Non Infringement Opinions in Patent Cases: Strategic Solutions to a Growing Problem
By Darin M. Klemchuk
It is a frequent practice for Non-Practicing Entities (NPEs or “patent trolls”) to send letters to targets they either believe infringe a patent or are willing to pay a nuisance settlement to avoid litigation (e.g., “shakedown” money). This strategy has two benefits to the NPE. First, whoever responds to the letter is added to the “warm” target list and has at least implicitly acknowledged a willingness to engage in conversation with the NPE. Second, it potentially creates evidence that the NPE provided the target with notice of the patent infringement claim. This can be used later to support a finding of willful infringement and possibly an exceptional case, which may lead to up to triple damages, attorney’s fees, and costs.
This creates a dilemma for businesses and their in-house counsel. Should you engage in discussion with the patent troll’s attorney or “licensing professional” and risk moving up on the target list? Should in-house counsel immediately obtain an expensive opinion of counsel as to whether the patent is actually infringed, the claims are invalid, and/or the patent is unenforceable? A letter bomb campaign to numerous potential infringers creates an asymmetric cost advantage to the troll. Often the initial letter may contain a less-than-thorough infringement analysis or claim chart, which could be reproduced quickly across numerous businesses in the target pool. However, the cost for each business to obtain a thorough non-infringement, validity, and enforceability opinion could be substantial.
1. Delay the Opinion Until Suit Is Filed
So how to resolve this dilemma? One option to consider is awaiting the filing of suit before obtaining the written opinion or responding to the troll. This comes with the risk that if infringement is shown later in the case, the defendant does not have the benefit of relying on an opinion to defend against a claim for willful infringement—at least until suit was filed and defense commences. In other words, it potentially increases the chances of willful infringement (if there is infringement), but saves the cost of obtaining the opinion. This analysis assumes that the NPE letter provides sufficient information and basis for infringement that an opinion is warranted.
2. Obtain a Full Comprehensive Non-Infringement Opinion
Another option is to hire an experienced private practice lawyer to conduct a comprehensive analysis and opinion. If the opinion is sufficiently competent, the business can rely upon it in its defense against a willful infringement claim later if suit is filed. The opinion acts like an insurance policy with the cost of the opinion as the premium. A few things to keep in mind about infringement/non-infringement opinions. First, they only matter when they are wrong. Put another way, if there is no finding of infringement, the opinion likely does not matter. If there is an infringement finding, the opinion may be sufficient to prevent a finding of willful infringement, which could lead to treble damages. The nature of this situation puts the lawyer rendering the opinion at risk for a malpractice claim, so these opinions tend to be thorough and expensive. A second consideration is that the lawyer that wrote the opinion is likely to be deposed and required to testify at trial. You may want to give careful consideration to hiring a technical lawyer to assist with drafting the opinion and a “testimony friendly” lawyer to be presented as the witness.
3. Conduct an Early Preliminary Infringement Analysis
A third option is to conduct an early analysis after sufficient notice of infringement has been received. The goal of the preliminary analysis is to see if two to three solid arguments exist why there is no infringement. If a lawsuit is filed, the client can elect to rely on the preliminary opinion to defend the case and/or invest in a comprehensive opinion. In my experience, this tends to be the best approach as it provides an analysis early and at a lower cost. These opinions do come with limitations since they are not comprehensive.
Key Takeaways on Using Non-Infringement Opinions in Patent Cases
Patent trolls employ broad letter campaigns to trigger responses as well as potentially putting future targets on notice of the alleged infringement;
A comprehensive and competent non-infringement opinion can provide a defense against a claim for willful infringement;
In-house counsel have several options to strategically address this situation;
An early preliminary infringement analysis is often the least expensive and most effective strategy; and
How a particular attorney is likely to perform as a trial and deposition witness is an important factor for consideration.
For a comprehensive discussion of using non-infringement opinions to defend against troll cases, see our Ideate blog post, Non Infringement Opinions in Patent Cases: Strategic Solutions to a Growing Problem.
