In Re Seagate Technology, LLC
497 F.3d 1360 (2007)
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Rule of Law:
Proof of willful patent infringement requires a patentee to show by clear and convincing evidence that the infringer acted with objective recklessness. Asserting an advice of counsel defense to willful infringement does not, as a general rule, waive the attorney-client privilege or work product protection for communications with trial counsel.
Facts:
- Convolve, Inc. and the Massachusetts Institute of Technology (collectively 'Convolve') held several patents related to computer technology.
- Convolve sued Seagate Technology, LLC ('Seagate') for patent infringement and alleged the infringement was willful.
- Prior to the lawsuit, Seagate had retained an attorney, Gerald Sekimura, to provide opinions concerning Convolve's patents.
- Sekimura, acting as opinion counsel, prepared three written opinions for Seagate, beginning shortly after the initial complaint was filed.
- These opinions concluded that many of Convolve's patent claims were invalid and that Seagate’s products did not infringe them.
- At all times, Seagate’s opinion counsel, Sekimura, operated separately and independently of Seagate's trial counsel.
Procedural Posture:
- Convolve, Inc. and MIT sued Seagate Technology, LLC in the United States District Court for the Southern District of New York for patent infringement, later amending the complaint to allege willful infringement.
- During discovery, Seagate stated its intent to rely on opinion letters from its opinion counsel as a defense against the willfulness charge.
- Convolve filed a motion to compel discovery of communications between Seagate and all its attorneys, including trial counsel, arguing that the advice of counsel defense waived privilege.
- The district court granted Convolve’s motion, ordering Seagate to produce communications with all counsel, including trial counsel, on the subject matter of the opinions.
- The district court denied Seagate's motion to stay the order and to certify it for an interlocutory appeal.
- Seagate petitioned the U.S. Court of Appeals for the Federal Circuit for a writ of mandamus to vacate the district court's discovery orders.
- The Federal Circuit granted a stay and ordered an en banc review of the petition.
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Issue:
Does a party's assertion of an advice of counsel defense to a charge of willful patent infringement waive attorney-client privilege and work product protection for communications with that party's trial counsel?
Opinions:
Majority - Mayer, J.
No. Asserting an advice of counsel defense by disclosing the opinions of an opinion counsel does not, as a general proposition, waive the attorney-client privilege or work product protection for communications with trial counsel. To resolve the underlying discovery dispute, the court first overrules its precedent in Underwater Devices and abandons the 'affirmative duty of due care' standard for willful infringement. It establishes a new, higher standard: a patentee must show by clear and convincing evidence that the infringer acted with objective recklessness. This requires proving the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent, and that this risk was known or should have been known. Given this new standard, which focuses on pre-litigation conduct, communications with trial counsel have little relevance. There is a fundamental difference between the roles of opinion counsel (objective assessment for business decisions) and trial counsel (adversarial litigation strategy), meaning the classic 'sword and shield' fairness concerns that justify broad waiver do not apply. Extending waiver would damage the adversarial process by chilling communications between clients and their trial attorneys.
Concurring - Gajarsa, J.
Yes, the writ should be granted, but the court should have gone further and eliminated the willfulness requirement for enhanced damages entirely. The text of the patent statute, 35 U.S.C. § 284, gives courts discretion to increase damages 'up to three times' without mentioning 'willfulness' or any other specific standard. The willfulness requirement is a judicial gloss on the statute that unnecessarily restricts the district courts' ability to use enhanced damages for remedial purposes, such as ensuring full compensation for a patentee, in addition to punitive ones. The court should adhere to the plain meaning of the statute and leave the discretion to enhance damages entirely in the hands of the district courts to apply 'according to the circumstances of the case'.
Concurring - Newman, J.
Yes, the writ should be granted, and the court is correct to overrule Underwater Devices because its 'due care' standard has been misapplied and has facilitated abusive litigation tactics. The proper standard should be based on the reasonableness of actions taken in fair commerce. However, the newly adopted 'recklessness' standard creates uncertainty and may be interpreted too leniently, potentially appearing to 'ratify intentional disregard' of valid patent rights. While modifying the old standard is necessary, the court should be cautious that the new standard does not weaken the fundamental respect required for intellectual property rights.
Analysis:
This landmark decision fundamentally altered the landscape of willful patent infringement litigation. By replacing the negligence-like 'duty of care' standard with a much higher 'objective recklessness' standard, the court significantly raised the bar for patentees seeking enhanced damages. This change reduces the pressure on accused infringers to obtain and disclose opinions of counsel to avoid willfulness charges. Furthermore, by creating a strong presumption against waiving privilege for trial counsel communications, the court reinforced the separation between pre-litigation business advice and post-filing litigation strategy, strengthening the adversarial system and impacting how companies structure their legal defense strategies.
