Are Patent Opinions Still Valuable After In re Seagate?

Last week the Federal Circuit’s opinion in In re Seagate Technology, LLC raised the bar for a finding of willful infringement in patent litigation.  Under the prior standard, whether or not the infringer relied on an opinion of patent noninfringement or invalidity was critical to the analysis of whether the infringement was willful.  Under the new standard, infringement is willful only if the patent holder shows that the defendant engaged in “objective recklessness.”  In particular, the Court stated that “there is no affirmative obligation to obtain an opinion of counsel.” 

The change is important because a patent infringer can be liable for punitive (triple) damages if the infringement is willful.  Thus, the Court’s opinion indicates that patent opinions are not necessarily required to avoid liability for willful infringement.

So are opinions of counsel still valuable?  Yes, although the Seagate decision suggests that they may not be required in every situation.  Some examples of situations where patent opinions continue to have value after Seagate include:

• situations where an accused infringer beleives that it is at risk of being named as a defendant in a patent infringement suit, so that the infringer can document a reasonable belief that its actions did not amount to infringement of a valid patent;
• due diligence situations, with a “freedom to operate” opinion that minimizes infringement risks are minimized and reassures investors, lenders and possible acquirors; and
• pre-litigation preparation by patent holders, to ensure that they have a reasonable basis for filing a patent suit against an infringer.

In some cases, it may be possible to consider a streamlined opinion that briefly documents the basis for a belief of no infringement of a valid patent.  Thus, while Seagate may make it more difficult for patent holders to establish willful infringement, patent opinions can still be valuable where potential litigants want to understand the risks and actions for avoiding patent infringement liability.

UPDATE:  For information about the Broadcom v. Qualcomm case, a post-Seagate decision that addressed the relevance of opinions in the inducement context, click here.