Night of the Living Dead Letter

admin — Thu, 08 Jan 2009 19:13:00 GMT

Beware the Curse of the Zombie Opinion-of-Counsel Letter! In re Seagate -- and the changes it made to the standard for willful infringement - seemed to kill off such creatures. Now, the Federal Circuit's decision in Broadcom Corp. v. Qualcomm, Inc., brings them back to life. Swirling out of the mists of the law of induced infringement, the Opinion-of-Counsel Letter has risen from its crypt, bringing new terrors to alleged infringers everywhere . . . .

In Broadcom, the jury returned a verdict that Qualcomm had willfully infringed and induced the infringement of Broadcom's patents for 3G mobile phone technologies. Qualcomm had elected to maintain its attorney-client privilege rather than introduce the opinion-of-counsel letter prepared by its attorneys in response to Broadcom's willful infringement claim. After the trial court set aside the jury's willfulness determination in the wake of Seagate, Qualcomm chose to accept the jury's verdict on liability and damages rather than have a new trial on all issues, including the willfulness question. After the court's entry of an injunction, Qualcomm appealed.

On appeal, Qualcomm argued that Seagate required a change in the rules for determining infringement claims based on inducement. Before Seagate infringers had an "affirmative duty of due care" to avoid willful infringement, and opinion-of-counsel letters often served as evidence of the exercise of that duty. When Seagate eliminated that duty, it looked like the need for opinion-of-counsel evidence had also been killed off. Qualcomm claimed the trial court had erred in its instructions regarding conclusions the jury could draw from Qualcomm's failure to offer its opinion-of-counsel letter. Qualcomm argued that it could not be liable for inducement if it was not liable for willfulness since the specific intent standard for inducement is greater than the recklessness associated with willful infringement.

The Federal Circuit rejected these arguments. The Court found the inducement standards unchanged since its opinion in DSU Medical. Under DSU, proof of induced infringement, under 35 U.S.C. § 271(b), requires evidence that the accused infringer "intended to cause the acts that constitute the direct infringement," and that the accused "kn[ew] or should have known [that] its action would cause the direct infringement." The Broadcom panel held that inducement may be found even when willfulness is absent.

And what specter rose out of its Seagate grave to satisfy those evidentiary requirements? The Opinion-of-Counsel Letter - or, more specifically, the failure to obtain (or offer) such evidence when faced with an induced infringement claim. The court said it "would be manifestly unfair to allow opinion-of-counsel evidence to serve an exculpatory function . . . and yet not permit patentees to identify failures to procure such advice as circumstantial evidence of intent to infringe." In the end, the Federal Circuit invalidated one of the patents, but left the district court's judgment and injunction standing.

From the perspective of an alleged infringer, Broadcom offers plenty to keep the accused infringer up at night. Spooky: A close reading of Broadcom might lead to the conclusion that the "specific intent" requirement of inducement is not so specific. Spookier: An alleged infringer in an induced infringement action who can't conjure an Opinion-of-Counsel Letter may not stand a ghost of a chance. Spookiest: No one can say what previously discounted claim or defense might next rise up to join the Opinion-of-Counsel Letter among the ranks of the "undead."

The Pompatus of Silence

admin — Fri, 12 Dec 2008 17:00:00 GMT

After the most recent decision in Qualcomm Inc. v. Broadcom Corp., patent law may need a new word^[1] to describe the specific consequences of silence in the face of a duty to disclose patents while participating in a standards-setting organization ("SSO"). Such silence by the patent holder in Qualcomm-along with some genuinely shocking litigation shenanigans-resulted in the Federal Circuit finding an implied waiver of patent enforceability against those practicing the standard set by the SSO. The Qualcomm court also looked to evidence of Qualcomm's pre-suit business misconduct to affirm an award of §285 "exceptional case" attorneys fees. Though the Federal Circuit had previously disallowed consideration of pre-suit conduct, here it said the evidence served as a predicate for understanding and evaluating other litigation and trial misconduct.

Ooo eee baby, that don't sound like a good time.

The patents at issue in Qualcomm covered video compression technology. Patent holder Qualcomm brought a suit against Broadcom alleging patent infringement. Broadcom's affirmative defense claimed the Qualcomm's participation in the Joint Video Team (JVT) SSO-whose purpose was to develop "a simple royalty free baseline profile" for industry members-made the patents unenforceable.

Throughout the litigation and trial, Qualcomm claimed it had not participated in setting the relevant standard (known as H.264) and that it had no responsive relevant evidence. However, on the last day of trial, the testimony of a Qualcomm witness led to the discovery of more than 200,000 pages of additional e-mail and other documentary evidence. This previously undisclosed information showed that Qualcomm had fully participated in setting the H.264 standard and that it had intentionally shielded its patents from the SSO so that it could later obtain royalties from products that complied with the standard. (Qualcomm's efforts regarding concealment of the evidence also resulted in multiple sanctions for its trial team and generated other oft-cited opinions).

Because Qualcomm allowed the standard to be developed using technologies covered by its patents, the Federal Circuit found that equity required that the patents be rendered unenforceable against those using the standard "until the misuse is purged"-a lessening of the consequence ordered by the district court which had held the patents unenforceable "against the world." The Qualcomm court used implied waiver as the specific doctrine for its order because it found that Qualcomm had breached a duty (both explicit and as understood by the participants of the SSO under Rambus) to disclose its relevant technology.

Note that the Federal Circuit had no time for Qualcomm's argument that consideration of Broadcom's affirmative defense regarding enforceability was improper because the jury had returned a verdict of non-infringement. Given the right circumstances, savvy defendants can use Qualcomm's teachings to gain considerable leverage in a case, including posturing for settlement. By persisting in an unenforceability defense (even when there's a finding of non-infringement) a defendant can convey to the patent owners that it faces exposure beyond a finding of non-infringement.

Qualcomm's consideration of pre-suit conduct in its award of attorney's fees to Broadcom also offers a framework for getting courts to look at events that occur before the litigation as evidence. By linking such pre-litigation bad conduct to misconduct that occurs during the trial, litigants may be able to create a compelling picture that what happened at trial is the culmination of a coordinated practice of bad conduct by a bad actor. With Qualcomm, both the patent and the patent holder then become the joker and both must face the music.

[1] For a full discussion of the etymology of the word "pompatus"(sometimes spelled "pompitious") please see; http://www.straightdope.com/columns/read/972/in-steve-millers-the-joker-what-is-the-pompatus-of-love

APaTS : Qualcomm v Broadcom

Night of the Living Dead Letter

The Pompatus of Silence