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PUBPAT in the Federal Circuit » PUBPAT Files Brief Opposing Continuing Threat of Treble Damages for Patent Infringement

PUBPAT FILES BRIEF OPPOSING CONTINUING THREAT OF TREBLE DAMAGES FOR PATENT INFRINGEMENT

WASHINGTON, D.C.  --  March 24, 2007  --  Since 1983, the Court of Appeals for the Federal Circuit has required people who learn of specific patents to take some “affirmative” action to avoid risking infringement or face punitive damages. Because of the costs of hiring patent attorneys, this standard has forced individuals and small businesses to license potentially invalid or inapplicable patents or to cease their activities.  Last week, the Public Patent Foundation (PUBPAT) — through the pro-bono efforts of law students — filed a friend-of-the-court brief (PDF; 3.3MB) explaining why this standard conflicts with Supreme Court precedent and is unfair to small entities.

The en banc Federal Circuit has solicited amicus curiae briefs addressing whether it should reconsider the “affirmative duty of care” standard for willful infringement that it had adopted in 1983.  Last week, two law students — Gina Bassi and John McCliggott at the Glushko-Samuelson Intellectual Property Law Clinic of the Washington College of Law, American University, under the supervision of Professor Joshua Sarnoff — filed an amicus brief that they had prepared for PUBPAT, the Electronic Frontier Foundation, and Public Knowledge. The brief would have cost tens of thousands of dollars to produce by a law firm, and thus provided a voice on these issues to affected individuals and small businesses. Without such pro bono legal assistance, these small entities could not afford to explain to the Court why the affirmative duty of care standard is unfair to them, just as they cannot afford patent validity and infringement opinions that costs tens of thousands of dollars but may be needed under this standard.

Specifically, the PUBPAT brief argues that the Supreme Court has held that punitive damages should not be imposed for patent infringement without proof of conscious bad faith by the infringer, and that the affirmative duty of care conflicts with the Supreme Court’s decisions.  Under these decisions, bad faith required a demonstrated intent to infringe what was believed to be a valid patent, and not merely risking infringement knowing about the patent and the potential to infringe it. In most cases, small entities will lack such bad faith intent.  Evaluating patent validity and infringement is a complex endeavor and such small entities cannot afford to obtain opinions of patent lawyers who might tell them that the patents are valid and will be infringed.  In contrast, large businesses are much more likely to have the knowledge to determine on their own or to hire lawyers to tell them whether they will infringe a valid patent.

The PUBPAT brief also addresses the need for the Federal Circuit to resolve issues that were raised but not decided in an earlier case on willful patent infringement. Knorr-Bremse System Fuer Nutzfahrzeuge GMBH v. Dana Corp., 383 F.3d 1337 (Fed. Cir. 2004).  PUBPAT had filed an amicus brief in that case, arguing that the Federal Circuit should eliminate the formal adverse inference of willful infringement, where juries had been instructed to infer bad faith when the infringer had not obtained an opinion from a patent lawyer.  The Court eliminated the formal adverse inference, but failed to prevent trial lawyers from telling juries that the infringer had risked infringement without obtaining a favorable legal opinion.  In the present brief, PUBPAT explained how such comments are unfair to individuals and small businesses.  These entities are placed in a worse position than larger entities, which are more likely to have obtained an unfavorable opinion of a patent lawyer and thus to have proceeded in bad faith.  In order to protect the sanctity of the attorney-client communication and work product privileges, however, juries cannot be told that these larger entities had obtained an unfavorable opinion.  PUBPAT also explained why, in the rare case that a small entity actually obtained a favorable opinion of a patent lawyer, any voluntary waiver of the attorney-client and work product privileges (to demonstrate good faith) should not extend to communications with or work product of the entity’s trial lawyers.

Submitted by Member of Josh Sarnoff, PUBPAT's Board of Directors.  PUBPAT's brief can be found at PUBPAT in the Federal Circuit.
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