Willful Patent Infringement: Lingering Questions

• Author: Austen Zuege
• Pages: 34-62

Published in Landslide, Volume 14, Number 4, 2022. © 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion

thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the

American Bar Association.

34

Willful Patent

Infringement

LINGERING QUESTIONS

By Austen Zuege

W

hat are the minimum requirements to establish enhanced

damages for patent infringement after the passage of

the America Invents Act (AIA) and the U.S. Supreme

Court’s decision in Halo, and what evidence can be presented on

this point? Post-Halo cases reveal areas of ambiguity and dispute.

Some dispute involves willfulness theories falling close to the line

between reckless conduct sufcient to establish willfulness and

merely negligent conduct that is not willful. But a lingering ambi-

guity is how 35 U.S.C. § 298 may exclude from willful patent

infringement certain conduct that might be considered reckless—

and thus willful—in other areas of tort law. For whatever reason,

§ 298 has received little attention or treatment, which has even led

to decisions contrary to that statutory provision.

A Brief History of Willfulness

Let us begin with some context for how willfulness has evolved in

patent law.

1

Damages enhancement is governed by 35 U.S.C. § 284,

even though the term “willful” does not explicitly appear there. In

the early 1980s, the Federal Circuit established an afrmative duty

of due care and an adverse inference of willfulness if the accused

infringer did not both obtain advice of counsel and waive privilege

to present an advice of counsel defense.2 Decades later, the Federal

Circuit abolished the adverse inference in Knorr-Bremse.3 Then it

abolished the afrmative duty of due care in Seagate, substituting

a two-prong willfulness analysis requiring “objective recklessness”

as a prerequisite.4 In the aftermath of those cases, the AIA intro-

duced § 298, which prohibits use of the failure to obtain advice of

counsel or make an advice of counsel defense to establish willful-

ness (or inducement).5

In 2016, the Supreme Court in Halo threw out the “objec-

tive recklessness” prerequisite, nding its “inelastic constraints”

insufcient to allow courts to punish “the full range of culpable

behavior.”6 The Court held that “culpability is generally measured

against the knowledge of the actor at the time of the challenged

conduct.”7 Therefore, “[t]he subjective willfulness of a patent

infringer, intentional or knowing, may warrant enhanced damages,

without regard to whether his infringement was objectively reck-

less.”

8

The Court discussed how reckless conduct supports punitive

damages where willful intent is required while merely negligent

conduct does not, clarifying that “a person is reckless if he acts

‘knowing or having reason to know of facts which would lead a

reasonable man to realize’ his actions are unreasonably risky.”

9

The abrogated “objective recklessness” threshold had allowed

classically reckless conduct to be exonerated by after-the-fact

rationalizations, which meant that some reckless conduct was

inappropriately shielded from punitive enhanced damages.10

Later Federal Circuit cases have interpreted Halo as abrogating

the “objective recklessness” requirement in a relatively narrow way

but leaving intact much other pre-Halo case law,

11

which presents

challenges for anyone trying to parse out the way older cases may

have been abrogated only in part but are potentially still control-

ling as to other aspects. The Federal Circuit has maintained that

“willfulness” is a question of intent involving the accused infring-

er’s state of mind that is for the nder of fact (jury) to decide,

12

and knowledge of the asserted patent is a prerequisite to a nding

of willfulness.13 After willfulness is established, the question of

enhancement of damages is then a question for the court (rather

than jury) to decide

14

—though a willfulness verdict does not auto-

matically entitle the patentee to enhanced damages.

15

But a court’s

discretionary moral judgment regarding enhancement does not

depend on any preceding factual nding of a particular state of

mind or level of intent of the infringer.16

District court decisions post-Halo have begun to explore the

minimum requirements to plead and then introduce evidence of

willfulness, though the Federal Circuit has not yet reached some

of the new theories denitively. These various new theories address

Image: Getty Images

Published in Landslide, Volume 14, Number 4, 2022. © 2022 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion

thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the

American Bar Association.

35

Austen Zuege is an attorney at Westman, Champlin & Koehler,

P.A. in Minneapolis, Minnesota. His practice includes patent

and trademark prosecution and litigation. He can be reached

at azuege@wck.com.

what it means to subjectively “have reason to know” that accused

conduct presents an unreasonable risk of patent infringement in

the absence of direct evidence that the accused party actually knew

about the patent and that there was a high probability its conduct

infringed, as well as the effect of the accused taking afrmative

steps to avoid learning of such facts.17

New Theories of Willful Infringement

First, a number of district courts have found “willful blindness”

to be an acceptable theory of willful patent infringement. Motiva

from the Eastern District of Texas is perhaps the most widely

known of these cases, holding that “[s]ince the Supreme Court has

explained that willful blindness is a substitute for actual knowl-

edge in the context of infringement, it follows that willful blindness

is also a substitute for actual knowledge with respect to willful

infringement.”18 Willful blindness has two basic requirements:

(1) the accused must subjectively believe that there is a high prob-

ability that a fact exists, and (2) the accused must take deliberate

actions to avoid learning of that fact; these two requirements

mean willful blindness has a limited scope that surpasses reckless-

ness and negligence.

19

To avoid dismissal, patentees must make

“plausible” willfulness allegations regarding both requirements

for willful blindness.20

What has generated much discussion about willfulness theories

relying on willful blindness is the role of “no patent review” corpo-

rate policies that (at least on paper) bar employees from reviewing

competitor patents.21 Yet the mere existence of such a “no patent

review” policy is not per se sufcient to plead willful blindness

for willful infringement unless there is also a plausible allegation

that the accused party subjectively believed a high probability of

patent infringement existed.

22

In practical terms, this means there

must be something more than simply a blanket corporate policy

that applies to any and all (competitor) patents and that “some-

thing more” must plausibly suggest a culpable state of mind with

regard to infringement of the asserted patent.

Second, some courts have addressed other theories—distinct

from “willful blindness”—that an accused infringer should have

reasonably known about the asserted patent. For example, district

courts are divided about whether actual knowledge of an unas-

serted family-related patent coupled with an allegation that the

accused should have investigated that patent family to discover

the asserted patent—such as a broader continuation or broadening

reissue—is sufcient to support willfulness.23 At times, these other

theories appear uncomfortably close to the old, abrogated afr-

mative duty of due care.

24

These other theories seem less stringent

and more expansive than willful blindness, partly because they

fall close to the boundary between negligence and recklessness

but also because decisions on these theories often contain little or

no discussion of why the accused had reason to know that there

was infringement of a later-issued patent and not merely that the

later-asserted patent existed.25

Statutory Limits on Evidence of Willfulness under

§ 298

But what about § 298? A curious feature of many post-Halo will-

fulness cases is how little that section introduced by the AIA is

discussed or even cited by courts when dealing with issues to

which it directly relates, namely the relevance of evidence under

the second Read factor: “whether the infringer . . . investigated

the scope of the patent and formed a good-faith belief that it was

invalid or that it was not infringed.”26 This is most troubling when

courts proffer reasoning based on case law that was abrogated by

§ 298 (if not also by Seagate). Section 298 states:

The failure of an infringer to obtain the advice of counsel with

respect to any allegedly infringed patent, or the failure of the

infringer to present such advice to the court or jury, may not

be used to prove that the accused infringer willfully infringed

the patent or that the infringer intended to induce infringement

of the patent.27

There can be no question that § 298 excludes certain evidence

from use to prove willfulness, including (1) the failure to consult

an attorney and (2) the decision to maintain privilege over advice

received from counsel. Yet an asymmetrical framework remains:

the accused infringer is still free to obtain a legal opinion and later

voluntarily present an advice of counsel defense based on that legal

advice,28 but a “decision not to seek an advice-of-counsel defense

is legally irrelevant under 35 U.S.C. § 298.”29

The key effect of § 298’s framework has to be that “having

reason to know” for a (recklessness) willfulness theory must be

limited to what the accused infringer reasonably should have

known at the time without the assistance of counsel. The scope

of the accused party’s (subjective) knowledge of the intricacies of

patent law will vary considerably, though. For instance, lay parties

might reasonably believe that broader later-issuing patents or

reissues are not likely or that something like prosecution laches

would apply to them.

30

This subjective knowledge may be difcult

to even infer from circumstantial evidence in situations in which

the accused did obtain advice of counsel but chooses not to waive

privilege and not to make an advice of counsel defense based on

that advice. And mere speculation on this point is generally inad-

equate. Moreover, as one district court held, attempts to suggest

what the accused knew based on privileged communications not in

evidence may be improper as a “disguised” attempt to circumvent

the limits set forth in § 298.

31

In a somewhat counterintuitive way,

§ 298 provides two distinct incentives to obtain advice of counsel

because an accused party can either waive privilege in such advice

and present an advice of counsel defense or maintain privilege and

later potentially shield certain state of mind inquiries or inferences

implicating that (maintained) privilege.32

Does a Duty of Due Care Still Exist? And Does It

Matter?

Seagate abrogated the afrmative duty of due care; but when Halo

later abrogated the “objective recklessness” standard, a question

arose as to the impact of Halo’s abrogation of the abrogation of the

duty of due care.33 The Federal Circuit has not explicitly weighed

in on this point, and no Federal Circuit case since Halo mentions