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High Court Has 2nd Chance To Hear Patent Malpractice Issue
By Ryan Davis
Law360, New York (June 05, 2012, 9:05 PM ET) -- While the U.S. Supreme Court on Monday declined to
hear a case dealing with whether patent-related malpractice suits belong in state or federal court, a
question that has recently sparked debate among the judges on the Federal Circuit, the issue is not yet
settled, with a potentially stonger case still up for high court consideration, attorneys say.
The justices on Monday refused to hear Memorylink Corp.'s argument that the Federal Circuit had
overreached when it affirmed a district court's dismissal of its state law patent malpractice claims
against Motorola Inc.'s in-house attorneys. But an appeal from Texas that remains pending before the
Supreme Court may present a better vehicle to address the issue, said Paul Devinsky of McDermott Will
& Emery LLP.
In that case, Gunn v. Minton, the Texas Supreme Court ruled in December that federal court was the
proper venue for an inventor's suit claiming Williams Squire & Wren LLP and other firms negligently
represented him in litigation over his securities trading network patent.
"I don't necessarily think that because the Motorola case was declined, the Texas case is dead,"
Devinsky said.
Compared to the unusual situation in the Memorylink case, where one company accused another of
legal malpractice, the Texas case better crystallizes the issue because it involves a client suing his law
firms, he said.
"That one really does feel like a bona fide patent malpractice claim," he said.
Attorneys noted that Motorola had declined to respond to Memorylink's petition and that the high
court did not request a response. The respondent in the Texas case also declined to respond, but the
Supreme Court has asked for a response to be filed by June 13, possibly signaling the court's interest in
the case.
Regardless of whether the high court takes it up, the question of jurisdiction for patent malpractice
cases is an intriguing one, said Paul Swanson of Lane Powell PC.
"It generally ends up devolving into a political litmus test on your view of federal versus state court
jurisdiction, which is a sensitive issue for all courts," he said.
The principle that federal courts have exclusive jurisdiction over malpractice cases involving patents was
established only recently, with the Federal Circuit's 2007 ruling in Air Measurement v. Akin Gump
Strauss Hauer & Feld LLP.
In that case, the court held that because cases where a client claims that an attorney committed patent
malpractice necessarily involves questions of infringement and other patent issues, such cases should be
heard in the federal courts, which have jurisdiction over patent law.
In the past several months, the Federal Circuit has ruled on several cases involving patent malpractice
claims, and in nearly all, the majority has ruled that federal jurisdiction is appropriate because of the
importance of uniform application of patent law.
"State court decisions imposing attorney discipline for conduct before the [U.S. Patent and Trademark
Office] and in federal patent litigation based on an incorrect interpretation of patent law are almost
certain to result in differing standards for attorney conduct," the court wrote in its March decision in
Byrne v. Wood Herron & Evans LLP.
However, Federal Circuit Judge Kathleen O'Malley has dissented in most cases, arguing that malpractice
cases should be heard in state court because putting state law causes of action in federal court upsets
the balance of the federal and state judicial systems.
Malpractice cases often involve questions of whether a patent would have been issued or litigation
would have had a different result if the attorney had acted differently — not questions of patent law per
se, she said.
"Finding federal jurisdiction over malpractice cases involving questions of hypothetical patent claims
opens the federal courthouse to an entire class of actions, thereby usurping state authority over this
traditionally state law tort issue," Judge O'Malley wrote in one case. At least two Federal Circuit judges
have joined her in different cases.
In the Texas case, Vernon Minton claimed that inadequate counsel by his attorneys in an infringement
case he filed against the Nasdaq Stock Market Inc. resulted in his patent being found invalid.
Minton's suit was filed in state court, and the attorney defendants were granted summary judgment.
After the summary judgment ruling, however, the Federal Circuit issued the Air Measurement ruling that
federal courts have sole jurisdiction over patent malpractice cases.
In a 5-3 ruling in December, the Texas Supreme Court ruled that Minton's case must be heard in federal
court. The case has since begun again from scratch in the Eastern District of Texas, but the attorneys
have asked the U.S. Supreme Court to review the ruling.
The majority of the Texas Supreme Court agreed with the Federal Circuit rulings that patent malpractice
cases should be heard in federal court. The dissent objected to forcing the defendants to relitigate in
federal court a case that they had already won in state court, and argued that "uniformity in patent law
is not the be-all and end-all of jurisprudence."
Malpractice cases in Texas should not be subject to precedent developed by the federal courts "largely
uninformed by the deep roots of Texas jurisprudence and the requirements of the Texas Constitution,"
the dissent argued.
Swanson said that the dissent made an eloquent case for the idea that federal courts should not have
jurisdiction over state law malpractice claims, which could be persuasive to the U.S. Supreme Court if it
takes the case.
Nevertheless, Swanson said that he believes patent malpractice cases should be kept in federal court
"when there's no getting around an extensive analysis of the patent."
He was involved in some such cases in state court before the Federal Circuit's 2007 ruling and said the
judges' lack of familiarity with patent law could be problematic.
When a malpractice case involves allegations that an attorney's error impacted prosecution or litigation
of a patent, state court judges often require "more expert testimony to fill in areas that are common
knowledge in federal court," which can increase the cost of litigation, he said.
"State court judges don't know how to do claim construction, so you end up with real communication
issues," he said. "They know the words and the concepts, but they've never gotten down and dirty in
reading a patent."
Devinsky said that there is possibly a middle ground between giving either state or federal courts
exclusive jurisdiction over patent malpractice claims. If a case involves particularly complex patent
issues, those matters could be referred to a federal court while the state court retains jurisdiction over
malpractice claims, he said.
While he said he was sympathetic to the arguments for uniform application of patent law, "it seems like
you don't have to kick the whole thing to federal court."
Devinsky said he had been swayed by Judge O'Malley's repeated dissents in the recent cases.
"I can't say I'd given it a lot of thought before she started beating that drum, but I'm listening to what
she's saying and it makes a lot of sense," he said.
--Editing by John Quinn and Elizabeth Bowen.
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