How do you defend yourself against charges of willful patent infringement? Companies finding themselves facing such an allegation often use the defense that they relied on a pre-lawsuit opinion from a lawyer that the company does not infringe valid patents. Such an opinion, if it exists, can be a strong piece of defensive evidence, because assuming a jury finds the company liable for patent infringement, an additional finding of willfulness in the patent infringement allows the judge in the case to multiply the damages award by up to three times the jury’s damages award. The problem is that introducing such an opinion of counsel into evidence comes with the risk that the opposing party may use the reliance on the opinion to argue that the company relying on the opinion has made effectively a blanket waiver of the attorney-client privilege.  KAZ USA, a manufacturer of consumer products, recently navigated this issue when it was accused by competitor Exergen of infringing Exergen’s infrared thermometer patents.

During the case before Judge Stearns in the District of Massachusetts, KAZ produced redacted versions of its opinion letters, providing only those sections opining that KAZ did not infringe the patents, and that the patents were invalid under Section 112 of the patent statute.  KAZ redacted passages concerning other patents in the family not at issue in this case, as well as passages that KAZ acknowledged may have “brushed up against” issues concerning invalidity of the patents based on prior art.

Exergen was not satisfied.  Exergen demanded that KAZ produce the entire, unredacted letter, plus a number of other categories of related documents.  In particular, Exergen demanded that KAZ also produce all  pre- and post-lawsuit work product and communications among the trial counsel team, since one member of the trial team was also the lawyer that wrote the opinion in question. Exergen also sought all drafts of any underlying documents considered by counsel, regardless of whether they were communicated to KAZ. Exergen justified its demands by pointing out that opinion counsel and trial counsel were the same person (KAZ’s long-time patent attorney), and that Exergen needed to investigate all the facts surrounding this attorney’s opinion on which KAZ was relying.

KAZ, on the other hand, argued that Rule 502 of the Federal Rules of Evidence only allows for a waiver of those materials that (1) relate to the same subject matter as relied on by the opinion of counsel and that, (2) “ought in fairness be considered together” with the opinion of counsel in order to determine if what was produced was “selective” or “misleading.”  KAZ believed that Exergen was overreaching, and as it argued to the court:

… [I]f Kaz were required to produce all post-complaint documents and communications with its attorneys . . . concerning infringement and validity of the Patents-in-Suit, it would basically have to produce every single communication it has had with its attorneys since this case began, and every single communication it will have with its attorneys for the remainder of the case. This means all communications regarding case strategy and tactics, all communications regarding trial preparation and conduct, etc. This would make it all but impossible for Kaz and its attorneys to mount an effective defense, and would completely eviscerate the long-standing attorney-client relationship between Kaz and its counsel.

Judge Stearns agreed with KAZ.  In his ruling, the judge noted that the materials Exergen was seeking were, in fact, privileged, and that KAZ’s reliance on portions of its opinion of counsel did not mean that all the materials Exergen was seeking must be produced.  The court also denied Exergen’s request for documents relating to reliance on counsel opinion after the filing of the lawsuit, because willfulness is “generally based on pre-litigation conduct.”  Documents not communicated to KAZ were also exempt from discovery, since they would have had “no impact on KAZ’s state of mind on the issue of willfulness.”

The case is Exergen Corp. v. KAZ USA, Inc., Civil Action No. 13-cv-10628-RGS, and it is pending in the District of Massachusetts.