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«DAVID HRICIK Associate Professor of Law Mercer University School of Law 1021 Georgia Ave. Macon, GA 31201 hricik_d State Bar of Texas 20TH ...»

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Associate Professor of Law

Mercer University School of Law

1021 Georgia Ave.

Macon, GA 31201


State Bar of Texas



March 1 – 2, 2007



Professor David Hricik, B.A., J.D.

Assistant Professor of Law, Mercer University School of Law, Macon, GA (2002-).

B.A., 1984, University of Arizona; J.D., 1988, Northwestern University School of Law.

Professor Hricik teaches Patent Law & Litigation; Professional Responsibility; Civil Procedure;

and Remedies, and also serves as an expert witness and consultant to patent malpractice, disqualification, and litigation matters.

He is the Chair of the Professionalism & Ethics Committee of the American Intellectual Property Law Association (2005-) and chaired the Ethics & Professional Responsibility Committee of the Intellectual Property Section of the American Bar Association (2002-03). He also served as a member of the Texas Disciplinary Rules of Professional Conduct Committee of the Texas State Bar (1997-2002). Professor Hricik has taught law at the University of Houston Law Center and the University of Texas School of Law and other courses at St. Edward’s Graduate School of Management.

Prior to becoming a full-time professor of law, Professor Hricik practiced law, principally in patent and complex commercial litigation, first with Baker Botts (Associate, 1988-96; Special Counsel, 1997-99), then as a founding partner of Slusser & Frost (Partner, 1999-2000), and finally with Yetter & Warden (Of Counsel, 2000-2002).

He has numerous publications and presentations on legal ethics and patent practice and his website, www.Hricik.com, contains various ethics and intellectual property resources.

Ethical Issues in Opinions of Counsel and in Working with Patent Agents Chapter 17






i Ethical Issues in Opinions of Counsel and in Working with Patent Agents Chapter 17 Should Lawyers in the Same Firm Serve as Both Litigation and Opinion Counsel?

By David Hricik Associate Professor of Law Mercer University School of Law 1021 Georgia Ave.

Macon, GA 31201

–  –  –



A. Financial Bias

B. Advocate-as-Witness Disqualification

C. Enhanced Risk of Waiver of Work Product

(1.) Strict Waiver Approach.

(2.) Middle Ground Balancing

(3.) The No Waiver Approach



–  –  –

Title 35 authorizes a trial court in its discretion to increase the damages awarded for patent infringement to a maximum of three times.1 One basis for awarding so-called “enhanced” damages is if the infringer “acted in wanton disregard of the patentee’s patent rights, that is, where the infringement is willful.”2 Willful infringement arises where a potential infringer has actual notice of another’s patent and fails to exercise due care to determine whether their continued activities would infringe a valid, enforceable patent.3 One important factor in determining whether an accused infringer met its duty of care is whether it sought legal advice before continuing its activities.4 Where it obtains such advice, the issue becomes whether it reasonably relied upon that opinion in continuing its activities.5 Combining the roles of opining and litigating create risks for the client that may not arise as acutely when the roles are kept separate.

–  –  –

A client that obtains an opinion of counsel regarding the invalidity, unenforceability, or noninfringement from a firm that provides litigation services to that client may have the opinion attacked as having been obtained from a financially interested attorney. The range of fact patterns that can create this risk no doubt are many. An acute example arose in Yamanouchi Pharmaceutical. Co. v. Danbury

–  –  –

producer can file an ANDA asserting invalidity of a drug patent.7 If successful, the producer can start to market the drug prior to expiration of the patent.8 However, if unsuccessful, then the court must determine 1.

35 U.S.C. § 284 (2005); see Mathis v. Spears, 857 F.2d 749, 754 (Fed. Cir. 1988).


Read Corp. v. Portec, Inc., 970 F.2d 816, 826 (Fed. Cir. 1992) (citations omitted).


See Minn. Mining & Mfg. Co. v. Johnson & Johnson Orthopaedics, Inc., 976 F.2d 1559, 1580 (Fed. Cir. 1992).


See Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F.2d 1380, 1389-90 (Fed. Cir. 1983).


See Ortho Pharm. Corp. v. Smith, 959 F.2d 936, 944 (Fed. Cir. 1992).


21 F. Supp. 2d 366, 375 (S.D.N.Y. 1998), aff’d, 231 F.3d 1339 (Fed. Cir. 2000).


See 21 U.S.C. § 355(j)(2)(A)(viii)(IV) (2005).


See 35 U.S.C. § 271(e)(1) (2005).

Ethical Issues in Opinions of Counsel and in Working with Patent Agents Chapter 17

whether the filing of the ANDA—a sort of constructive infringement—was done in bad faith, justifying a determination of “exceptional case.”9 In Yamanouchi, the generic drug manufacturer, Schein, had retained outside counsel, Engelberg, to

argue bases for invalidity of the patent-in-suit. The court described their arrangement:

Schein contracted... with outside counsel Engelberg to identify up to six potential challenges to existing drug patents and to provide written invalidity opinions to Schein....

Once Engelberg chose the various challenges, Schein would then go forward with development of the pertinent drugs, providing that a commercial market for the drug existed and the raw materials necessary to its production were available. Engelberg was not to be directly compensated for writing the challenge opinions, but instead would receive fifty percent of the “Marginal Gross Profit” of any of the drugs’ sales if its corresponding patent challenge was successful. Additionally, if Engelberg himself defended in the litigation flowing from a challenge, Schein was not to pay fees for his services. If he delegated that function to another law firm, Schein was required to pay the relevant fees, but the same would then be deducted from Engelberg’s eventual profit share. The arrangement, however, did contemplate that an award of attorneys’ fees could be imposed against Schein as to any of the identified challenges and that Schein alone would be responsible for such an event.10 At trial, the court found the patent valid and infringed by the filing of the ANDA.11 The court then concluded that the filing of the ANDA was willful infringement: “Here, the only legal opinion Schein was willing to present was formulated by Engelberg, an attorney with a stake in the outcome....”12 How strong the bias Engelberg faced is debatable. On the one hand, he did share in revenues if his opinion was sustained in litigation – and only then. On the other, if litigation was necessary, its expenses were deducted from his portion. Arguably, the problem was that he was paid only if invalidity was established, and thus his opinion could not be reasonably viewed as objectively unbiased in the form necessary to avoid willfulness: he had a stake in the outcome.

Does the argument of bias have the same purchase where, for example, a patent firm has a contingent interest in litigation over a patent in which it gave an opinion? For example, if a firm provides an opinion to the accused infringer in a case where it also takes a reverse contingency fee in defending a

–  –  –

subsequent infringement suit, the same bias exists: the firm arguably has a stake in the outcome much as did Engelberg.

There is little guidance on this issue. Obviously, the totality of the circumstances should come into play. The timing of the opinion, the type of contingent fee arrangement, and—of course—the totality of the circumstances must be considered in determining how much weight, if any, to give to an opinion from an interested attorney. Finally, even if financial bias is not present, the credibility issues created by using the same attorney to litigate as opine need to be examined. It may be, for example, that juries may be less likely to give weight to opinions drafted by trial counsel.13

–  –  –

A lawyer who provides an opinion of counsel about a patent is likely to be subject to deposition14 and one who combines the opining role with a role in litigation is likely to face a motion to disqualify based upon the advocate-as-witness rule. Whether disqualification under the advocate-as-witness rule would be required has split the courts. Some courts reason that disqualification may be required, but others deny the motions because the attorney’s role in preparing the opinion and the client’s receipt of it are likely to be uncontested.15

13. In extreme cases, such as where a trial court has found a prima facie case of inequitable conduct, sufficient to pierce the privilege, an unconsentable conflict could arise. See MODEL RULES Rule 1.7(b)(1) (consent may not be obtained where a reasonable lawyer cannot competently and diligently represent a client). Where a lawyer’s own conduct has been found on its face to render a client’s patent unenforceable, potentially subjecting the client to money damages and giving the client a cause of action against the lawyer, the conflict between the lawyer’s interest and the client’s are likely so severe that consent would not be appropriate to even request.

14. E.g., Clinitec Nutrition Co. v. Baya Corp., No. 94 C 7050, 1996 WL 153881 (N.D. Ill. Mar. 28, 1996) (granting motion to compel deposition of opining-litigator).

15. The few courts that have analyzed whether an opining-litigator must be disqualified under the advocate-as-witness rule have split. Compare Bristol-Myers Squibb Co. v. Rhone-Poulenc Rorer, Inc., No. 95 Civ. 8833(RPP), 2000 WL 1655054, at *2 (S.D.N.Y. Nov. 3, 2000) (denying motion to disqualify opining-litigator on grounds that it was uncontested that he had provided the opinion and so disqualification was improper), and Amsted Ind. Inc v. Nat’l Castings, Inc., No. 887, 1990 WL 106458 (N.D.

Ill. June 22, 1990) (holding that opining-litigator was not required to testify as to foundation of opinion), with Rohm Haas Co. v.

Lonza, Inc., No. Civ.A. 96-57, 1999 WL 718114, at *1 (E.D. Pa. Sept. 7, 1999) (granting motion to disqualify opining-litigator).

Whether disqualification of an opining-litigator is appropriate would turn on whether his testimony in the particular case would be necessary. Most often, where it is reliance by the client on the opinion and not preparation of the opinion which is in issue, disqualification would not be appropriate since the fact that the lawyer prepared the opinion would be an uncontested issue.

Model Rule 3.7(a)(1) does not prescribe disqualification where the lawyer’s testimony relates to uncontested issues.

Ethical Issues in Opinions of Counsel and in Working with Patent Agents Chapter 17

In a recent case, the Western District of Texas disqualified an entire firm from litigating a case where lawyers had given an opinion of counsel. In Crossroads Sys. (Texas), Inc. v. Dot Hill Sys. Corp.,16 lawyers from Morgan Finnegan had given a noninfringement opinion to a client. Later, other Morgan Finnegan lawyers represented the client when an infringement suit was filed against it over the same patent.

The patentee filed a motion to disqualify. The trial court granted the motion, even though it recognized that the ethics rules generally did not require firm-wide disqualification under these circumstances. Explaining

its reasoning, the court stated:

Although the various ethical canons speak with one voice with respect to the general question of whether an attorney who will be called to testify in a trial may serve as trial counsel, their unanimity breaks down somewhat when it comes to other members of the testifying lawyer's firm. For instance, the Model Rules allow members of the lawyer's firm to serve as trial counsel unless the conflict of interest rules would prohibit their service. The Texas rules are less forgiving as they prohibit other members of the firm from serving as trial counsel unless their client gives informed consent. Finally, the Model Code takes the hardest line, treating the members of a testifying lawyer's firm exactly the same as the testifying lawyer for purposes of the prohibition on service as trial counsel. The local rules of this district do not address the issue.

The Court believes that under the circumstances presented here, a strict prohibition on all members of the testifying lawyer's firm serving as trial counsel is appropriate.

Crossroads will be seeking to attack the reasonableness of Dot Hill's reliance on the opinions given by Morgan & Finnegan attorneys, in part, by attacking the accuracy and validity of the opinions themselves as well as the work underlying the formulation of the opinions.

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