Opining About Another Client's Patent

Two (count 'em, two) different authorities have so far held that it is per se unethical for a lawyer to provide a non-infringement or invalidity opinion about another client's patent.  Va. Op. No. 1774 (Feb. 13, 2003);  Andrew Corp. v. Beverly Mfg. Co., 2006 U.S. Dist. LEXIS 6360 (N.D. Ill. Feb. 16, 2006) (non-infringement).  Andrew is particularly worrisome (and wrong) because it concludes that an opinion given by a conflicted lawyer is "incompetent" as a matter of law, and therefore inadmissible to defend against a charge of willful infringement.

It seems to me that a per se approach to either of these issues is wrong.  On the noninfringement side, let me come at it from the easy way:  Client A comes to a lawyer and asks, "I want to make a new pizza, do I infringe any patents if I do so?" and the lawyer says "no" after conducting a clearance search, analyzing the closest patent (held by a non-client) -- even though her firm represents hundreds of clients with thousands of patents.  Why is it ethical to give a non-infringement opinion under that circumstance?  I think because no reasonable lawyer would contend there was infringement.  Put another way, the duty of loyalty that a lawyer owes to a client does not include the duty to make frivolous interpretations of a patent.  So, it seems to me that a lawyer should be free to give noninfringement opinions so long as no reasonable lawyer would find there was infringement.

Now, real world:  that won't help much because the only time an opinion is likely to be needed is when there's a reasonable argument about it.  But the rule needs to be right, because I guarantee this issue will pop up in ways that no one has ever thought of... yet.

Invalidity presents a closer, more difficult question.  My initial thoughts are that an invalidity opinion will often constitute an adverse representation, but I would love to hear more thoughts about that.

More to come...

Comments

[Joe Patent]

Yes (assuming no waiver).

[Milind Sathe]

There is nothing unethical about giving a non-infringment opinion about granted patent of another client.

Distinguishing alleged invention from granted patent is normal be it of another client or otherwise. There is no question of ethics by any stretch of imagination. Probably one one enter into odd situation if the clients asks for revocation of granted patent. Then it would be for an individual to decide if to accept such offer or refuse.

[Geoff]

I think giving an opinion of non-infringement about another client's granted patent gets close to the line. How can you successfully enforce that patent against an infringer who uses any of the arguments for non-infringement that you advanced in your opinion?

[Rakesh Prabhu]

Hi David,

I do not think it is right on the part of the counsel to provide any non-infringement opinion or invalidity opinion on any of the patents held by my other client. In an opinion, apart from stating issues, an attorney should also arrive at an independent conclusion, which is justifiable. In any given situation, I represent the interest of my clients. As such I cannot give any opinion against the interest of my any other client' work.

Rakesh Prabhu,
Patent Attorney

[David Hricik]

Rakesh: What if no reasonable lawyer would say there's infringement? Again, I think this happens every day when a lawyer gives a clearance opinion and DOESN'T list thousands of patents on it, because they couldn't reasonably be deemed to matter. (I think the invalidity opinion is harder, agreed.)

On the idea of then litigating the same patent for the client, I agree that would be a big time problem. Telling Client A that the '123 patent is invalid, but then representing its owner in an infringement suit doesn't happen very often, though, I wouldn't think.

[Thomason]

I don't agree with the ruling that the opinion is "incompetent" and so inadmissible. First, an opinion is competent, or not, based on an objective standard. Sure, the author may have a bias, but that rarely is enough to make it incompetent (weight not admissibility). Next, the worth of an opinion is in a non-jury setting when willful infringement is assessed. Seems again like the judge should read it, and deal with it, rather than toss it on evidentiary grounds.

[Gerry Elman]

David: You wrote "Telling Client A that the '123 patent is invalid, but then representing its owner in an infringement suit doesn't happen very often, though, I wouldn't think."

As lawyers move from firm to firm and as firms merge, the likelihood increases. What sort of recordkeeping and augmented "conflicts checking" is going to be needed to prevent this imputed conflict from happening in a large multi-office firm?

[Phil Mann]

While all this is interesting, one can't help wondering if it's just another instance of form over substance. Why should the questions of: (1) is there an opinion? and (2) if so, does that opinion "count"? overshadow the far more important question of whether the accused infringer based his actions on the existence of a factually and legally credible defense? That is a question that is, and should remain, independent of who the lawyers are. Indeed, it is independent of whether a formal opinion even exists in the first place.

If the opinions are based on solid law and fact and the accused infringer relied on them, that is what is important. If the opinions are simply legal doubletalk, or the client never even read or relied on them, what difference does it make who wrote them? And if the lawyers engaged in unethical conduct, that should be a matter between them and the licensing body -- not the basis for trebling a damage award against an innocent client who hired them.

Because "willful infringement" is part of a patent owner's case in chief, it should always be necessary for him to prove "willfulness," not for the accused infringer to disprove it. I was hoping that was the direction the Federal Circuit was heading in Knorr-Bremse. It may still be. Interesting to see what happens if and when this issue gets to the CAFC.

[Anthony Diepenbrock]

Adverse is being used by the court incorrectly. The court asserts that a non-infringement opinion is "adverse" to the patent owner of the subject patents. However, adverse in a conflicts sense relates to the quality of the representation. It asks whether there is a conflict of duties when rendering the opinion. Suppose, in this case, that the opinion was completed before the merger. Would there still be a conflict? The court would say yes, because it views the opinion as itself adverse, regardless of the representation. In fact, the court considers patent prosecution to adverse to the owner of a reference that is overcome in the prosecution. I would appeal this case to see if I could get a better reasoned result at the Federal Circuit.

[R]

In different ways, all non-infringement opinions opine the following: “Client A cannot successfully sue client B for infringement of patent C.” How is providing this opinion not adverse to client A’s interests?? Even if no reasonable attorney would conclude that client A could successfully sue client B and even if it would be frivolous for client A to sue client B, the patent practitioner will harm client A by merely informing client B of such facts. For example, client B will be less likely to take a license for the patent from client A. Also, client B will be more likely to continue selling the accused (and probably competing) product. I don’t care that every other reasonable attorney might have given client B the same advice. It doesn’t change the fact that the advice was adverse to client A’s interests and that the advice was given by client A’s patent practitioner. Good luck trying to argue that you can harm client A so long as what you said was true!!

Mr. Hricik suggests that clearance opinions implicitly opine on non-infringement on every patent not listed in the opinions: “Again, I think this happens every day when a lawyer gives a clearance opinion and DOESN'T list thousands of patents on it, because they couldn't reasonably be deemed to matter.” But most firms have an outside search company perform the search and identify a list of potentially relevant patents. In such cases, the firms should provide a clearance opinion limited to only those listed patents with disclaimers that there may be other patents not found in the search that could be infringed. If the listed patent are not owned by other clients and if that disclaimer has been given, I don’t see how the clearance opinion could adversely affect clients who had patents that were not listed in the clearance opinion.

HYPO: In performing a clearance search for client B’s product, the outside search company lists client A’s patent as being potentially relevant.

If you don’t list client A’s patent in the clearance opinion, you can be sure that the client B will sue you for hiding the patent as a violation of the duty of candor. And if you opine as to non-infringement of client A’s patent, I believe the above analysis applies and client A could sue you.

Even if you do list client A’s patent (with the express statement that you’re providing no opinion as to client A’s patent), aren’t you harming client A by giving client B a chance to review and possibly design around client A’s patent?

Also, since client A’s patent is probably somewhat relevant to client B’s product, would you owe a duty to disclose to client A that client B’s product existed and that client A’s patent might be relevant to that product? Isn’t that a classic conflict of interest?

[Phil Mann]

"[A]ll non-infringement opinions opine the following: 'Client A cannot successfully sue client B for infringement of patent C.' How is providing this opinion not adverse to client A’s interests?? Even if no reasonable attorney would conclude that client A could successfully sue client B and even if it would be frivolous for client A to sue client B, the patent practitioner will harm client A by merely informing client B of such facts."

Come on now R. Do you really believe this? Suppose, for the sake of argument, "patent C" expired 20 years ago. Do you really think it would be improper for the lawyer to advise "client B" that the patent is expired and he is free to practice that technology? Yes, in a broad sense, this is "adverse to client A's interests," but are we, as lawyers, ethically obligated to make fools and asses of ourselves denying the undenyable?

Legend has it that Abraham Lincoln once opined that half the practice of a decent lawyer should consist of advising his potential client that he doesn't have a case and ought to quit. The older I get, the more that makes sense.

[Joe Patent]

But, Phil, the point is that clients don't get noninfringement opinions on patents expired twenty years ago.

The per se rule makes sense because a company only gets a noninfringement opinion when there is a reasonable argument that there is infringement.

[Phil Mann]

"But, Phil, the point is that clients don't get noninfringement opinions on patents expired twenty years ago."

But the statement I was commenting on explicitly asserts that the duty to client A remains "Even if no reasonable attorney would conclude that client A could successfully sue client B and even if it would be frivolous for client A to sue client B." Those are R's words, not mine.

If we accept (as I do, and I agree with you) that this statement is not meant literally and there are limits to how far you have to go to "protect" client A's interests, then it's reasonable to ask what those limits are and where they end. I don't buy into the concept that it is automatically wrong for the lawyer to advise client B about patent C. (Hope I've kept all these letters straight!)

[R]

Phil & Joe,

Good comments.

I absolutely meant "even if no reasonable attorney would conclude that client A could successfully sue client B and even if it would be frivolous for client A to sue client B."

However, this statement does not mean that a patent practitioner is ethically obligated to make a fool or an ass of himself/herself by denying the undeniable, as Phil suggests it might mean.

Rather, this statement means that a patent practitioner is obligated not to deny *or* confirm anything. A patent practitioner must keep silent and refuse to give client B an opinion about client A's patent, even if the answer is undeniable. In sum, the patent practitioner isn't denying anything because the patent practitioner isn't opining at all.

In sum, I believe there would still be a *technical* violation of ethics to tell client B to go ahead and practice the invention in client A's expired patent.

However, I believe that Phil's clever hypothetical does raise important issues: What are Client A's interests when non-infringement is undeniable? What would be the damages?

**Interests & Damages with Expired Patent**

Assuming client A's patent is expired, client A could not demand royalties or a license payment on an expired patent. Client A does not have any protectable interest in the royalties or license payment.

But if client A is in a particular market and client B is waiting for a patent practitioner's opinion before entering that market, the patent practitioner harms client A by providing the rock-solid, undeniable opinion that encourages client B to more quickly enter the market. Of course, actual damages for this harm may be speculative and hard to prove. The pivotal issue would be whether (and how soon) client B would have obtained another opinion. But keep in mind that a delay of a week or two could mean thousands of dollars (or more) to client A, depending upon the particular technology.

**Interests & Damages with Non-expired Patent**

Assuming client A's patent is not expired and is otherwise enforceable, client A could provide some sort of license on its patent to client B -- even if there wouldn't be infringement (companies can take licenses where they may expand their technology ). Client A has the interest in receiving payment for a license. Also, as discussed above, if client A is in a particular market and client B is waiting for a patent practitioner's opinion before entering that market, the patent practitioner harms client A by providing the opinion that encourages client B to more quickly enter the market. Thus, where the patent can be licensed, client A may have interests in selling a license and preventing client B from becoming a competitor faster.

As for the damages relating to client B's entry into a market, the damages analysis above would still apply.

As for the damages relating to licensing, the pivotal issues would include (1) whether client B would have taken a license and (2) for how much.

** Conclusion **

As a practical matter, clients do not typically ask for non-infringement opinions where the non-infringement is undeniable. But I absolutely believe that patent practitioners have an absolute duty not to opine about another client's patent in the absence of an appropriate waiver of conflicts from the clients.

But take a variation of the hypothetical of the expired patent: suppose the patent clearly expired a week before client B visits the patent practitioner. Client B might not have any clue about patent term and might not be able to see another patent practitioner for weeks (thus delaying client B's entry into the market). Do you think client A would believe that the patent practitioner met his/her duty of loyalty to client A by advising client B to jump into the market and start competing with client B? Further, is accepting the $100 of work from client B worth the risk of client A's malpractice claim that could raise your insurance rates?

[R]

Do you think client A would believe that the patent practitioner met his/her duty of loyalty to client A by advising client B to jump into the market and start competing with client **A**?

sorry for the typo

[Anthony Diepenbrock]

"Invalidity presents a closer, more difficult question. My initial thoughts are that an invalidity opinion will often constitute an adverse representation..."

No doubt - especially if the firm prosecuted the patent which is the subject of the invalidity opinion. But suppose the firm represents the patent owner in a completely unrelated matter and the scope of that representation is confined to the unrelated matter. Is there a conflict of duties then?

[David Hricik]

Wow- interesting stuff and exactly what I was hoping to gather.

Sort of responding collectively, starting with the last: if a client is a current one, then you can't be "adverse" to it, even in unrelated matters.

With invalidity, yes, I think that's always (or nearly always) a problem, and it seems that's a consensus.

Where we seem to part ways, slightly, is on noninfringement. Expired patents is a good example that, I think, does make the point: I don't believe anyone would suggest it's a breach of duty for a lawyer to say to a client, "Bob owns the '123 patent, and it's expired" even if Bob is a client. I don't think the law requires that sort of loyalty, where you can't tell a client an indisputable fact. I do think there is an analogous associated range with noninfringement. Again, I don't think it's often going to be of practical help, but even then these things come up in weird ways, and so saying "per se" when everyone -- or most everyone -- agrees it's not wrong to say, "that patent's expired" -- is wrong, so let's make sure the court says it right.

Yes, the court was wrong, I think, to hold the opinion "incompetent." I'm not sure that exclusion would have been proper even under a "let's not extend the harm caused by the breach of duty" type of argument, but that one at least doesn't do violence to willfulness doctrine.

Cool stuff. Thanks. More topics a'coming.

[Anthony Diepenbrock]

Perhaps I wasn't clear. Firm represents patent owner in a (non-litigation) matter unrelated to the subject matter of the patent. Firm also represents a client that wants an invalidity opinion regarding the patent. Can Firm render an opinion of invalidity regarding the patent? Is the representation adverse to the patent owner?

Under the court's reasoning in the Beverly case, the answer is YES. Firm would be acting adversely to the interests of the patent owner.

[David Hricik]

Anthony - yes, I agree. See the other David's post on Andrews, above, by the way for an excellent analysis of why the court was wrong for non-substantive reasons.

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