Putting On Your Halo: Patent Litigators’ Ethical Duty To Communicate Change In Willfulness Law

Last week, the Supreme Court issued an opinion that significantly altered the legal landscape for proving willful infringement in patent cases. In Halo Electronics, Inc. v. Pulse Electronics, Inc., the Supreme Court rejected the Federal Circuit’s two-part Seagate test for awarding enhanced damages under 35 USC § 284, finding that both the substantive requirement for “objective recklessness” and the “clear and convincing” burden of proof were inconsistent with the intent of the statute.

Notably, the Court in Halo held the Seagate test for willful infringement “is unduly rigid, and it impermissibly encumbers the statutory grant of discretion to district courts.”  The Court criticized the Seagate test in part because it requires a finding of objective recklessness in every case before district courts may award enhanced damages. Such a threshold requirement excludes “from discretionary punishment many of the most culpable offenders, such as the ‘wanton and malicious pirate’ who intentionally infringes another’s patent—with no doubts about its validity or any notion of a defense—for no purpose other than to steal the patentee’s business.”

The Court further criticized the Seagate test because it made “dispositive the ability of the infringer to muster a reasonable (even though unsuccessful) defense at the infringement trial. The existence of such a defense insulates the infringer from enhanced damages, even if he did not act on the basis of the defense or was even aware of it.” The Supreme Court rejected the ability of an accused infringer to escape enhanced damages “on the strength of his attorney’s ingenuity” and noted that culpability for willful infringement “is generally measured against the knowledge of the actor at the time of the challenged conduct.”

Ethical Issues Raised By Halo

There is no doubt that Court’s opinion in Halo may be a game-changer for parties involved in patent litigation.  While most commentators have to date focused on the substantive and procedural issues raised by Halo. it is important to note that the Supreme Court’s decision also imposes several significant ethical duties on attorneys who are presently litigating a patent case in which willfulness is an issue.  Whether representing the patent owner or the accused infringer, litigators must be mindful of the ethical issues raised by Halo as they proceed in ongoing and future patent infringement cases.

First, an attorney in litigation has an ethical duty to not knowingly “make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal” by the attorney. See ABA Model Rule 3.3(a)(1). If patent litigation counsel has taken a position before a court predicated on the Seagate willfulness standard, and the court has not already been apprised of the Halo decision, then it is incumbent upon counsel to disclose to the tribunal the Halo decision.  This duty arises if the Halo decision, which is  “legal authority” from a “controlling jurisdiction”, is “known to the attorney to be directly adverse to the position of the client and not already disclosed to the tribunal by opposing counsel.”  See ABA Model Rule 3.3(a)(2).  The USPTO ethics rules impose on patent and trademark practitioners similar duties of candor to the tribunal as those set forth in the ABA Model Rules. See 37 C.F.R. § 11.303(a)(1) & (a)(2).

The comments to ABA Model Rule 3.3 explain:

[4] Legal argument based on a knowingly false representation of law constitutes dishonesty toward the tribunal. A lawyer is not required to make a disinterested exposition of the law, but must recognize the existence of pertinent legal authorities. Furthermore, as stated in paragraph (a)(2), an advocate has a duty to disclose directly adverse authority in the controlling jurisdiction that has not been disclosed by the opposing party. The underlying concept is that legal argument is a discussion seeking to determine the legal premises properly applicable to the case.

canstockphoto12671539This ethical duty makes sense.  If a party has already made a “statement” to a tribunal regarding the law of willful infringement—such as an assertion in a pleading or motion predicated on the Seagate standard for willful infringement—litigation counsel has a duty to speak and should not assume the court is aware that Seagate is no longer good law.  The duty of candor to the tribunal would include, at a minimum, advising the tribunal of the change in the law. In addition, litigation counsel must decide whether and the extent to which they should (or must) supplement or modify prior “statements” made to the tribunal predicated on Seagate in light of the Halo standard.

Patent litigation counsel also have ethical duties to timely communicate with their clients important information material to the representation. If willful infringement is an issue in the client’s case, then litigation counsel should report the Halo decision and how it might impact their client’s case.

One could easily see how the Halo decision could be especially important for an accused infringer who decided to forego relying on an opinion of counsel defense to willfulness based upon the more favorable (from a defense perspective) Seagate test.  Defense counsel may need to revisit their bases, strategies, and evidence for defending against a willfulness allegation based upon the more liberal and (from a plaintiff’s perspective) favorable standard for willful infringement set forth in Halo.

In addition to their duties to the tribunal and clients, litigation counsel also have an ethical duty to not “knowingly make a false statement of material fact or law to a third person”—which includes opposing counsel. See ABA Model Rule 4.1(a). The USPTO ethics rules impose the same duty on practitioners. See 37 C.F.R. § 11.401(a). This rule could be implicated, for example, if a party relied on the Seagate standard in responding to discovery.  Thus, if litigation counsel has made representations to the opposing party or their counsel regarding the law of willfulness predicated on application of Seagate, then they have an obligation to correct such representations.


After a decade that has seen the evolution of generally pro-defense Supreme Court and Federal Circuit patent jurisprudence, Halo may be viewed as “giving one back” to the plaintiff’s bar.  Patent litigation counsel on both sides of the aisle who have relied upon Seagate may need to go back to the drawing board with respect to the willfulness issue.  Indeed, in light of their ethical duties, counsel need to determine whether it is necessary to supplement their discovery responses, pleadings, and other positions advanced to tribunal.  Counsel must also decide how they plan on defending or prosecuting a willfulness claim going forward under the new standard–which could be especially tricky for accused infringers who believed at the commencement of the litigation that they could avoid a willfulness charge by simply putting on a strong defense without regard to their state of mind when they first learned about the patent-in-suit.  Moreover, if a tribunal has issued any rulings predicated on the Seagate standard—for example, dismissing a claim for enhanced damages under Rule 12(b)(6) for failure to sufficiently plead willfulness under the Seagate standard—then counsel may have an ethical duty to apprise the court of the change in law and potentially seek reconsideration of any such prior rulings.

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