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|Albert Minn is a patent attorney with 10 years of experience practicing before the United States Patent and Trademark Office.|
Opinions by In-house Counsel
As we discussed in our previous post about non-infringement and invalidity opinions, Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380 (1983) stated that whether an opinion is prepared by in-house business counsel or by outside third-party counsel is only one factor to consider when determining whether an opinion was obtained in good faith. Another factor the court considered was whether or not the in-house legal counsel was a qualified patent attorney.
Yet, just because an attorney is also employed by the business as in-house counsel does not necessarily mean that the opinion is automatically suspect. For example, the Federal Circuit held in Radio Steel & Mfg. Co. v. MTD Products, Inc., 788 F.2d 1554 (Fed. Cir. 1986) that an oral opinion by non-patent counsel was sufficient to form the basis of the defendant’s good-faith belief. Likewise, the 4th Circuit Court of Appeals held in Western Elec. Co. v. Stewart-Warner Corp., 631 F.2d 333 (4th Cir. 1980) that reliance on an in-house counsel prepared opinion was reasonable. Although it cannot be said that an attorney must be an experienced patent attorney to provide a valid non-infringement or invalidity opinion, the attorney must be held to the same standard and be expected to provide the same due diligence that would be expected of any patent attorney.
Opinions by Non-Patent Attorneys and Non-Attorney Employees
Some courts have outright dismissed non-infringement or invalidity opinions provided by in-house patent agents as being reasonable to avoid willful infringement. For example, the U.S. District Court in the Western District of Texas held in Signtech USA, Ltd vs. Vutek, Inc. that a patent agent not licensed to practice law was incompetent to provide a valid opinion. On appeal, the Federal Circuit Court of Appeals held that no valid opinion from competent counsel was obtained, and thus, the defendant did not have a reasonable, good faith belief their product did not infringe the patent in question. As such, a finding of willful infringement and the trebling of damages was upheld.
Another point to consider is that any business obtaining an opinion from a non-attorney employee runs the risk of the author being subpoenaed as a witness during litigation. Thus, the non-attorney employee could be deposed with respect to the opinion’s origins or motivations, as well as any other related subjects such as the company’s intellectual property or patent strategies. However, an opinion prepared by outside patent counsel, and any work product associated with the opinion, would be protected by attorney-client privilege.
Strategies and Best Practices to Consider
Regardless of whether the opinion was prepared by in-house counsel, a patent agent, or an engineer employee, a business can take some actions to help ensure the author’s impartiality. First, the author of the opinion should be certain to give an accurate and verifiable accounting of all the facts. Additionally, the business should have a written policy stating that any research and development managers and/or managing executives are forbidden to have any role in preparing and/or writing the opinion. Having such a policy ensures the opinion author is free to arrive at an independent opinion without interference from a supervisor. Further, the written policy may help prove the opinion was based solely on the author’s own professional judgment without any undue influence.
Yet, in view of courts’ decisions and overall attitude towards non-patent counsel, patent agents, and other non-attorney employees preparing non-infringement and/or invalidity opinions, it is probably best to have outside, third-party patent attorneys prepare those opinions. Hiring outside counsel provides the greatest assurance that the author is not influenced by any internal business interests. Additionally, obtaining an opinion from outside counsel will avoid any unnecessary risks if litigation were ever to arise, such as waivers of privilege or confidentiality.
If you have other questions or need to speak with a patent attorney about non-infringement or invalidity opinions, give Grell & Watson a call at (919) 825-3309!