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An Analysis of Knorr-Bremse
It has long been held that a good faith reliance on timely and competent advice of counsel can negate a charge of willful patent infringement. Such advice of counsel can be used to potentially shield an infringer from having to pay enhanced damages of up to three times the damages under 35 U.S.C. '284 and/or the patentee's attorneys' fees under 35 U.S.C. '285. Similarly, a defendant's failure to obtain advice of counsel until after the company commenced its infringing activities would be evidence of willful infringement. Underwater Devices Incorporated v. Morrison-Knudsen Company, 717 F.2d 1380, 1390 (Fed. Cir. 1983). The practical application of this rule has been fraught with difficulty, however, since assertion of an opinion of counsel as a defense to a charge of willfulness typically involves a waiver of attorney-client privilege as to communications surrounding the opinion. The tension created by this dynamic was exacerbated by an adverse inference that an opinion of counsel was unfavorable if an accused infringer refused to waive privilege and disclose an opinion of counsel in defense of a willfulness charge. Kloster Speedsteel AB v. Crucible, Inc., 793 F.2d 1565, 1580 (Fed. Cir. 1986). The Court of Appeals for the Federal Circuit in Knorr-Bremse Systeme Fuer Nutzfahrzeuge GMBH v. Dana Corp., 2004 U.S. App. LEXIS 19185 (Fed. Cir. 2004) (en banc) abolished the adverse inference rule, but also reaffirmed that one is under a duty of care to avoid infringement.
Thus, under the adverse inference rule, parties that failed to proffer an opinion letter at trial could run the risk of having the court instruct a jury that it could infer that the infringement was willful or wanton. To avoid this adverse inference, an alleged infringer could assert that it relied on the advice of counsel, but in raising this defense, a waiver of the attorney-client privilege would be triggered. Thus, the affirmative duty of care requirement and its enforcement by the adverse inference rule were in tension with the attorney-client privilege and work product immunity.
The recent decision in Knorr-Bremse resolved this tension by holding that adverse inferences are no longer warranted where attorney-client privilege is asserted to protect advice of counsel or where advice of counsel was not obtained. The Federal Circuit, however, reaffirmed the duty of care to avoid infringement. As a consequence, questions remain as to what actions will be sufficient to satisfy this duty of care, and particularly, whether obtaining and producing exculpatory advice from competent counsel, although effectively not required, is nonetheless advisable.
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