NBJ Online | Article of the Month
By Jeffrey S. Kinsler and David L. Hudson, Jr.
The bar exam has been described as “one of life’s most dreaded experiences” and a “career threatening ordeal.”1 Studying for it “can be a hellish and grueling grind.”2 Many famous people—including John F. Kennedy, Jr.3, Robert F. Kennedy, Jr.4, California Governor Jerry Brown5, former California Governor Pete Wilson6, former Los Angeles Mayor Los Angeles Mayor Antonio Villaraigosa7, former First Lady Michelle Obama8, and former Secretary of State Hillary Clinton9—have failed at least one bar exam. Some individuals try numerous times. One man passed the California bar exam on his 48th attempt.10 Others never achieve a passing score. Widespread awareness of the exam’s difficulty has increased as passage rates have declined in recent years.11
States bar exams differ in content though there are some commonalities. Nearly every jurisdiction’s exam contains the Multistate Bar Exam (MBE), a 200-question test on seven different legal subjects: Federal Civil Procedure, Constitutional Law, Contracts and Sales, Criminal Law and Procedure, Evidence, Property, and Torts. Louisiana and Puerto Rico remain the only jurisdictions to not use the MBE. Most states utilize the Multistate Performance Test (MPT), which requires students to read a host of materials in a “File” and a “Library” before drafting an office memorandum, a persuasive memo or brief, a client letter, a will, a contract, or other legal document. Some states then require students to answer specific, state-law essay questions.
The Tennessee Bar Exam is a two-day exam. During the first day, examinees tackle one MPT and the nine essay questions. The next day examinees take the MBE.
Trending Towards the UBE
Twenty-four states and the District of Columbia have adopted the Uniform Bar Exam (UBE); seven jurisdictions have adopted the UBE in the past six months. The UBE features three components: (1) the MBE, (2) two MPT questions, and (3) the Multistate Essay Examination (MEE), six essay questions on any of the following areas: Business Associations (Agency and Partnership, Corporations, and Limited Liability Companies); Civil Procedure; Conflict of Laws; Constitutional Law; Contracts (including Article 2 on Sales); Criminal Law and Procedure; Evidence; Family Law; Real Property; Torts; Trusts and Estates (Decedents' Estates, Trusts, and Future Interests); and Article 9 (Secured Transactions) of the Uniform Commercial Code.12
The push for a uniform bar exam gathered momentum in August 2010, when the American Bar Association’s Council of the Section of Legal Education and Admissions to the Bar urged its adoption.13 The Council noted the increased demand for lawyer mobility and multijurisdictional practice. The National Conference of Chief Justices also adopted a resolution urging consideration of a uniform bar exam. Missouri became the first state to adopt the UBE and now a total of 24 states have adopted it. New York and Massachusetts adopted the UBE in 2015.
There is even more momentum in 2016 for adoption of the UBE. In February 2016, the American Bar Association’s House of Delegates adopted a resolution urging “bar admission authorities in each state and territory to adopt expeditiously the Uniform Bar Examination.”14
Reasons for Adopting the UBE
The Tennessee Board of Law Examiners should adopt the UBE for at least three reasons. First, the adoption of the UBE will enable lawyers to move more readily from jurisdiction to jurisdiction. The UBE offers a portable score that allows applicants to obtain licensure in another state more easily. This only makes sense in the increasingly interconnected world of legal practice. Erwin Chemerinsky, Dean of UC Irvine School of Law, favors the UBE, calling the current system “inefficient, burdensome, and, frankly, unjustifiable.”15
Jim Nowogrocki, the President of the Missouri Board of Law Examiners, recently explained that his state’s “adoption of the uniform bar exam in 2010 has proved both convincing and a source of satisfaction in today’s ever-changing landscape for new lawyers.”16 He explains that the UBE has provided the state with more new lawyers from different jurisdictions able to meet the changing legal needs of businesses and the public.
Second, and perhaps more importantly, the quality of the UBE essay questions is better than those currently on the Tennessee Bar Exam. The National Conference of Bar Examiners (NCBE) produces exam products of a very high quality. The organization has been writing exams for decades. “Essays go through multiple drafting sessions, verifications and are eventually pretested,” explains Nowogrocki. “It [is] simply a better product than our jurisdiction could ever produce.”17
Some essay questions on the Tennessee Bar Exam have been well-written and thoughtful. However, others have been woefully inadequate and poorly drafted. The inconsistency in quality is far from ideal. The exam focuses too often on minor issues of state law rather than on broader and more important legal principles. For example, questions have concerned Tennessee’s statute on landlord-tenant law, while ignoring other central concepts of property law.
Third, the Tennessee Board of Law Examiners does not publish model or selected answers. This lack of transparency flouts the NCBE’s and ABA’s Code of Recommended Standards for Bar Examiners, which provides in pertinent part:
An applicant who fails a bar examination should have the right, within a reasonable period of time after announcement of the results of the examination, to see the applicant’s answers to the essay questions and the grades assigned thereto, and to compare each of these answers with an approved answer.18
The Tennessee Board of Law Examiners defies this recommended standard by not giving failing applicants an opportunity to review their essay questions and not providing any approved answers. Unlike the Tennessee essays, there are well-drafted, very detailed model answers to the MEE.
Critics may worry that the adoption of the UBE would take away state control of the bar exam. Such is not the case. If Tennessee adopts the UBE, the Tennessee Supreme Court and the Board of Law Examiners can still establish passing scores, make character and fitness decisions, determine who can sit for the bar exam, and adopt rules regarding the number of times an applicant may take the exam. In addition, although UBE essay questions and model answers are drafted by the NCBE, the TBLE will continue to grade the essay answers and determine the relative weight to give to each question. In other words, adopting the UBE will not diminish state control but will improve the quality of the exam.
1 Robert Jarvis, An Anecdotal History of the Bar Exam, 9 Geo. J. Legal Ethics 359, 359 (1995).
2 David L. Hudson, Jr., Professional Responsibility 14 (2015).
3 John G. Browning, Legally Speaking: If At First You Don’t Succeed, SE Texas Record, June 29, 2008.
4 Barbara Goldberg, Now It’s ADA John F. Kennedy, Jr., United Press Int’l, Aug. 20, 1989.
5 Jay Mathews, California’s Bar Exam Breaks Breaks More Lawyers Than It Makes, Wash. Post, Aug. 2, 1983, at A2.
6 David Whelan, Law Exam is a Real Bar for Aspirants, Contra Costa Times, Dec. 7, 2003, at G7.
7 Maura Dolan, A High Bar for Lawyers, L.A. Times, Feb. 21, 2006, at A1.
8 Harrison Barnes, 10 Ways to Bounce Back After Failing the Bar and Pass on Your Next Attempt, LawCrossing.
9 Cornelius Chapman, No bar too low for lawyers turned pols, Boston Herald, June 25, 2012, at 19.
10 Marc Lacey, Passing the Test of Time: After 48 Tries, Compton Man Masters Bar Exam, L.A. Times, May 31, 1999.
11 Tamara Tabo, When Bar Scores Plummet, Who Will Examine the Examiners?, Above the Law (Nov. 7, 2014).
12 National Conference of Bar Examiners, Preparing for the MEE.
13 ABA Section of Legal Education and Admissions to the Bar, Council Resolution, Endorsing Consideration of a National Bar Exam (Aug. 6, 2010).
14 ABA House of Delegates Resolution 109.
15 Erwin Chemerinsky, A better way to license lawyers, L.A. Times (May 11, 2015), at A19.
16 Jim Nowogrocki, Testing the UBE: Missouri Benefits From Uniform Bar Exam, Law360 (July 25, 2016).
18 NCBE, Comprehensive Guide to Bar Admission Standards, at vii (Code of Recommended Standards for Bar Examiners) (2016).
By Seth R. Ogden, Alex Huffstutter, and Edward D. Lanquist
SCOTUS dealt another blow to the Federal Circuit patent jurisprudence with substantial financial ramifications for litigants, by abrogating its bright-line Seagate test1 for enhanced damages. Treble damages no longer depend on an “objectively reasonable,” and often after-the-fact, noninfringement or invalidity opinion. Patentees now possess increased negotiating leverage where a defendant knew the infringement risk, and their competitors must assess the need for an opinion of counsel earlier in product development.
Historical Overview of Enhanced Damages for Patent Infringement
Patent infringement is a strict liability tort; liability does not depend on intent. However, intent may govern the size of the damages award. Courts may award treble damages for “willful” infringement.
In 2007, the en banc Federal Circuit promulgated a stringent two-prong willfulness test (the Seagate test). The first prong required an objectively high likelihood that the infringer’s actions constituted infringement of a valid patent. The infringer’s state of mind was of no consequence.2 The second prong required that the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.”3 A court could award enhanced damages only upon satisfaction of both prongs. That award was subject to a convoluted trifurcated appellate review, with objective recklessness reviewed de novo, subjective knowledge reviewed for substantial evidence, and the ultimate decision reviewed for abuse of discretion.4 Consequently, the district court’s discretion failed to receive much deference.
In Halo v. Stryker, SCOTUS streamlined the “unduly rigid” two-part test5 by discarding the objective prong.6 Now, a preponderance of the evidence standard applies7, and enhanced damages should be “based on all the facts and circumstances” to punish bad-faith disregard of patent rights rather than reward counsel’s resourceful opinion drafting.8
Patentees Have Gained Increased Negotiating Leverage
Halo lowers the bar for enhanced damages. An accused infringer’s financial risk, and the concomitant pressure that can be applied by a patentee during settlement negotiations, has increased.
First, “many of the most culpable offenders” are no longer shielded by the objective recklessness prong.9 The Seagate bright-line test made the infringer’s ability to “muster a reasonable (even though unsuccessful) defense at the infringement trial” dispositive, even if unaware of the defense at the time of infringement.10 “[S]omeone who plunder[ed] a patent … [could] nevertheless escape any comeuppance under [35 U.S.C.A.] § 284 solely on the strength of his attorney’s ingenuity.”11 Now, culpability is measured against the infringer’s knowledge at the time of his or her conduct.12
Nonetheless, Halo’s true impact remains to be seen. The Federal Circuit recently held that, although subjective willfulness supports an enhanced damages award, objective reasonableness is still relevant in evaluating the totality of the circumstances.13 And district courts’ deference to jury findings of subjective willfulness has varied. Judge Reindinger of the Western District of North Carolina determined that the jury’s “finding standing alone is sufficient to support a finding of willfulness.”14 Other courts’ “sound discretion” led them to “decline to award . . . enhanced damages despite the jury’s finding of willful infringement.”15
Second, the preponderance of the evidence standard—the same standard that governs proof of infringement—makes willfulness easier to prove at trial.16 As a result, district courts will theoretically defer to jury determinations based on sufficient record evidence.17
Third, the abuse of discretion standard of review will promote affirmance.18 SCOTUS scolded the Federal Circuit for its unfounded “concern that district courts may award enhanced damages too readily, and distort the balance between the protection of patent rights and the interest in technological innovation.”19 Defendants will be less likely to expend resources appealing enhanced damages awards.
Consequences for Businesses Competing with Patented Technologies
To shield against a willfulness determination, a patentee’s competitors should be proactive in obtaining a competent opinion of counsel. Opinions should be obtained early in the product development process “before the initiation of any possible infringing activity.”20 Noninfringement opinions should be updated upon major product design revisions. There is no affirmative duty to obtain an opinion,21 but even in the wake of Halo, opinions of counsel will remain the gold standard among willfulness defenses.22
A good-faith belief of invalidity or noninfringement should avoid “increased damage or attorney fees imposed solely because a court subsequently holds that belief unfounded.”23 Thus, the ultimate legal correctness of the opinion is not determinative,24 only that the defendant demonstrates he or she relied on the opinion’s advice.25 Nevertheless, good-faith reliance requires both timely acquisition26 of a competently drafted opinion.27 Competency applies to both the qualifications of the person giving the opinion and the opinion’s content.28 Opinions from non-patent counsel or lay persons are insufficient.29
The decision whether to obtain an opinion of counsel depends on several factors: the likelihood of litigation, the litigation history of the patentee and the patent at issue, the patent licensing history, the importance of and revenue associated with the products implicated by the patent, and whether the opinion will be consistent with trial strategy and thus potentially useful at trial.30
Halo v. Stryker appears to lower the bar to obtaining enhanced damages for patent infringement. Patentee’s negotiating leverage has increased, but this decision creates an opportunity for potential infringers. An opinion of counsel obtained before commencing potentially infringing activity provides litigation counsel with a valuable tool to avoid a treble damages award.
1In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007), abrogated by Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923 (2016).
3 Halo, 136 S. Ct. at 1930 (citing Seagate, 497 F.3d at 1371).
4 Id.; see also Bard Peripheral Vascular, Inc. v. W.L. Gore & Assoc., Inc., 682 F.3d 1003, 1005, 1008 (Fed. Cir. 2012); Spectralytics, Inc. v. Cordis Corp., 649 F.3d 1336, 1347 (Fed. Cir. 2011), abrogated by Halo, 136 S. Ct. 1923.
5 Halo, 136 S. Ct. at 1932 (quoting Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1751 (2014)).
6 Halo, 136 S. Ct. at 1933.
7 Id. at 1934.
8 Read Corp. v. Portec, Inc., 970 F.2d 816, 826 (Fed. Cir. 1992).
9 Halo, 136 S. Ct. at 1932.
10 Id. at 1933.
13 WesternGeco LLC v. Ion Geophysical Corp., 837 F.3d 1358 (Fed. Cir. 2016) (citing Halo, 136 S. Ct. 1923 at 1930) (an attorneys’ fees case, for the proposition that totality of circumstances applies in willfulness cases).
14 Sociedad Espanola de Electromedicina Y Calidad, S.A. v. Blue Ridge X-Ray Co., No. 1:10-CV-00159-MR, 2016 WL 3661784, at *2-3 (W.D. N.C. July 8, 2016).
15 Presidio Components, Inc. v. Am. Tech. Ceramics Corp., No. 14-CV-02061, 2016 WL 4377096, at *10 (S.D. Cal. Aug. 17, 2016); see also Trs. of Boston Univ. v. Everlight Elecs. Co., Nos. 12-11935, 12-12326, 12-12330, 2016 WL 3976617, at *4 (D. Mass. July 22, 2016).
16 Halo, 136 S. Ct. at 1934 (quoting Octane Fitness, 134 S. Ct. at 1758) (“[P]atent-infringement litigation has always been governed by a preponderance of the evidence standard.”).
17 See Radware, Ltd. v. F5 Networks, Inc., No. 5:13-CV-02024, 2016 WL 4427490, at *3-5 (N.D. Cal. Aug. 22, 2016) (granting judgment as a matter of law of no willfulness where evidence of defendant’s knowledge of the patent-at-issue consisted of citation to a patent number in correspondence from the patent office and circumstantial evidence).
20 Underwater Devices, Inc. v. Morrison-Knudsen Co., Inc., 717 F.2d 1380, 1390 (Fed. Cir. 1983), overruled by Seagate, 497 F.3d 1360.
21 35 U.S.C.A. § 298 (stating that the failure to obtain an opinion of counsel “may not be used to prove that the accused infringer willfully infringed the patent.”); see also Knorr-Bremse System Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337, 1345-46 (Fed. Cir. 2004) (en banc).
22 See, e.g., Charles S. Barquist & Bita Rahebi, Willfulness Post-Seagate and the Decision to Rely on Advice of Counsel, 2 Patent Litig. 112, 123 (2010); see also Neil C. Jones, Ashley B. Summer & Brian D. McAlhaney, Using Opinion Letters and Defending Against Willful Infringement, 2 Patent Litig. 171, 185 (2010).
23 Kloster Speedsteel AB v. Crucible Inc., 793 F.2d 1565, 1580 (Fed. Cir. 1986).
24 Id. at 1581, as amended on reh’g (Aug. 15, 1986), overruled by Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH, 383 F.3d 1337 (Fed. Cir. 2004).
25 Johns Hopkins Univ. v. CellPro, Inc., 152 F.3d 1342, 1364 (Fed. Cir. 1998) (finding the opinions must be competent and followed).
26 Michlin v. Canon, Inc., 208 F.R.D. 172, 174 (E.D. Mich. 2002) (“[I]t is difficult to understand how there could be a defense to willful infringement based on an opinion rendered after the litigation began.”).
27 Ortho Pharm. Corp. v. Smith, 959 F.2d 936, 944 (Fed. Cir. 1992) (noting that an opinion must be “thorough enough, as combined with other factors, to instill a belief in the infringer that a court might reasonably hold the patent is invalid, not infringed, or unenforceable.”).
28 Jurgens v. CBK, Ltd., 80 F.3d 1566, 1572 (Fed. Cir. 1996).
29 Jepson, Inc. v. Makita USA, Inc., No. CV 90-4312-GHK, 1994 WL 543226, at *7 (C.D. Cal. May 27, 1994); see also Ortho Pharm., 959 F.2d at 944 (stating competent opinion letters were obtained from “experienced patent counsel”).
30 William L. Lafuze et al., Exculpatory Patent Opinions and Special Problems Regarding Waiver of Privilege, 6 J. Marshall Rev. Intell. Prop. L. 313, 360 (2007).