Infringer’s Disregard for Counsel’s Advice Justified Treble Damages of Over $1.84M

Intellectual Property Law

In Western Plastics, Inc. v. DuBose Strapping, Inc., the district court granted Western Plastic’s motion for treble damages because defendant DuBose Strapping did not reasonably rely on the advice of its counsel. The court explained that the advice DuBose obtained provided a warning to avoid Western Plastics’ patents. DuBose ignored those warnings and sold the infringing product anyway.

Western Plastics sued DuBose for patent infringement. DuBose admitted infringement of Western Plastics’ U.S. Patent No. 8,080,304 (the ’304 Patent). At trial, the jury sided with Western Plastics on patent validity and damages. Western Plastics then sought treble damages for DuBose’s egregious infringement. The district court granted Western Plastics’ motion and awarded $1,843,644 in treble damages.1

The district court noted that the jury found Western Plastics showed by a preponderance of the evidence that it should receive lost profits and initially granted $614,548.2

A district court has discretion to award enhanced damages. Under 35 U.S.C. § 284, “the court may increase the damages up to three times the amount found or assessed” in patent infringement cases.3 The Supreme Court has held that “[a]wards of enhanced damages under the Patent Act over the past 180 years establish that they are not to be meted out in a typical infringement case, but are instead designed as a ‘punitive’ or ‘vindictive’ sanction for egregious infringement behavior.”4 The Court emphasized that treble damages “are generally reserved for egregious cases of culpable behavior” and that “such punishment should generally be reserved for egregious cases typified by willful misconduct.”5 However, “an award of enhanced damages does not necessarily flow from a willfulness finding.”6

The district court granted treble damages based on the jury’s willfulness conclusion and its own examination of the facts of the case. Regarding willfulness, the court instructed the jury as follows:

To show that defendant DuBose Strapping’s infringement was willful, plaintiff Western Plastics must prove by a preponderance of the evidence that defendant DuBose Strapping knew of plaintiff Western Plastics’ patent and intentionally infringed at least one asserted claim of the patent. For example, you may consider whether defendant DuBose Strapping’s behavior was malicious, wanton, deliberate, consciously wrongful, flagrant, or in bad faith.7

The court noted that the “subjective willfulness of a patent infringer, intentional or knowing, may warrant enhanced damages, without regard to whether his infringement was objectively reckless.”8

The court held DuBose’s behavior was sufficiently egregious to award treble damages. According to the court, DuBose essentially copied Western Plastics’ Panacea product even though DuBose knew it was not in any safe harbor. Jeffery Kellerman, DuBose’s chief operating officer, recognized that Western Plastics’ Panacea product was protected by the ’304 Patent. Kellerman obtained legal advice from attorney Frank Leak on design-around prospects and how to not infringe the ’304 patent. Leak’s opinion letter was limited to prior art products that preceded the ’304 patent. “Leak’s Opinion Letter was at best inconclusive to Kellerman’s prior art position, and at worst, contradictory.”9 In other words, Kellerman’s supposed interpretation of such advice was wrong.

Kellerman also relied on the legal advice of a second lawyer, Joel Bair, which was not helpful either. Specifically, Western Plastics sent a letter to Kellerman and DuBose asking DuBose to not infringe the ’304 Patent. Kellerman obtained legal advice regarding DuBose’s potential infringement liability. Bair directed Kellerman as follows:

In our view, the Dubose Strapping product cannot be held to infringe any of the claims of the Clarke ’304 patent because it is squarely within the prior art, including the disclosure of Shirrell [i.e., the ’909 Patent]. Whatever the scope of the Clarke ’304 patent claims, if any, they cannot read on the Dubose Strapping product without being invalid in view of Shirrell.10

The consequence of Bair’s advice was that the Dubose product had to be constructed of the Shirrell ’909 Patent. However, Kellerman and Dubose did not construct the product as described in the Shirrell ’909 Patent. The district court explained:

Put simply, the legal advice that Kellerman received—from not one but two lawyers—did not offer a “safe harbor” from the ’304 Patent but a “warning sign” to avoid it. DuBose ignored those warning signs in order to make money selling an infringing product. Having reviewed the jury’s finding, the entire record, and the governing law, DuBose’s conduct warrants treble damages.11

Therefore, the court tripled the jury’s damage award from $614,548 to $1,843,644.12

Lessons

While the absence of a legal opinion does not by itself mean a party is a willful infringer,13 obtaining prelitigation opinions of counsel regarding infringement and/or validity may reduce the chances of treble damages. Once a party is on notice of a potentially adverse patent, that party should investigate either a noninfringement or an invalidity position—or (preferably) both—and document them, as appropriate, prior to litigation. Failure to take timely action may contribute to a factfinder’s determining that the accused infringer acted egregiously.

The Western Plastics, Inc. v. DuBose Strapping, Inc., case demonstrates, however, that when obtaining invalidity opinions, it is critical to follow the advice of counsel. In addition, since communications regarding the subject matter of an opinion of counsel may later become discoverable and the attorney-client privilege waived, care should be taken to prevent unnecessary disclosure of unrelated privileged information not related to the opinion. Maintaining a practice of keeping counsel opinions separate from other privileged communications should also reduce the risk of inadvertent waiver of other privileged communications.


Irah Donner is a partner in Manatt’s intellectual property practice and is the author of Patent Prosecution: Law, Practice, and Procedure, Eleventh Edition, and Constructing and Deconstructing Patents, Second Edition, both published by Bloomberg Law.


1 Id., 2020 BL 368815 at *1.

2 Id., 2020 BL 368815 at *1.

3 Id., 2020 BL 368815 at *1 (quoting 35 U.S.C. § 284) (emphasis added by court).

4 Id., 2020 BL 368815 at *1-*2 (quoting Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1932, 118 USPQ2d 1761, 1765 (2016)).

5 Id., 2020 BL 368815 at *1-*2 (quoting Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1932, 1934, 118 USPQ2d 1761, 1765, 1767 (2016)).

6 Id., 2020 BL 368815 at *2 (quoting Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 875 F.3d 1369, 1382, 124 USPQ2d 1745, 1753 (Fed. Cir. 2017)).

7 Id., 2020 BL 368815 at *2.

8 Id., 2020 BL 368815 at *2 (quoting Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923, 1933, 118 USPQ2d 1761, 1762 (2016)).

9 Id., 2020 BL 368815 at *3.

10 Id., 2020 BL 368815 at *3.

11 Id., 2020 BL 368815 at *3.

12 Id., 2020 BL 368815 at *3-*4.

13 35 U.S.C. § 298 (“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.”).

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