Post America Invents Act: Necessity For IP – Patent Counsel

Michael D. Moberly   February 13, 2012

I found an interesting read in an article published in Bloomberg Law Reports titled ‘Your Opinion Matters to Us – The Continued Value of Patent Counsel Opinions in a Post American Invents Act Era’.  The authors, lawyers of course, describe how patent counsel opinions have declined since the Federal Circuit’s 2004 decision in Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corporation in which the court held that…

  • no adverse inference of willful infringement of a patent may be drawn either from the failure to obtain legal advice, or
  • the invocation of the attorney-client privilege concerning the advice sought.

The America Invents Act (AIA) actually extended the Knorr-Bremse decision by…

  • prohibiting one’s failure to obtain the advice of counsel, or
  • failure to present such advice to the court or jury,
  • from being used to prove either willful and/or induced infringement.

More specifically, AIA’s Section 298 (35 U.S.C.) includes the “Advice of Counsel,” which states…

The failure of an infringer to obtain the advice of counsel with respect to any allegedly infringed patent, or the failure of the infringer to present such advice to the court or jury, may not be used to prove that the accused infringer willfully infringed the patent or that the infringer intended to induce infringement of the patent.

Previously, of course, potential infringers who possessed actual notice of another parties’ patent rights, had an affirmative duty to obtain competent legal advice before initiating any infringing activity.  Failure to do so could lead to a finding of willful infringement.

AIA framers suggest that Section 298 was inserted to (a.) protect attorney-client privilege, and (b.) reduce pressure on accused infringers to obtain opinions of counsel solely for litigation purposes.

Insofar as understanding Section 298’s affects, the authors suggest it’s useful to examine current law, one of which is the doctrine of willful infringement.  This particular doctrine exists to inhibit objectively reckless behavior.  For example, if an innovator or entrepreneur inadvertently engages in infringement by neglecting to consider (a.) the likelihood that their actions (will/may) constitute infringement of an existing valid patent, and (b.) this probability (risk) is known and/or obvious, then (c.) it’s possible that the entrepreneur or innovator may be found liable for willful infringement with the accompanying substantial damages.

Insofar as matter-of-factly stating whether or how the AIA has affected the demand for IP (patent) counsel, I don’t believe the following quite meets the ‘rocket science’ test because I have no objective data to support it either way, i.e., that there has been a general reduction in legal (particularly, outside counsel) budgets due to one or a combination of (a.) the global economic downturn, (b.) the new provisions incorporated in the AIA, and/or (c.) the demoralizing and momentum stifling costs associated with securing competent IP (intellectual property) counsel by individual entrepreneurs, innovators, and R&D intensive SME’s (small, medium enterprises).

Some IP law firms are politely serving up warnings that dispensing with opinions from expert patent counsel does carry some downsides.  Certainly, no argument from me!  One of the (potential) downsides I hear mostoo is the proverbial ‘I wish I had done – known that’. Such sentiments become particularly acute when, not so much if, challenges, disputes, or litigation arise at some point, regarding the propriety or status of a patent.

The inference that patent counsel wish to convey is that (IP) clients will be better positioned to (a.) avoid having their IP challenged, disputed, and/or litigated, and (b.) defeat claims of willful infringement, enhanced damages, or induced infringement if experienced and competent IP (patent) counsel are involved at the outset in terms of rendering opinions. Such timely and experienced perspectives that a patent, and the embedded intellectual capital, are not infringed, invalid, or both, will likely continue to be an influential defense to allegations of willful infringement.

There’s no argument from me that competent and experienced IP counsel can, and routinely are necessary and beneficial.  I am particularly supportive of those seemingly few IP counsel who can articulate for clients’, an evidence-based, 360 degree picture for clients absent over-dramatized FUD  factors, i.e., fear, uncertainty, and doubt.  That said, there is absolutely no question a persistent, aggressive, globally asymmetric, and increasingly predatorial environment of risks, threats, and vulnerabilities exist, including ‘trolling’, which are variously directed to proprietary intellectual, structural, and relationship capital, i.e., intellectual properties.   This leaves ample room for competent, current, knowledgeable, and experienced IP counsel to remain valuable collaborators to entrepreneurs, innovators, and corporate R&D processes in the post AIA era.

(The inspiration for this post evolves from article written by Edmund J. Haughey and Stephan Yam of Fitzpatrick, Cella, Harper & Scinto in Bloomberg Law Reports, February 14, 2012.)

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