Proof of Willfulness Requires a Showing of Recklessness

In Re Seagate Technology, LLC., [MD-830](August 20, 2007)[MAYER, Newman, Lourie, Rader, Schall, Bryson, Gajarsa, Linn, Dyk, and Prost) The Federal Circuit issued a Writ of Mandamus vacating the district courts order compelling disclosure of materials that Seagate claimed were protected by privilege.
SIGNIFICANCE: 1. Willfulness requires a showing of recklessness with respect to infringement, not merely a breach of the duty of due care. 2. Waiver of attorney client privilege and work product privilege generally does not extent to trial counsel.
BRIEF: Convolve sued Seagate for patent infringement, alleging willful infringement. Seagate intended to rely on the advice of counsel to defend the allegation of willfulness. Convolve persuaded the district court to compel disclosure all opinions of counsel, including defense counsel, because the privilege was waived by Seagate's reliance on the opinions to defend willfulness. Seagate then sound a Writ of Mandamus to prevent disclosure of its trial counsel's opinions. LOF: We review the trial court’s determination of the scope of waiver for an abuse of discretion. The Federal Circuit began with the observation that an award of enhanced damages requires a showing of willful infringement. The Federal Circuit then analyzed how its law on willfulness, beginning with Underwater Devices, imposed a duty of care, which was more of a negligence standard that was in appropriate for evaluating willful conduct, and which forced accused infringe rs to rely upon the opinion of counsel to establish due care. While Knorr-Bremse had ameliorated the problem by eliminating any adverse inference from not disclosing (or even obtaining) an opinion of counsel. The Federal Circuit explained that its decision in Echo Starr that assertion of advice of counsel as a defense to willful was a waiver of privilege on communciations on the same subject, but the Federal Circuit said that it did not decide the question of waiver as to trial counsel.
The Federal Circuit concluded that the duty of care fails to comport with the general understanding of willfulness in the civil context, and overruled Underwater Devices and held that proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness. Furthermore, because the Federal Circuit abandoned the affirmative duty of due care, it reemphasized that "there is no affirmative obligation to obtain opinion of counsel". The Federal Circuit explained that to 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 Federal Circuit then turned to the appropriate scope of waiver, stating the significantly different functions of trial counsel and opinion counsel advise against extending waiver to trial counsel. The Federal Circuit further found that willfulness will almost always depend on pre-filing conduct, and that willfulness asserted in a Complaint must necessarily be grounded exclusively in the accused infringer's prefiling conduct. Since a party can obtain a preliminary injunction when an accused infringer's post filing conduct is reckless, the Federal Circuit said that a patentee who does not attempt to stop an accused infringer’s activities with a preliminary injunction should not be allowed to accrue enhanced damages based solely on the infringer’s post-filing conduct. Similarly, if a patentee attempts to secure a preliminary injunction but fails, it is likely the infringement did not rise to the level of recklessness. As to work-product privilege, the Federal Circuit held that as a general proposition, relying on opinion counsel’s work product does not waive work product immunity with respect to trial counsel, but left open the possibility that situations may arise in which waiver may be extended to trial counsel, such as if a patentee or his counsel engages in "chicanery".