In this 3-part article, general guidelines
for patent, trademark, and copyright infringement are addressed, focusing on
ways how to avoid it. Part 2 addresses patent opinion
requirements, and Part 3 discusses the effect
of Knorr-Bremse v Dana Corp.
E. Warren Jr. and E.E. "Jack" Richards II
I know it when I see it.
—Supreme Court Justice Potter Stewart, Jacobellis v Ohio, 378 U.S. 184 (1964)
Justice Stewart made the above comment in an attempt to define pornography
and decide whether a risqué movie should be protected as a work of art. So,
what does pornography have in common with willful infringement of intellectual
property? The answer is simple: both are difficult to define but are routinely
recognized by the courts "when they see it." In other words, there are no tried
and true tests to help companies completely avoid charges of willful infringement.
Still, there are general guidelines that can be observed to lessen one’s chance
of being hit with a willful infringement charge. This article addresses these
guidelines for patent, trademark, and copyright infringement.
Willful infringement should be a major concern for almost any business because
it allows a judge, in his or her discretion, to award a patentee up to three
times the actual damages suffered. In addition, the infringer may be saddled
with paying the attorney fees that were incurred during the patent infringement
While Justice Stewart may have subscribed to the "I know it when I see it"
test, patent lawyers are not nearly so colorful. Consequently, they offer the
following definition for willful infringement: whether the infringer, acting
in good faith and upon due inquiry, had sound reason to believe that it had
the right to act in the manner that was found to be infringing. Courts determine
whether this test has been satisfied by examining the "totality of the circumstances."
On second thought, Justice Potter may have gotten right, "They know it when
they see it."
In all seriousness, this is about the best guidance courts can offer. The
very nature of whether an act is performed willfully depends on the thoughts
and actions of the accused infringer. If these "facts" are largely determinative
of the outcome, it is no small wonder that case law to date has been unable
to articulate any gold standards for defining willful infringement because the
facts in each case are unique. Nevertheless, there are some general guidelines
that have surfaced to aid those who wish to avoid the sting of willful infringement
and its consequent penalties.
The only solid advice to avoid willful infringement is to get a thorough,
written opinion from a patent attorney stating you do not infringe the claims
of a patent or that the patent is invalid or unenforceable. Just what constitutes
such an opinion will be addressed in Part 2 to the riveting article in which
you are now so thoroughly engrossed. As much as various unnamed patent attorneys
would love to write a noninfringement opinion for you every time you modify
or develop a product, doing so might become a little cost-prohibitive. So, the
relevant question becomes...
The logic for when to obtain a noninfringement opinion is best set out by
addressing the following questions under the premise that you have invented
"a better mousetrap."
Do you know of a "target mousetrap" that predates your mousetrap? Certainly,
if you design and build your mousetrap without knowledge of any patent ("target
patent") that covers another mousetrap ("target mousetrap"), you cannot obtain
an opinion addressing that which you do not know. The need for an opinion may
arise at a later time if you receive "actual notice" of the target patent. Actual
notice is often gained when the patentee sends you a license offer, cease and
desist letter, or a summons. At that time, you have a well-recognized responsibility
to investigate the possibility of infringement. This duty is usually addressed
by obtaining the aforementioned opinion addressing infringement and invalidity. Braun Inc. v Dynamics Corporation of America,
975 F2d 815, 24 USPQ2d 1121 (Fed Cir 1992).
Is your mousetrap largely copied from the target mousetrap? If you have knowledge of the target mousetrap, and if you outright copy the
target mousetrap then obtaining advice from counsel is highly recommended. This
may not be as obvious as you think because the target might have never been
the subject of a patent or may be the subject of an expired patent. Still, you
would be wise to check into these possibilities. Any attorney fees incurred
verifying there is no such patent should be manageable. American Medical Systems, Inc. v Medical Engineering
Corp., 6 F3d 1523, 28 USPQ2d 1321 (Fed Cir 1993).
Is your mousetrap a modified version of the target
mousetrap? If your mousetrap was modeled after the target mousetrap but
has been modified to incorporate distinguishing features, your efforts in designing
around the target trap may be deemed good faith efforts to simply design a more
effective mousetrap ... something condoned as a basic goal of patent law. Amstar Corp. v Envirotech Corp., 3 USPQ2d 1412
(Fed Cir 1987). In this situation, the failure to obtain an opinion, or obtaining
advice that is deemed less than sufficient, may be mitigated somewhat in terms
of willful infringement. While a judge has discretion to award up to three times
actual damages when willful infringement is found, any good-faith efforts might
persuade the judge to stop short of the ultimate penalty of treble damages.
Have you known about the target patent for a long
time? Suppose you have known about the target patent for some time but,
for one reason or another, have never obtained a formal opinion. In that case,
turning a blind eye to the patent and any related patents that might issue later
could be damaging if you never obtain a formal opinion. However, if you continue
to monitor the patent family as well as any changes to your mousetrap, this
may be deemed a good effort because you did not ignore the patentee’s property
rights. Continually monitoring the area, however, also means you must stay ready
to obtain an opinion should infringement become a greater concern. Studiengesellschaft kohle mbH v Dart Industries Inc.,
666 F Supp 674, 4 USPQ3d 1817 (D Del 1987).
Is the target mousetrap made by a competitor? When you know the target mousetrap is made by a competitor, your risk for willful
infringement goes up because a judge might view your efforts as being predatory
with a motivation for harm. Also, claiming a lack of knowledge of the target
patents and products is a harder argument to make in such a circumstance. Consequently,
an opinion is more advisable in this scenario.
Is the target mousetrap in a "hot" sector? For similar reasoning found above, claiming no knowledge of a target mousetrap
that has the industry in a buzz is hard to do. Consequently, the need for an
opinion in heightened.
Do you have sufficient knowledge of mousetrap prior
art? If your in-house patent counsel knows the "lay of the land" in terms
of existing patents related to say, mousetraps that incorporate titanium coils,
then your failure to obtain a formal opinion might be more excusable. However,
if your in-house counsel is more familiar with classic traps, for example, that
incorporate steel coils, you may need a formal opinion to evaluate the scope
of prior art that is likely unknown to you. Stryker
Corp. v Intermedics Orthopedics, Inc., 96 F3d 1409, 40 USPQ2d 1065 (Fed
Has the target mousetrap been marked? If you
know the target mousetrap has been marked with wording along the lines of "U.S.
Pat. No. 1,234,567," then you are certainly on notice that you must investigate
the patent. Even "Patent Pending" may be considered in a willfulness inquiry
depending on whether you tried to obtain a published application concerning
the product and whether you continued to monitor new patents to see if the "pending"
patent is eventually granted. See Stryker.
Did you search for potential target patents? Many businesses keep tabs on the patents that issue in a certain class of products.
Doing so might keep you abreast of the latest ideas and further the technical
prowess of your organization. Still, gaining knowledge of a target patent might
provoke the need for an opinion. Consequently, many organizations choose to
stay away from organized searches of patents thereby frustrating the patent
system’s goal of promoting technical progress. The case law on this point is
mixed. Some courts have found that finding a target patent as a result of one’s
own efforts suggests reasonableness and not willfulness. See Dart, Braun, American Standard Inc. v Pfizer Inc.,
772 F Supp 86, 14 USPQ2d 1673 (D Del 1989).
Other courts, however, have gone the opposite way. See Stryker. This split in the case law goes to show
how much courts base decisions on the facts of each case and not on nice, clean
rules. Many commentators neglect to point out that the infringer in Stryker was a (1) well-funded company that (2)
kept close tabs on its competitor’s products which, in this case (3) was a "hot
product." Furthermore, the infringer’s patent counsel (4), as well as a manager,
had some knowledge of the target product, and (5) was evasive during questioning
in the litigation. Finally, (6) the infringer had never made a product in the
particular niche of prosthetics that was at issue in the suit.
In conclusion, the above factors should be considered when considering whether
to obtain a formal patent opinion. If you find the above need for expensive
patent opinions frustrating when, for example, the patentee may have no intention
of ever asserting the patent, you are not alone. The Federal Trade Commission
delivered a report calling for higher requirements for findings of willful infringement. To Promote Innovation: The Proper Balance
of Competition and Patent Law and Policy, a report by the FTC (October
2003). Still, until the courts or Congress adopts those recommendations, remember
Justice Stewart’s words of wisdom (and your friendly neighborhood patent attorney).
Similar to patents, a formal opinion concerning potential trademark infringement
can constitute good faith and weigh against a willful infringement finding. Sports Authority v Prime Hospital Corp., 89 F3d
955 (2nd Cir 1996). Still, one has no duty to conduct a trademark search or
obtain advice of counsel to avoid a finding of willful infringement. Often,
an intent to capitalize on the goodwill of the senior user, in addition to failing
to properly investigate the matter, may be required for a willfulness finding.
See McCarthy at § 26:10. Such an intent can be
found when, for example, a party disregards advice of counsel or takes advantage
of its economic superiority over the plaintiff. So, whether one needs to obtain
a formal opinion is largely a function of whether other inculpatory facts are
Many businesses might determine that cursory searches (e.g., knock-out searches
of federal registrations) are so inexpensive, the risk of later litigation,
regardless of willful infringement penalties, make such searches worthwhile.
The results might then dictate whether more detailed searches should be conducted.
Furthermore, the more important the mark will be in terms of marketing, the
more detailed searching makes sense.
With copyrights, the increased statutory damage award depends on a demonstration
of willfulness which may require the infringer have acted with "actual knowledge
or reckless disregard for whether its conduct infringed upon the plaintiff’s
copyright." Universal Studios, Inc. v Ahmed,
29 USPQ2d 1775 (ED Pa 1993). An element considered in the determination of willfulness
is an obligation of reasonable inquiry, including a Copyright Office records
search. M.S.R. Imports, v R.E. Greenspan Co.,
220 USPQ 361 (ED Pa 1983), aff’d without opinion, 732 F2d 146 (3rd Cir 1984).
Whether a party is, or should be, familiar with copyright law and the need to
secure permission to reproduce copyrighted works is also considered in a willfulness
inquiry. Viacom International, Inc. v Fanzine International,
Inc., 2001 U.S. Dist Lexis 11925 (SD NY 2001).
("Jack") Richards II is an associate with Winstead Sechrest Minick
in Austin, Texas, where he specializes in intellectual property, technology,
litigation, dispute resolution, and nanotechnology. He received his BS degree
from Texas A&M and his JD degree, cum laude, from the University of Houston
Law Center. Before entering law school, he worked as an engineer for a start-up
company in the medical device industry, focusing on electronics and software
related to cardiac data (electrophysiology and hemodynamics). Mr. Richards can
be reached at
Part 2 to this article addresses the requirements
for patent opinions that are sufficient to guard against findings of willful
infringement. Part 3 discusses the effect
of Knorr-Bremse v Dana Corp.
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