By: Peter D. Olexy

Upon a finding of infringement, a United States District Court may increase damages, but a finding of increased damages is not mandatory. A court "may increase the damages up to three times the amount found or assessed."² Further, a court may award attorney's fees to the winning party.³ A finding of willful infringement, though a sufficient basis for an award of increased damages does not compel such an award.⁴ Nevertheless, a finding of willful infringement is one of the most common bases for a Federal District Court to award increased damages against a party found guilty of infringement.⁵

The Federal Circuit has made it clear that whether a finding of willful infringement is warranted depends on what the Federal Circuit has characterized as "the totality of the circumstances" presented, namely, whether a reasonable person would prudently conduct himself with any confidence that a court might hold the patent invalid, not infringed or unenforceable.⁶

One factor under the Federal Circuit "totality of the circumstances" test which has received attention in various decisions regarding willful infringement is whether the infringer has obtained an opinion of counsel regarding infringement and/or validity. The Federal Circuit has held that once a party has actual notice of another's patent right,⁷ that party has an affirmative duty to respect those rights, and that this affirmative duty normally entails obtaining advice of legal counsel.⁸ Under the "totality of the circumstances" test applied by the Federal Circuit, though it is an important consideration if an opinion of competent counsel is obtained, not every failure to obtain an opinion of competent counsel requires a finding of willfulness.⁹ Conversely, the fact that an opinion of counsel was obtained does not "always and alone" dictate a finding that the infringement was not willful.¹⁰

• Where no opinion of counsel was obtained, the Federal Circuit has split in its decisions regarding the willfulness or non-willfulness of the infringement involved. For example:
• where no opinion was obtained until after suit was filed, some six months after the patent had issued, willful infringement not found;¹¹
• on the other hand, willful infringement was found where the Federal Circuit found contrary internal memorandum of the infringer;¹²
• willful infringement was found where the court noted that there was no basis for the infringer reasonably believing that the patent was invalid or that it did not infringe;¹³ and
• no willful infringement was found where there was expert testimony that bona fide efforts had been made to "design around" the claimed invention and there was no copying.¹⁴

Where an opinion of counsel has been obtained, factors which the Federal Circuit has considered in approving or criticizing opinion of counsel in determining the willfulness or non-willfulness of infringing acts are now discussed.

In those cases where willful infringement was found despite the presence of an opinion of counsel, generally the opinion of counsel was either ignored or found to be incompetent.¹⁵ A written opinion may be incompetent on its face by reason of its containing merely conclusionary statements without a discussion of facts or by presenting only a superficial analysis.¹⁶ For example, where the opinion is merely a letter of assurance, that was a factor in the court finding willful infringement.¹⁷ A finding of willfulness was upheld where the attorney's opinion relied upon treated the claims superficially, failed to set out a standard for one of ordinary skill in the art, failed to consider secondary considerations in determining obviousness, mischaracterized the prior art, failed to perform a proper "best mode" analysis, and only addressed invalidity and did not discuss infringement.¹⁸

However, in a number of decisions, the Federal Circuit has viewed a competent legal opinion concluding invalidity and/or non-infringement as an important factor in declining to find willful infringement. The Federal Circuit has viewed with approval opinions which have been rather detailed, for example, where the patent has been reviewed, its file history has been reviewed, and the pertinent prior art reviewed as well as certain tests, experiments and studies.¹⁹ The fact that at least two independent, detailed written opinions of unrelated patent counsel were obtained has also been a factor which the Federal Circuit has viewed with approval.²⁰

1) The decisions in this area are very fact-oriented. As a consequence, anyone with concern in this area would be well-advised to carefully review the case law and consult legal counsel.

2) 35 U.S.C. §  284. Of course, "treble" damages need not be awarded, and many decisions, while involving increased damages, do not involve treble damages.

3) 35 U.S.C. §  285.

4) American Original Corp. v. Jenkins Food Corp., 774 F.2d 448, 227 U.S.P.Q. 299 (Fed. Cir. 1985); Modine Mfg. Co. v. Allen Group, Inc., 917 F.2d 538, 16 U.S.P.Q. 2d 1622 (Fed. Cir. 1990), cert. denied, 111 S.Ct. 2017 (1991

5) The Federal Circuit applies the very strict "clearly erroneous" standard in reviewing District Court decisions on wilfulness. As a consequence, reversal of a District Court finding on wilfulness is rather unusual.

6) Ryco, Inc. v. Ag Bag Corp., 857 F.2d 1418, 1428, 8 U.S.P.Q. 2d 1323, 1331 (Fed. Cir. 1988); Westvaco Corp. v. International Paper Co., 991 F.2d 735, 26 U.S.P.Q. 2d 1353 (Fed. Cir. 1993).

7) This means that the patent must have issued, though where production of an infringing device began before issuance of the patent, and continued after issuance of the patent can result in a finding of wilful infringement. State Industries, Inc. v. A.O. Smith Corp., 751 F.2d 1226, 224 U.S.P.Q. 418, 425 (Fed. Cir. 1985); Shiley, Inc. v. Bentley Laboratories, Inc., 794 F.2d 1561, 230 U.S.P.Q. 112 (Fed. Cir. 1986).

8) The Read Corp. v. Portec, Inc., 970 F.2d 816, 23 U.S.P.Q. 2d 1426 (Fed. Cir. 1992); Kloster Speedsteel AB v. Crucible, Inc., 713 F.2d 1565, 1579, 230 U.S.P.Q. 81, 91 (Fed. Cir. 1986), cert. denied, 479 U.S. 1034 (1987).

9) Kloster Speedsteel AB v. Crucible, Inc., 713 F.2d 1565, 230 U.S.P.Q. 81 (Fed. Cir. 1986), cert. denied, 479 U.S. 1034 (1987).

10) Kori Corp. v. Wilco Marsh Buggies & Drag Lines, Inc., 761 F.2d 649, 656-57, 225 U.S.P.Q. 985, 989 (Fed. Cir.), cert. denied, 106 S.Ct. 230 (1985).

11) American Original Corp. v. Jenkins Food Corp., 774 F.2d 448, 227 U.S.P.Q. 299 (Fed. Cir. 1985).

12) Kloster Speedsteel AB v. Crucible, Inc., 713 F.2d 1565, 230 U.S.P.Q. 81 (Fed. Cir. 1986).

13) Ryco, Inc. v. Ag Bag Corp., 857 F.2d 1418, 8 U.S.P.Q. 2d 1323 (Fed. Cir. 1988). To similar effect is Kaufman Company Inc. v. Lantech Inc., 807 F.2d 920, 1 U.S.P.Q. 2d 1202 (Fed. Cir. 1986).

14) Rolls-Royce Ltd. v. GTE Valeron Corp., 800 F.2d 1101, 231 U.S.P.Q. 185, 191 (Fed. Cir. 1986).

16) Underwater Devices Co., Inc. v. Morrison-Knudsen Co., Inc., 717 F.2d 1380, 1390, 219 U.S.P.Q. 569, 576-577 (Fed. Cir. 1983).

17) Jurgens v. McKasy, 927 F.2d 1557, 18 U.S.P.Q. 2d 1031 (Fed. Cir. 1991).

18) In re Hayes Microcomputer Products Inc. Patent Litigation, 982 F.2d 1527, 25 U.S.P.Q. 2d 1241 (Fed. Cir. 1992).

19) Uniroyal Inc. v. Rudkin-Wiley Corp., 939 F.2d 1540, 19 U.S.P.Q. 2d 1433 (Fed. Cir. 1991).

20) The Read Corp. v. Portec Inc., 970 F.2d 816, 23 U.S.P.Q. 2d 1426 (Fed. Cir. 1992).