancing test as put forth in this article, however, speaks to the question of whether some concededly relevant evidence can only be obtained by compelling production of trial counsel communications, which has the potential of leading to unfairness to the defendant, discovery abuses, and gamesmanship. This "objectively reasonable need" factor is no more or less than what district courts presently do when deciding, by court order, whether to limit discovery under the Federal Rules of Civil Procedure:

The frequency or extent of use of the discovery methods otherwise permitted under these rules and by any local rule shall be limited by the court if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues. The court may act upon its own initiative after reasonable notice or pursuant to a motion under Rule 26(c).²⁰⁷

¶ 93         Therefore, one virtue of this "objectively reasonable need" factor is that it depends from familiar concepts and well-established principles in law. This need factor is essential, because violation of trial counsel's work-product immunity and attorney-client privilege is a drastic measure to be avoided unless absolutely necessary. Some guidelines for courts to weigh in making that judgment are discussed next.

¶ 94         The accused infringer's "intent and reasonable beliefs are the primary focus of the willfulness inquiry."²⁰⁸ Because the willfulness inquiry centers on the "infringer's state of mind,"²⁰⁹ the opinion counsel generally would not be competent to give an opinion of what was in another's mind.²¹⁰ Rather, the focus is on whether the opinion, on which the accused infringer relies in support of the advice of counsel defense, was sufficient to "instill a belief in the infringer that a court might reasonably hold the patent is invalid, not infringed, or unenforceable."²¹¹

¶ 95         Consequently, the critical component of the defense is the effect of the opinion on the defendant, and whether it was reasonable for the defendant to rely on that opinion.²¹² Therefore, the pivotal focus should be on evaluating the nature of the opinion itself and the effect it had on the defendant's action.²¹³ The plaintiff who seeks trial counsel communications should first take the deposition of the defendant and then be required to show a nexus between its action and trial counsel's breach of the screening wall,²¹⁴ giving serious consideration to the question of whether the defendant relied primarily²¹⁵ on the asserted opinion of counsel.

¶ 96         Opinion of counsel letters on which the defendant is relying generally must be examined by the four corners²¹⁶ of those letters. EchoStar²¹⁷ expressed concern over a defendant who produces only favorable letters while withholding unfavorable letters that might have led to opinion shopping. Assuming all such opinion letters from opinion counsel have been produced, then opinion counsel may be deposed as to the letter and as to what counsel told the client. Because opinion counsel tends to give testimony favorable to the defendant, plaintiffs rarely call the defendant's opinion counsel at trial, and given Federal Circuit precedent that it is the client's state of mind that matters, opinion counsel cannot give competent testimony to establish another's state of mind. But, nonetheless, plaintiff should be given the opportunity to show competency of opinion counsel and a legitimate expectation of calling that counsel at trial.²¹⁸

¶ 97         If opinion counsel is not a necessary party, then it is doubtful that trial counsel's testimony would be needed. Indeed, the Federal Circuit has held that the importance of an opinion of counsel "does not depend on its legal correctness."²¹⁹ Because the inquiry ought to be the four corners of the opinion and the accused infringer's reasonable reliance on that opinion,²²⁰ mere comments by trial counsel should be excluded as little more than cumulative evidence of the written opinion or otherwise obtainable from some other source such as testimony from the client or documents exchanged between opinion counsel and the client.²²¹ Therefore, trial counsel's agreement or disagreement with the opinion would not justify the wholesale invasion of trial counsel's privilege.

¶ 98         While willful infringement should not be trivialized, something more must be shown before a defendant faces a decision of whether to give up a key defense to charges of willful infringement or to choose the effective assistance of counsel. Nevertheless, under the Federal Rules of Evidence, district courts are accustomed to deciding important issues of whether there has been a "showing that the party seeking discovery has substantial need of the materials in the preparation of the party's case and that the party is unable without undue hardship to obtain the substantial equivalent of the materials by other means."²²² Therefore, this factor has the virtue of placing district courts on familiar territory.

¶ 99         The plaintiff should be expected to shoulder the initial burden of showing irreparable harm to it if denied trial counsel communications. Here, district courts may borrow traditional common law notions of irreparable harm as they have done in other contexts, such as with injunctive relief.²²³

¶ 100         Logistically, therefore, a defendant would assert the advice of counsel defense to willful infringement.²²⁴ The plaintiff would take traditional discovery of opinion counsel and defendant's witnesses on conventional issues relating to the advice of counsel defense. If there is evidence that trial counsel wore two hats - if any member of the trial team also played a role in, contributed to, influenced the opinion on which the defendant relies, or breached the screening wall - then the defendant would have an opportunity to withdraw the advice of counsel defense. Withdrawal would be with prejudice, defendant could not be heard to disavow the decision later in the case, and there would be presumptive irreparable harm to the plaintiff if defendant should attempt to recant its informed decision to give up the advice of counsel defense to charges of willful infringement.

¶ 101         Here, however, the policy against sword-and-shield litigation tactics works both ways. The plaintiff might not be able to show irreparable harm if it amends the complaint to assert additional patents that were not at issue at the time of the hearing and for which the screening wall has been perfectly maintained. In granting leave to allow the plaintiff to amend the complaint,²²⁵ a district court can tie its decision to granting defendant's motion to assert the advice of counsel defense to the newly added patent.²²⁶ Alternatively, the district court may sever²²⁷ plaintiff's infringement claim on the new patent, or may bifurcate willfulness²²⁸ for that patent.

¶ 102         Only if the defendant maintains the advice of counsel defense would the court need to hear a motion on whether to pierce the trial counsel privilege. Thus, the timing of the hearing promotes judicial efficiency and avoids unnecessary motion practice should the defendant assert but then withdraw its defense based on revelations of discovery through traditional methods associated with proving and rebutting that defense.

¶ 103         The burden of production and burden of persuasion²²⁹ of proving willful infringement remains with the plaintiff and, given that the advice of counsel defense is a "defense,"²³⁰ the burden of choosing to give up this key defense or preserve the privilege with trial counsel would shift to the defendant only after plaintiff's initial showing that the privilege was pierced, the screen wall breached, or anyone from the trial team wore two hats.²³¹ Moreover, this shifting burden would dovetail with Federal Circuit precedent on the parties' respective burdens:

The patentee bears the burden of persuasion and must prove willful infringement by clear and convincing evidence. . . . 'The patentee must present threshold evidence of culpable behavior' before the burden of production shifts to the accused to put on evidence that it acted with due care. . . . 'Absent an initial presentation of evidence this burden of coming forward in defense does not arise.' That threshold showing cannot be satisfied merely by proof that the accused is asserting the attorney-client privilege to withhold an opinion of counsel.²³²

¶ 104         If the court should find that the factors of the coherent and equitable balancing test militate in plaintiff's favor, then the court may order limited discovery of defendant's trial counsel communications.²³³

V.    Conclusion

¶ 105         As a defense to pro forma, template allegations of willfulness, a patent infringement defendant oftentimes obtains an opinion of counsel. Trouble is brewing, however, for the defendant as the 2006 Federal Circuit decision in EchoStar²³⁴ has set off a veritable feeding frenzy of attacks by plaintiffs' counsel on the most sacred of attorney client communications and work product: that of trial counsel.

¶ 106         Plaintiffs pretend that the EchoStar decision creates a bright-line rule of absolute waiver of all attorney-client privileges and work-product immunities. Such an approach forecasts ominous consequences where a plaintiff may foist document requests and deposition notices on the trial team, and justify its discovery tactics with the bold assertion that EchoStar has empowered plaintiffs to listen in on the defendant's communications with trial counsel whenever a defendant asserts the advice of counsel defense and may be discussing non-infringement of the patent or any other issue that is the subject of the opinion of counsel on which the defendant relies. The upshot will be a defendant and its trial team that cease communications critical to preparing the case for trial or even evaluating the case for settlement. Such invasive discovery abuses are rabid attempts to place the accused infringer between Scylla and Charybdis: choosing between the advice of counsel defense to willful patent infringement on the one hand, or the effective assistance of trial counsel on the other.

¶ 107         This article argues that any reliance on EchoStar for a bright-line, automatic, absolute waiver of trial counsel communications is misplaced, inconsistent with, and contradictory to the language, tenor, and overriding policies set forth in EchoStar, Knorr-Bremse,²³⁵ and other Federal Circuit precedent. This article argues that the Federal Circuit would not do away with the adverse inference instruction - which had posed a threat to the attorney-client privilege and work-product immunity if a defendant exercised them in lieu of asserting the advice of counsel defense - only to nullify those privileges and protections to all who assert that very defense for which the adverse inference was overruled. Indeed, given the Federal Circuit's view on the necessity of full and frank communications between an attorney and client, and its overruling an adverse inference when a defendant exercises the attorney-client privilege, this precedent militates against an argument that, based on Underwater Devices,²³⁶ the duty of care trumps an accused infringer's attorney-client privilege or work-product immunity the moment when an accused infringer should assert the advice of counsel defense to willful infringement.

¶ 108         In place of the all-or-nothing, wholesale destruction of the attorney-client privilege or work-product immunity propounded by plaintiff and some district courts, this article has proposed a coherent and equitable balancing test that will bring clarity and fairness to the potentially chilling effect on discussions between the defendant and its trial team in the wake of EchoStar. The Federal Circuit precedent clearly demands a balancing test and forsakes a bright-line rule where a district court abdicates an obligation to weigh the evidence. One virtue of the "balancing" test proposed in this article is that it depends from familiar concepts and well-established principles of patent law, rules of evidence, and rules of civil procedure. Another virtue is that the balancing test will not complicate the case to any appreciable extent given what is at stake: the time-honored trial counsel's privilege and a defendant's right, when facing punitive treble damages, to effective assistance of trial counsel.

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