In Seagate, the en banc Federal Circuit resolved several issues relating to willful infringement of a patent.  The case came to the court on defendant Seagate Technology’s petition for a writ of mandamus.  At the district court, Seagate had asserted the advice of counsel defense to willful infringement based upon three written opinions prepared by its opinion counsel.  Although Seagate produced all of the opinion counsel’s work product and made its opinion counsel available for deposition, the plaintiff in the case wanted more.  The trial court obliged, ordering Seagate to produce all communications with any attorney (including in-house counsel and trial counsel) and all attorney work product relating to the subject matter of the opinions.  The Federal Circuit stayed the district court’s order pending its decision on whether to grant Seagate’s petition.

The Federal Circuit decided to take the case en banc, and the en banc court ordered briefing on three specific questions.  In an opinion written by Judge Mayer, the unanimous court (Chief Judge Michel and Judge Moore did not participate) answered the questions as follows:

Question 1.     Should a party’s assertion of the advice of counsel defense to willful infringement extend waiver of the attorney-client privilege to communications with that party’s trial counsel?  See In re EchoStar Comm’n Corp., 448 F.3d 1294 (Fed. Cir. 2006).

No: “[A]s a general proposition, [] asserting the advice of counsel defense and disclosing opinions of opinion counsel do not constitute waiver of the attorney-client privilege for communications with trial counsel.”  Slip Op. at 18.  However, “trial courts remain free to exercise their discretion in unique circumstances to extend waiver to trial counsel, such as if a party or counsel engages in chicanery.”  Id.  The court did not address whether the waiver would extend to communications with in-house counsel.  Id. at 3, n.1.

Question 2.     What is the effect of any such waiver on work-product immunity?

The waiver has no effect on work product immunity: “[A]s a general proposition, relying on opinion counsel’s work product does not waive work product immunity with respect to trial counsel.”  Id. at 21.  However, “situations may arise in which waiver may be extended to trial counsel, such as if a patentee or his trial counsel engages in chicanery.”  Id.

Question 3.     Given the impact of the statutory duty of care standard announced in Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (Fed. Cir. 1983), on the issue of waiver of attorney-client privilege, should this court reconsider the decision in Underwater Devices and the duty of care standard itself?

Yes, the Court explicitly overruled the standard set forth in Underwater Devices which required “an affirmative duty of due care to determine whether or not he is infringing . . . [which] includes, inter alia, the duty to seek and obtain competent legal advice from counsel before the initiation of any possible infringing activity.”  Id. at 7 (quoting Underwater Devices, 717 F.2d at 1389-90).  Moving forward, “[p]roof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness.”  Id. at 12.  In addition, the court noted that “[b]ecause we abandon the affirmative duty of due care, we also reemphasize that there is no affirmative obligation to obtain opinion of counsel.”  Id.

The court offered guidance as to what a patentee must show to satisfy the new objective recklessness standard:

[T]o establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.  The state of mind of the accused infringer is not relevant to this objective inquiry.  If this threshold objective standard is satisfied, the patentee must also demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer.

Id. at 12.  The court offered some additional insights in its discussion of the scope of the waiver of the attorney-client privilege.  There, the court apparently equates the “objectively high likelihood” standard with the likelihood of success on the merits standard courts use when deciding whether to grant a preliminary injunction: “[W]hen an accused infringer’s post-filing conduct is reckless, a patentee can move for a preliminary injunction, which generally provides an adequate remedy for combating post-filing willful infringement.”  Id. at 16-17.  Moreover, “[a] patentee who does not attempt to stop an accused infringer’s activities in this manner should not be allowed to accrue enhanced damages based solely on the infringer’s post-filing conduct.  Similarly, if a patentee attempts to secure injunctive relief but fails, it is likely the infringement did not rise to the level of recklessness.”  Id. at 17.  The court does note that “a patentee may be denied a preliminary injunction despite establishing a likelihood of success on the merits . . . [i]n that event, whether a willfulness claim based on conduct occurring solely after litigation began is sustainable will depend on the facts of each case.”  Id.