In re Seagate: Scope of Opinion Waiver

A tremendous amount of litigious time and energy is spent fighting over opinions of counsel and associated waivers.  Formal non-infringement or invalidity opinions are usually designed for litigation — their sole purpose to reduce that a defendant will be held liable for treble damages.  The formal opinions are — as you might expect — stiff and formal. The good ones are exceedingly thorough and cover all the legal bases.  Yet, formal opinions often fall far short of honestly answering the important question: "What are my chances of winning if I’m sued on this patent?"  That question is much more nuanced.

Opinions of counsel are protected as attorney work product and usually attorney-client privilege as well.  When the opinion is presented to court, those protections are waived.  Many courts extend the scope of the waiver to include any related opinions (whether formal or informal) provided to the client. This waiver has, on occasion, been extended to litigation counsel even when an outside firm provided the formal opinion. 

The logic behind the broad waiver may help avoid nefarious behavior: A potential defendant would like to obtain several separate opinions, then only produce the ‘best’ one.  Such a scenario would hardly comport with the ‘reasonable reliance’ standard.  In addition, a broad wavier helps the patentee’s counsel ensure that any opinion is based on a solid background rather than potentially faulty information. (sword vs. shield)

One reason why waiver issues are fought so fiercely is that court outcomes are all-over-the-map. Some courts grant broad waivers while others are quite narrow.

In Seagate, the lower court granted a broad waiver to include otherwise privileged communication between the defendant and its trial counsel "even if it is communicated in the context of trial preparation."  The waiver was also extended to include in-house counsel’s internal discussions with business executives.  The Court of Appeals for the Federal Circuit, acting sua sponte, has requested an en banc hearing to determine the scope of opinion waivers.

In its opening brief, Seagate takes the position that "opinion and trial counsel have entirely different roles," and those roles require that the waiver be limited to opinion counsel.  Seagate also focuses on the result — that litigation attorneys will stop talking with their clients, resulting in worse legal representation. Clear rules will also "foster predictability."

I agree that this case is very important for patent litigants, but the interesting aspect involves the interplay between general practice and boutique firms. (More to come on this).

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Notes:

37 thoughts on “In re Seagate: Scope of Opinion Waiver

  1. “While he places the burden on the patentee’s attorney to show the second opinion “is a worthless piece of crap that no reasonable person could rely on,” he would deny the patentee discovery of the earlier negative oral opinion — arguably the best evidence of the unreasonablness of reliance.”

    I don’t think so. The best evidence of the unreasonable of reliance on the crap opinion is the lies and falsehood which will be inherent in the crap opinion.

    If it’s a “close call” and I tell the client that I’ll write the opinion but it’s going to be expensive so the client goes elsewhere, then in that instance as well my earlier less-than-glowing oral opinion is not “best evidence” of any unreasonable reliance on a subsequent opinion obtained more cheaply.

    “Suppose the first negative opinion was poorly done. Not addressing the first opinion head on could expose the client to treble damages no matter how brilliant the second opinion.”

    I’m not sure what you mean by “head on.” If the second opinion is brilliant, it covers all the bases. There is no need per se to expressly outline why the conclusions/analysis of an earlier opinion were effed up.

  2. “While he places the burden on the patentee’s attorney to show the second opinion “is a worthless piece of crap that no reasonable person could rely on,” he would deny the patentee discovery of the earlier negative oral opinion — arguably the best evidence of the unreasonablness of reliance.”

    I don’t think so. The best evidence of the unreasonable of reliance on the crap opinion is the lies and falsehood which will be inherent in the crap opinion.

    If it’s a “close call” and I tell the client that I’ll write the opinion but it’s going to be expensive so the client goes elsewhere, then in that instance as well my earlier less-than-glowing oral opinion is not “best evidence” of any unreasonable reliance on a subsequent opinion obtained more cheaply.

    “Suppose the first negative opinion was poorly done. Not addressing the first opinion head on could expose the client to treble damages no matter how brilliant the second opinion.”

    I’m not sure what you mean by “head on.” If the second opinion is brilliant, it covers all the bases. There is no need per se to expressly outline why the conclusions/analysis of an earlier opinion were effed up.

  3. Malcolm Mooney “fail[s] to see the necessity of decimating the attorney/client privilege” where he has orally told the client he can’t give a non-infringement opinion and the client gets one from another attorney. While he places the burden on the patentee’s attorney to show the second opinion “is a worthless piece of crap that no reasonable person could rely on,” he would deny the patentee discovery of the earlier negative oral opinion — arguably the best evidence of the unreasonablness of reliance.

    Opinions of counsel are not expert reports prepared in anticipation of litigation by experts who will not testify at trial and therefore non-discoverable. They are positive evidence offered to show the reasonableness of the infringer’s actions, the offering of which waives attorney/client privilege. If you want to preserve attorney/client privilege, don’t offer any opinion. Once offered, however, attorney/client privilege should not prevent or limit discovery of the earlier oral opinion or related matters. Discovery should include all drafts of opinions and depositions of the opinion attorney. Why? Because negative information found in an earlier draft but not in the final opinion is relevant to the competency of the attorney rendering the opinion and the reasonableness of the reliance.

    Suppose the first negative opinion was poorly done. Not addressing the first opinion head on could expose the client to treble damages no matter how brilliant the second opinion. While a judge can’t exceed treble damages, he can award substantially less and deny attorneys fees. The existence and the cover-up of a negative opinion may add malice to willfulness and guarantee treble damages and very generous attorneys fees.

  4. SF quotes a oopy right case and concludes:

    “Consequently, Congress is essentially free to decide how to best enact laws the fulfill the purpose of “promot[ing] the Progress of Science and useful Arts” — as long as the exclusive rights granted by those laws are for “limited Times.””

    The language of the Supreme Court in Graham v. John Deere is more closely on point:

    “At the outset it must be remembered that the federal patent power stems from a specific constitutional provision which authorizes the Congress “To promote the Progress of . . . useful Arts, by securing for limited Times to . . . Inventors the exclusive Right to their . . . Discoveries.” Art. I, 8, cl. 8. 1 The clause is both a grant of power and a limitation. This qualified authority, unlike the power often exercised in the sixteenth and seventeenth centuries by the English Crown, is limited to the promotion of advances in the “useful arts.” … The Congress in the [383 U.S. 1, 6] exercise of the patent power may not overreach the restraints imposed by the stated constitutional purpose. Nor may it enlarge the patent monopoly without regard to the innovation, advancement or social benefit gained thereby. Moreover, Congress may not authorize the issuance of patents whose effects are to remove existent knowledge from the public domain, or to restrict free access to materials already available. Innovation, advancement, and things which add to the sum of useful knowledge are inherent requisites in a patent system which by constitutional command must “promote the Progress of . . . useful Arts.” This is the standard expressed in the Constitution and it may not be ignored. And it is in this light that patent validity “requires reference to a standard written into the Constitution.” A. & P. Tea Co. v. Supermarket Corp., supra, at 154 (concurring opinion).

    Within the limits of the constitutional grant, the Congress may, of course, implement the stated purpose of the Framers by selecting the policy which in its judgment best effectuates the constitutional aim. This is but a corollary to the grant to Congress of any Article I power. Gibbons v. Ogden, 9 Wheat. 1. Within the scope established by the Constitution, Congress may set out conditions and tests for patentability. McClurg v. Kingsland, 1 How. 202, 206. It is the duty of the Commissioner of Patents and of the courts in the administration of the patent system to give effect to the constitutional standard by appropriate application, in each case, of the statutory scheme of the Congress.” (end of quote)

    Congress is expected to act in good faith within the purpose of the power. While the courts may allow Congress a wide latitude in how that purpose is achieved if it becomes apparent that the patent system as a whole, or a severable part of the system, is not operating to promote progress then that part is ultra vires Congress and is unconstitutional. Perhaps of greater practical importance is the fact that USPTO and the courts are obliged to interpret the patent statute in a manner consistent with the Constitution.

  5. Joe Smith wrote, “My view is that the power to grant monopolies is limited by the purpose of the power, namely to promote progress of science and the useful arts, and if Congress enacts a patent system which, on balance, does not promote progress then that system falls outside the purpose, and hence outside the power, and would be unconstitutional.”

    In Eldred v. Ashcroft (a 7 to 2 decision in a copyright case), the Supreme Court explained, “We have also stressed, however, that it is generally for Congress, not the courts, to decide how best to pursue the Copyright Clause’s objectives.” Consequently, Congress is essentially free to decide how to best enact laws the fulfill the purpose of “promot[ing] the Progress of Science and useful Arts” — as long as the exclusive rights granted by those laws are for “limited Times.”

  6. Just like a good law case, the discussions on this blog cover a lot of the questions that a growing law student needs to ask – recently I’ve seen discussions of venue, conflict of laws, constitutional and statutory construction, evidence, and now professional ethics. Nice.

  7. Mr. Moose (as in “Anon E. Moose’) wrote:

    “‘Bad’ (setting aside all the subjective vagaries) does not equate to unconstitutional in any context.”

    I think it does in this context for the following reason:
    1. the common law abhorred the grant of special monopolies and privileges by the Crown.
    2. the US constitution (Art i section 8 clause 8) carved out a limited exception and said “Congress shall have the power… To promote the Progress of Science and useful Arts, by securing for limited Times to … Inventors the exclusive Right to their … Discoveries”

    My view is that the power to grant monopolies is limited by the purpose of the power, namely to promote progress of science and the useful arts, and if Congress enacts a patent system which, on balance, does not promote progress then that system falls outside the purpose, and hence outside the power, and would be unconstitutional.

  8. “What opinion? Just the formal written one? ”

    Yes, and drafts thereof. We don’t provide drafts to the client, just the final opinion.

    Look, if a client comes to us with a patent and says, “We want a non-infringement opinion. Here’s the patent and here’s the product,” we don’t say, “Sure, no prob. Give us a month and $50,000.”

    We look at their product and we look at the patent. If we can’t write a reasonable opinion, we TELL THEM WHY.

    Then the client can look elsewhere. But if we can’t write the reasonable opinion for them, the bad news is that nobody can. Therefore, if they don’t get a license and continue to infringe, they are going to get screwed for triple damages UNLESS the patentees have worthless attorneys incapable of explaining why the “opinion” is a worthless piece of crap that no reasonable person could rely on.

    I fail to see the necessity of decimating the attorney/client privilege under these circumstances.

  9. Has it occurred to anyone else that the terms NON-infringement opinion and INvalidity opinion beg the question and put the conclusion before the research? Isn’t the attorney supposed to be providing an opinion as to WHETHER the patent is or is not valid and/or infringed?

    It is no surprise that NON-infringement and INvalidity opinions can be very costly. Just as the cost of defense in litigation increases with the strength of the plaintiff’s case, I suspect that the cost of obtaining a NON-infringement and/or INvalidity opinion increases with the strength of the patentee’s validity and infringement positions.

    Malcolm Mooney added the “all caps” material to my statement: “Any opinion letter which is discosed and relied on to attempt to avoid a finding of willful infringement ought to open the doors for broad discovery relative to the opinion counsel’s actual opinions and communications with the client ABOUT THE CONTENT OF THAT OPINION AND NOTHING ELSE.”

    What opinion? Just the formal written one? What about the oral opinion that may have told a slightly or vastly different story? Or the opinions the attorney left out of the written opinion? While I’m not sure I’d open discovery to the entire relationship between that attorney and client, I would open it up to all matters relative to the patents and products involved with the opinion. Since preparation of an opinion anticipates waiver of attorney/client privilege, clients and attorneys would be wise to be very careful. While it may not be a formal conflict of interest for opinion counsel to act as trial counsel, the opinion counsel’s risk assessments and potential litigation strategies at the time of the opinion are clearly relevant to the reasonableness of the client’s reliance on that opinion.

  10. Alan Harrison, I typically pay under 2000, closer to 1000 for a manual archive and database search on a mechanical and/or electrical invention. If there are wide ranging features, then it’ll get broken into a few searches. I’ve never run into anything that couldn’t be thoroughly searched for 6k. I send a pretty good volume to the guy that handles my searching though. His end product is a list of references with a sentence or two identifying the content of the top couple of references.

    I wish we could charge 50k per non-infringement opinion. That would never fly in our market. A lot of big corporations do not ever get opinions from outside corporations. It’s the mid-size corporations that get opinions because they know they’ll be going to war, whether a potential infringement charge has any merit or not. Most atty’s in STL charge more like 25k for a full non-infringement opinion. Now, that of course varies by the complexity of the invention, number of claims in the subject patent, and the number of legal issues presented in the drafting of the subject patent.

  11. “In this thread, if I am reading it correctly, if a client wants a patent attorney to compare just two patents and give an opinion on whether or not they overlap then that will cost $20,000 to $50,000. With the large number of prolix patents being filed how is any start supposed to go out, find and analyze the existing patent literature if it will cost them $20,000 to $50,000 to get a formal analysis of each patent?”

    I am fascinated to see these price ranges. I work at a research firm that provides various types of products (including, at the low end, invalidity search reports) to both attorney and non-attorney clients. We don’t provide a legal opinion on our search results; we do provide summary reports that point out, from the PHOSITA perspective of our engineers and scientists, apparent overlaps between prior art and selected patents or proposed inventions. We have not historically charged anything approaching $50k for a single invalidity search. However, given that our technical expertise often provides the meat which law firms then cook to perfection, maybe we should investigate claiming more of the price share. Any thoughts?

  12. Joe Smith puts his finger on the conundrum that fascinates me: which legal system (common law or civil law) can best nurture the rights of the little guy. It seems: neither. Civil law, everywhere where English law doesn’t run, has no decent fact-finding tools like discovery and x-exam. Common law has equity, so costs 50k to clear each patent. Where does that leave, say, a start-up in an area of dense patent activity? My solution: look to England, subservient to the civil law European Court of Justice but still soldiering on with the equitable principles of common law. Clearance doesn’t cost 50k per patent in England. BTW, I am still so ignorant that I am not clear on the difference between a clearance and a non-infringement opinion. Am I to equate “non-infringement” with “outside the scope of the claim, whether or not valid”. For me, infringement happens ONLY when you are inside a claim that’s valid.

  13. Quoth Joe Smith “This is an indicator that the patent system may be doing more harm than good and accordingly unconstitutional.”

    ‘Bad’ (setting aside all the subjective vagaries) does not equate to unconstitutional in any context. Moreover, if the text of the constitution means anything anymore, the patent system is one a very few select explicitly constitutional federal powers. See, Art. 1, sec. 8, cl. 8.

  14. The question I was asked was when did the PTO start its new reexamination system, in which, as the PTO announced: “all reexamination decisions now require a thorough review by a panel of supervisors and senior patent examiners. Reexaminations where an initial decision has been made will remain with the examiner originally assigned to the reexamination. All other reexaminations will be reassigned to a newly formed central reexamination unit.” That was only on 7/29/05, so it is not likely that very many FINAL reexamination decisons to date can be blamed on the new reexam “swat team.” Let’s be optomistic until proven otherwise.

  15. At one time, I was an advisor to underwriters that underwrote patent infringement insurance in the Lloyd’s market. We developed a proprietary practice of underwriting infringement insurance backed by the opinion of counsel. We would draw out the limitations of the opinion into the declarations page of the proposed insurance as a way of advising underwriters on the scope of the opinion and hence the coverage. Both underwriters and the potential insureds were always surprised by those limitations when drawn out into the insurance context. Potential insureds would sometimes say that the scope of the potential insurance would not do them any good at all. Our response would be, “Well, how can the scope of the opinion do you any good? They are the same.” It always started quite an interesting dialogue. It was especially interesting when there was more than one opinion.

  16. Mark Pitchford — My primary point was that is is a bad practice, a potentially fraudulent practice, and possibly malpractice to give an oral opinion of infringement and a written opinion of non-infringement. That’s neither an opinion nor a lie of omission, it’s a lie of commission.

    As for whether to give a written opinion of infringement in addition to an oral opinion, I don’t see how it hurts your client. As the opinion is subject to attorney/client privilege and your client is not likely to waive that privilege by relying on it to avoid treble damages, what’s the harm? Who’s going to find a privileged smoking gun? If your client shops around and gets a more favorable opinion, does not having given a written opinion make it easier for your client to commit fraud by relying on that new opinion without disclosing your oral opinion? In that case, a written opinion may help protect your client from itself.

    Reliance on an opinion of counsel is essentially an affirmative defense to an allegation of willfulness. If that defense is going to be asserted, full discovery into that defense should be permitted, in part to prevent your client from “forgetting” about your oral opinion.

    A “lie of omission” in a trial setting exists only if I failed to disclose something I was obligated to disclose. If the other side didn’t discover evidence which might hurt my client or help theirs, I am under no obligation to disclose it and agree it would probably be malpractice to do so.

    While opinions of counsel are generally prepared in anticipation of litigation, they are not expert opinions in the normal sense. They are evidence relative to proving a defense to an allegation of willful infringement — i.e. reasonable reliance on a competent opinion of counsel. Are attorneys giving their honest opinions or providing an insurance policy. If doing the former results in the latter, that’s fine. If your goal is that latter, how sure are you of the former? Is it really reasonable for your client to rely on that opinion when its given with a wink and a nod and an oral representation to the contrary?

  17. One of the recurring points made by defenders of the status quo is that the patent system protects the little guy, In this thread, if I am reading it correctly, if a client wants a patent attorney to compare just two patents and give an opinion on whether or not they overlap then that will cost $20,000 to $50,000. With the large number of prolix patents being filed how is any start supposed to go out, find and analyze the existing patent literature if it will cost them $20,000 to $50,000 to get a formal analysis of each patent?

    This is an indicator that the patent system may be doing more harm than good and accordingly unconstitutional.

  18. Paul

    “a blind front reexamination [now much more professionally and promptly handled by the new PTO "reexamination swat team"] could be far more useful than a mere invalidity opinion, or a jury argument.”

    Paul, is this based on your personal experience or something else (if the latter, linky please!).

    How “new” is the “new” swat team?

    I’m aware of at least one valuable and reexamined patent whose allowance last year appalled me. In light of that, I am loathe to advise clients to pursue a reexamination strategy unless they’ve got a chamber full of 300 pound silver bullets.

  19. “While many high confidence letters are legitimate, I wouldn’t expect to see one in a case that actually went to trial and the patent was found valid and infringed.”

    Have you ever litigated patents in Mississippi?

  20. “Any opinion letter which is discosed and relied on to attempt to avoid a finding of willful infringement ought to open the doors for broad discovery relative to the opinion counsel’s actual opinions and communications with the client ABOUT THE CONTENT OF THAT OPINION AND NOTHING ELSE.”

    Fixed the typo.

  21. “So after a court OF FINAL RESORT rules that the patent is valid and infringed, THAT IS THE ONLY TIME THAT the “accused” can no longer rely on an opinion of counsel to avoid inducement liability for future acts of inducment? Wow! Who would have thunk.”

    Fixed your typo.

  22. Jim Uschold, are you seriously saying that it is good practice to reduce an opinion of infringement by your client to writing?

    I think that taking steps to ensure that your own client is found to be willfully infringing would absolutely constitute malpractice in every jurisdiction. That is certainly not something that I would consider to be a competent practice.

    And to say that it is a lie of omission; do you start every trial an opinion with presentations of undiscoverable or non-existent evidence against your client?

  23. A good attorney, whether trial counsel or opinion counsel, knows both the strengths and weaknesses of his client’s position. Counsel who do not know and/or disclose the weaknesses of their clients’ positions are of dubious competency and/or integrity. An opinion which omits reference to the negatives is not a legitimate opinion. It’s a penalty-avoidance insurance policy equivalent to the “opinion letters” prepared relative to dubious tax shelters, etc. We ought to start treating them as such.

    Any opinion letter which is discosed and relied on to attempt to avoid a finding of willful infringement ought to open the doors for broad discovery relative to the opinion counsel’s actual opinions and communications with the client. It is far easier to lie by omission in an opinion letter than to lie under oath in a deposition.

    If an attorney believes doing X will expose the company to infringement liability or there are substantial risks, he ought to say so orally and in writing or provide no written opinion at all. Indeed, to disclose such negative information orally but not in the opinion letter with the knowledge or expectation that the client would rely on the letter to avoid treble damages is to induce fraud.

    To be honest, I’d much rather find infringement not willful for a company which has an opinion that gives it only a 40 percent chance of winning than a company which has an opinion with 80+ percent confidence that the patent is invalid and non-infringed. While many high confidence letters are legitimate, I wouldn’t expect to see one in a case that actually went to trial and the patent was found valid and infringed. Thus, such a letter ought to be presumed to be an “insurance policy” letter with a value equal to no opinion or a negative opinion.

    Mark Pitchford says, “If you don’t have a reasonable belief of non-infringement, you attempt to help the client acquire a license or simply verbally warn them about the territory they are entering.” Unless the client doesn’t want to pay to complete a written opinion, why not put it in writing, too? The client may not want to rely on it at trial, but it would be protected by attorney/client privilege.

    The problem, of course, is not whether there is or is not a written opinion but ensuring that the written opinion conforms to the oral opinion. We can’t encourage people to obtain opinions of counsel and thereby avoid treble damages withhout requiring the full and open communications between attorney and client that the rule contemplates and full disclosure of those communications. If the reward is avoiding treble damages, the price must be full disclosure.

  24. Re reliance on cheap O.C. invalidity or infringement opinions, checking the upper limits on the provider’s malpractice insurance policy would seem to be a good idea in some cases. Also, if invalidity is really that clear, and can be based on patents or publications (which can include product literature), a blind front reexamination [now much more professionally and promptly handled by the new PTO "reexamination swat team"] could be far more useful than a mere invalidity opinion, or a jury argument.

  25. Brian:

    You are correct re: multiple opinions. However, once you have one bad opinion, you are fighting an uphill battle. Heck, it’s bad if you have more than one favorable opinion if those two opinions are inconsistent in any significant manner (e.g., claim interpretation).

  26. “A potential defendant would like to obtain several separate opinions, then only produce the ‘best’ one. Such a scenario would hardly comport with the ‘reasonable reliance’ standard.”

    I’m not sure that I agree with this. The ultimate question is whether it was reasonable for the defendant to rely on the opinion.

    If the “best one” is thorough and well-reasoned, then I think it is reasonable to rely on the opinion regardless of any other opinions the defendant received. On the other hand, if the defendant only obtained one favorable opinion after nine unfavorable ones, there is a high likelihood that the favorable opinion is junk, and the defendant was not reasonable to rely on it.

    On the topic of cost – my experience is that $20-50K is typical for full-blown non-infringement opinions. Invalidity opinions, on the other hand, can go way beyond that.

    Also, it appears that some of the posts are not distinguishing between clearance opinions and non-infringment opinions. In practice, these tend to be very different things.

  27. “Not that once a claim is found valid and the decision is “final,” the alleged infringer can no longer reasonably claim that he doesn’t intend his/her inducement to cause infringement. So this “defense” has its limits (but it seems like it would preclude any awards of damages for past acts of inducement, which could be huge).”

    So after a court rules that the patent is valid and infringed, the “accused” can no longer rely on an opinion of counsel to avoid inducement liability for future acts of inducment? Wow! Who would have thunk.

  28. And where do the estimates of $30,000 for an infringement/validity opinion come from?

    An opinion which costs less than that is one you could probably write yourself, i.e., if it’s that cheap, then you don’t need a smart lawyer to explain to you (or anyone else) that the patent at issue is invalid or not infringed.

  29. Josh

    “I disagree that “their sole purpose to reduce [the likelihood] that a defendant will be held liable for treble damages.” In the wake of December’s en banc opinion in DSU, which held that inducement liability requires actual knowledge of and intent to infringe the patent at issue, I expect opinions to be used to reduce the likelihood that a defendant accused of secondary liability will be held liable at all.”

    This is already happening. Not that once a claim is found valid and the decision is “final,” the alleged infringer can no longer reasonably claim that he doesn’t intend his/her inducement to cause infringement. So this “defense” has its limits (but it seems like it would preclude any awards of damages for past acts of inducement, which could be huge).

  30. A very interesting topic which has no easy answers. On the one hand, I think it is fundamentally unfair to extend the waiver to trial counsel – especially when there is no connection between trial and opinion counsel. Of course the accused infringers will all too often simply want an opinion that they do not infringe and/or that the patent is invalid, rather than thorough and sound guidance. There are indeed exceptions, but those exceptions do not drive the development of the caselaw in this area. Heck, there are some companies that have competitive bidding for opinions – and I’m not talking about bidding for the company’s opinion work in general. No, they actually have competitive bidding for the right to provide an opinion on a specific patent! Is there any litigator out there that is not salivating at the thought of an infringement suit against a company relying on an opinion written by the lowest bidder? At least the traditional “wink and a nod” is never memorialized.

    And where do the estimates of $30,000 for an infringement/validity opinion come from? While I have written some that probably ended up in that range, they were few and far between. Assuming a modest rate of $300/hr, thats 100 hours of work. That seems on the very high side, especially considering that 75+% of the opinions I have read over the years contain a considerable amount of boilerplate. Now, I do acknowledge that some opinions can easily (and legitimately) cost well over $30,000. Are those types of opinions driving up the average? Or, are the attorneys responding to these surveys inflating the numbers a bit – knowing that their clients are not going to use in-house counsel for such work?

  31. MaxDrei, it’s not a single step process. The first step is to commission a manual search of the the patent archives to gather all relevant prior art. You then look through the proir art and disregard all those patents and applications that have claims with distinguishing elements that are clearly missing from your clients product. Any remaining patents should receive a thorough legal analysis (outline your understanding of your client’s product, clearly outline all legal framework, and explain the application of the legal framework to the case in front of you) stating your basis for believing that your client’s product does not infringe the claims. If you don’t have a reasonable belief of non-infringement, you attempt to help the client acquire a license or simply verbally warn them about the territory they are entering. Less scrupulous attorneys may take a different approach, but this is how it’s done properly.

  32. Max: you are correct that things are not always as they appear in the US, but consider this. In preparing an opinion of counsel to protect against treble damages, the client wants their counsel to do exactly what you describe; after all, why have outside counsel if you can’t benefit from their ability to do this type of search and analysis.

    What they don’t want is for anything negative to be reduced to writing, for many reasons. For example, counsel may be wrong, or circumstances or the law may change. But an opinion that “doing X will expose you to infringement liability” will remain forever, and may be available for discovery (or at least that’s the fear).

    So what frequently happens is that counsel and the client have a frank discussion about the situation, and then the client decides 1) not to pursue the opportunity; 2) to try to get a license or 3) to use the opinion of counsel to avoid treble damages if they go forward despite the risk.

    Things are not so different in the US, but they can be more subtle based on US-specific circumstances like wide-open discovery and the “all over the map” quality of US decisions on the scope of the waiver.

  33. Dennis, what an interesting topic to discuss, for a reader from a civil law jurisdiction often asked to do a “product clearance study”, on a product to be launched. One presumes that one is being paid to i) find any patent that might threaten, and ii) opine on the likelihood that the patent owner will be able to get a ruling that a valid claim is infringed. I have long ago realised that, in USA, things are different, and more complex. You confirm that one is NOT being asked to find all the published patent applications and issued patents that might be a threat. One is NOT being asked to opine on likelihood of success for the owner of the properties that threaten. The “clearance” given is confined to “clearance against triple damages”. Implicit in your piece is that what a business person, a technical person or a client would understand as a “clearance opinion” is actually “too difficult” these days in USA. Joe Smith above reveals some of the reasons why that is.

  34. Forcing clients to disclose the legal advice they got is eventually going to prompt some litigation counsel to write a poison pill opinion letter like:

    “on the technical merits you have an iron clad defence. The only problems you have are that the recent case law from the CAFC is goobledygook; the Plaintiff’s expert is a whore who would sell his own mother for a pittance; and the trial judge assigned to this case is a political hack who is incapable of understanding the technical issues, has a bad temper, will refuse to hear relevant evidence, thinks being rude to counsel is the mark of a strong judge and will doze off in the afternoons in an alcohol induced haze.”

    Counsel would of course vigorously fight being forced to disclose the opinion and having it placed in the record.

  35. I disagree that “their sole purpose to reduce [the likelihood] that a defendant will be held liable for treble damages.” In the wake of December’s en banc opinion in DSU, which held that inducement liability requires actual knowledge of and intent to infringe the patent at issue, I expect opinions to be used to reduce the likelihood that a defendant accused of secondary liability will be held liable at all.

  36. Surely there must be a timing issue in all of this. If a manufacturer obtains an opinion on infringement in 2000 which says he’s in the clear and carries on manufacturing and then when the action is commenced in 2007 gets an opinion from litigation counsel on the merits of the particular action the new opinion is not relevant to whatever happened between 2000 and the commencement of the proceeding.

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