Legal Definitions - advice-of-counsel defense

The advice-of-counsel defense is a legal argument primarily used in patent infringement lawsuits. It asserts that a party accused of infringing a patent acted in good faith because, after becoming aware of a patent owner's rights, they sought and relied upon a thorough and well-reasoned legal opinion from an attorney before continuing the potentially infringing activity. This argument is not a complete defense that absolves a party of liability for infringement. Instead, it is presented to demonstrate that any infringement was not "willful" (i.e., intentional or reckless). A finding of willful infringement can lead to significantly enhanced damages (penalties much higher than basic damages), so presenting an advice-of-counsel defense can help reduce the financial penalties imposed by a court.

• Example 1 (Manufacturing a Product): A small electronics company, "InnovateTech," develops a new wireless charging device. Before launching, they become aware of a patent held by a larger competitor, "GlobalCharge," which appears to cover similar technology. Concerned about potential infringement, InnovateTech immediately hires a reputable patent attorney. The attorney conducts a thorough analysis of GlobalCharge's patent and InnovateTech's device, ultimately providing a detailed written opinion concluding that InnovateTech's device uses a sufficiently different mechanism and therefore does not infringe the GlobalCharge patent. Relying on this expert legal advice, InnovateTech proceeds with manufacturing and selling their device. If GlobalCharge later sues InnovateTech for patent infringement, InnovateTech could present the attorney's opinion as an advice-of-counsel defense. This would not necessarily prove they didn't infringe, but it would demonstrate that they acted responsibly and in good faith, making it less likely for a court to find their infringement "willful" and impose triple damages.

• Example 2 (Developing Software Features): "CodeCrafters Inc." develops a popular mobile application with a unique data synchronization feature. After its release, a competitor, "SyncSolutions," sends a cease-and-desist letter, alleging that CodeCrafters' feature infringes on one of SyncSolutions' patents. CodeCrafters promptly engages a patent lawyer specializing in software. The lawyer meticulously reviews both patents and CodeCrafters' source code, providing a comprehensive legal opinion stating that CodeCrafters' synchronization method operates on fundamentally different principles and does not fall within the scope of SyncSolutions' patent claims. Based on this professional advice, CodeCrafters continues to offer the feature in their app. If SyncSolutions proceeds with a lawsuit, CodeCrafters would use the attorney's opinion as an advice-of-counsel defense to show that they had a reasonable belief their actions were lawful, thereby mitigating any potential finding of willful infringement.

• Example 3 (Pharmaceutical Design-Around): A pharmaceutical company, "MediForm," is developing a generic version of a patented drug. They are fully aware of the original drug's patent. To avoid infringement, MediForm's research team designs a new formulation that they believe falls outside the patent's claims. Before investing heavily in clinical trials and manufacturing, MediForm seeks a comprehensive legal opinion from a patent attorney specializing in pharmaceuticals. The attorney reviews the original patent, MediForm's new formulation, and relevant case law, and provides a detailed written opinion concluding that MediForm's formulation successfully "designs around" the existing patent and does not infringe. Relying on this advice, MediForm moves forward with development. If the original patent holder sues MediForm, MediForm would present the attorney's opinion as an advice-of-counsel defense. This would serve to counter any claim that MediForm intentionally or recklessly infringed, thereby reducing the risk of enhanced damages.