Night of the Living Dead Letter

Broadcom Corp. v. Qualcomm, Inc.

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. ยง 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."

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