Knorr-Bremse Systeme Fuer Nutzfahrzeuge GMBH v. Dana Corporation, et al. (Fed. Cir. en banc)

September 13, 2004 on 9:16 pm | In Caselaw |

The Federal Circuit (en banc) decided Knorr-Bremse Systeme Fuer Nutzfahrzeuge GMBH v. Dana Corporation, et al. earlier today. The case is perhaps the most important Federal Circuit case this year. As usual, I will give you the summary and a link to the case for your own reading. Tomorrow, as the experts chime in, I will add links/update this post as necessary to give you the full scoop.

Knorr-Bremse Systeme Fuer Nutzfahrzeuge GMBH v. Dana Corporation, et al.
Federal Circuit, September 13, 2004.
Before MAYER, Chief Judge, NEWMAN (opinion), LOURIE, CLEVENGER, RADER, SCHALL, BRYSON, GAJARSA, LINN, DYK (concurring in part and dissenting in part), and PROST, Circuit Judges. (MICHEL, Circuit Judge, took no part in the consideration or decision of this case).

NEWMAN (opinion)

Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH is the owner of United States Patent No. 5,927,445 (the ‘445 patent) entitled “Disk Brake For Vehicles Having Insertable Actuator,” is sued on July 27, 1999. At trial to the United States District Court for the Eastern District of Virginia, the appellants Dana Corporation, Haldex Brake Products Corporation, and Haldex Brake Products AB were found liable for infringement and willful infringement. No damages were awarded, for there were no sales of the infringing brakes. Based on the finding of willful infringement the court awarded partial attorney fees under 35 U.S.C. §285.

The appellants seek reversal of the finding of willful infringement, arguing that an adverse inference should not have been drawn from the withholding by Haldex of an opinion of counsel concerning the patent issues, and from the failure of Dana to obtain its own opinion of counsel. Applying our precedent, the district court inferred that the opinion of counsel withheld by Haldex was unfavorable to the defendants. After argument of the appeal we took this case en banc in order to reconsider our precedent with respect to these aspects. The parties were asked to submit additional briefing on four questions, and amicus curiae briefs were invited. Knorr-Bremse, 344 F.3d 1336 (Fed. Cir. 2003) (En banc Order).

We now hold that no adverse inference that an opinion of counsel was or would have been unfavorable flows from an alleged infringer’s failure to obtain or produce an exculpatory opinion of counsel. Precedent to the contrary is overruled. We therefore vacate the judgment of willful infringement and remand for re-determination, on consideration of the totality of the circumstances but without the evidentiary contribution or presumptive weight of an adverse inference that any opinion of counsel was or would have been unfavorable….

DYK, Circuit Judge, concurring-in-part and dissenting-in-part.

I join the majority opinion insofar as it eliminates an adverse inference (that an opinion of counsel would be unfavorable) from the infringer’s failure to disclose or obtain an opinion of counsel. I do not join the majority opinion to the extent that it may be read as reaffirming that “where, as here, a potential infringer has actual notice of another’s patent rights, he has an affirmative duty to exercise due care to determine whether or not he is infringing.” Maj. Op., ante, at 7 (quoting Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 F.2d 1380, 1389 (Fed. Cir. 1983))….

UPDATE: Michael Dzwonczyk’s Knorr-Bremse summary[PDF]

UPDATE #2: Patently Obvious Blog post, Hal Wegner summary #1 [PDF]
Hal Wegner summary #2 [PDF]

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7 Comments

  1. Finally! Some dissent. Someone sent me this:

    “My personal view, FWIW, is that it’s ridiculous to say something cannot be inferred that is clearly an obvious inference. Patent lawyers all know the drill: if you are asked to look at a possible infringement, then if you can opine “no” (and the bar for saying this is very low for many attorneys, who can be paid to say anything), you do the opinion; if you can’t opine no–basicaly because you think there is infringement–you tell the client that he better not hire you to do anything. I.e., opinions are ONLY done when the attorney is willing to say in writing he thinks there is no infringement. You never do an opinion saying there is infringement; what’s the point.

    Therefore, if you DO consult with an attorney and don’t get an opinion, usually, IMO, it’s b/c the attorney would not give you an opinion. Which means you were pretty much aware of a real possibility of infringement. This is not a per se rule but it’s real evidence, why shouldn’t the jury be able to hear it? Oh, because of the attorney-client privilege. In other words, the FedCircuit, in a pure policy decision to support the “sanctity” of the attorney’s role, is willing to prevent the jury from considering probative evidence. I don’t think that’s justice.

    Moreover, it seems to me obvious that for any defendant that has a decent legal budget and an active patent portfolio, then if they don’t have an opinion, it’s probably because they couldn’t get their attorneys to do one.

    If someone doesn’t have an opinion, you don’t know if it’s because they were too poor or lazy or cheap to pay for one, or if it’s because they asked but were unable to get their attorneys to do one. So I would think the most just solution would be this: let the plaintiff ask the defendant WHY they don’t have an opinion. And the defendant has to answer (regardless of the “sacred” atty-client relationship). The defendant could truthfully say that he has no opinion because he didn’t want to spend the money on it or couldn’t afford it. In which case there is no inference. OR, he could truthfully answer that he doesn’t have an opinion because he asked his attorneys and they refused to do it. In this case, there should be an inference, unless the attoreny wants to take the stand and explain some innocuous reason he didn’t want to do it.

    But then, that would require a desire to find the truth, rather than to promote some policy rationale unrelated to truth. Here truth is being sacrificed to something more important, namely the attorney-client privilege. This is akin to the ridiculous exclusionary rule, which disards real, probative evidence simply because of how it is acquired.

    I have spoken. Further deponent sayeth not.”

    Comment by Nipper — September 14, 2004 #

  2. “Here truth is being sacrificed to something more important, namely the attorney-client privilege”
    Is this an insight? Every privilege limits the search for truth. Congress, the Supreme Court and numerous other common law jurisdictions have recognized that the maintenance of these privileges generally are more important than the limits they impose on private parties seeking discovery in litigation. The Fed. Cir. has done nothing other than conform its doctrine to well-established law.

    Comment by Hayek — September 15, 2004 #

  3. I’ve been sticking occasional Gmail invites in the comments….Enjoy.
    http://gmail.google.com/gmail/a-9bfe052c4a-731a794bfd-fc0f1ad000
    http://gmail.google.com/gmail/a-9bfe052c4a-3ad0faced7-08a22ade1f
    SMN

    Comment by Nipper — September 15, 2004 #

  4. “But then, that would require a desire to find the truth, rather than to promote some policy rationale unrelated to truth. Here truth is being sacrificed to something more important, namely the attorney-client privilege.”

    Whoa, hold on there Nip, buddy! Truth? We’re talking about a presumption here, namely the presumption that anyone who doesn’t get an opinion must be guilty of willful infringement. How does that follow even logically, much less as a matter of objective truth? There are any number of reasons someone didn’t get an opinion of counsel. The cost factor is very real and something I have no trouble believing. It shouldn’t be pooh poohed. The likelihood that someone COULDN’T FIND a lawyer to opine there is no infringement strains belief. After all, unless a defendant is able to find a lawyer wiling to advance at least some credible defense, how is the defense going to advance very far in the first place? (Last I checked, Rule 11 applies to defense counsel just as much as plaintiff’s counsel.)

    I make my living suing infringers, and I liked the now defunct presumption as much as the next guy. But, in all honesty, it was difficult to justify either morally or as a matter of logic. (Given that the right to withhold attorney/client communication IS the law, it can’t be justified legally either.)

    The decision in Knorr-Bremse is good. If there is willful infringement, prove it with direct evidence. (”What might that be” I hear you ask? How about a letter or memo from the infringer’s CEO saying something like, “Tell ‘em to take their patent and stick it up their….” Believe it or not, stuff like that happens – and even finds its way into writing!) Tripling the amount of a damages award simply because someone exercises a legal right, or chooses not to spend scarce resources on yet another set of lawyers, is no substitute for real evidence. It’s not based on “truth” either.

    Affectionately,

    Phil

    Comment by Phil Mann — September 16, 2004 #

  5. Actually…I didn’t write that comment (I just pasted it as a comment, with permission). /Nip/

    Comment by Nip — September 16, 2004 #

  6. Hey, can’t a fella vent? I admit I don’t really feel too strongly about this; it was just my initial reaction. Probably in retrospect my criticisms are too strong and there are some countervailing considerations.

    But as for truth–the truth I meant was simply the question of whether or not the infringer had asked his attorney for and been denied an opinion, or had been given one that had not been introduced into evidence. This is indeed a fact, and it is a relevant fact. My point was that you should be able to ask. If the answer is no, then no presumption. But if you did ask for an opinion and the lawyer refused, or you refuse to produce it, surely that’s a relevant fact.

    But as I said above, perhaps the current rule is best. What do I know.

    Comment by Stephan Kinsella — September 16, 2004 #

  7. I’m Guilty as charged. Sorry Nipper, didn’t read as closely as I should have.

    Cheers.

    Comment by Phil Mann — September 17, 2004 #

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