• Exclusive Federal Court Jurisdiction over Patent Legal Malpractice Claims: Where Are We?
  • January 11, 2010 | Author: Paul D. Swanson
  • Law Firm: Lane Powell PC - Seattle Office
  • Have the twin Air Measurement and Immunocept decisions succeeded in establishing an exclusively federal forum for patent legal malpractice claims?

    The answer is: NOT YET. That inconclusive answer makes crafting your claim theories and drafting a well pleaded complaint or answer critical, if your goal is to have a federal court decide the merits of your case.

    A jurisdictional storm front is gathering during the two years since the Federal Circuit published two opinions holding that federal courts have exclusive jurisdiction over legal malpractice claims when the merits of those claims require the resolution of a substantial question of federal patent law.

    One emerging line of cases rejects the expansion of federal jurisdiction over what is classically a state cause of action. Some courts have ruled that the Federal Circuit’s Air Measurement and Immunocept cases are non-binding authority.

    Two recent cases are illustrative, which are provided after the jump.

    Recent case #1: Warrior Sports, Inc. v. Dickenson Wright, P.L.L.C.

    In Warrior Sports, Inc. v. Dickenson Wright, P.L.L.C., (E.D. Mich.), the malpractice allegations involved the impact of a lapsed (later reinstated) patent and alleged failures to communicate with the client during patent litigation.

    Soon after the complaint's filing, the federal district court issued an order to show cause why the case should not be dismissed for lack of federal court jurisdiction. Despite both the parties’ agreement that Air Measurement and Immunocept mandated federal court jurisdiction, the court dismissed the complaint without prejudice. See Order Denying Defendant’s Mot. for Recons (pdf).

    The federal judge brushed aside as “sub-inquiries” the fact that the adjudication of professional liability issues would turn on a resolution of underlying patent issues. Instead, the judge determined that Federal Circuit decisions are not binding on a lower court’s determination of whether subject matter jurisdiction exists in the first instance.

    Further, the assigned judge also questioned whether an appeal of the subject-matter jurisdictional decision to the Federal Circuit would be proper. Id. at 10, n.2. We should have Federal Circuit’s answer to that question, since the defendant law firm has filed an appeal with the Federal Circuit.

    Recent case #2: Minton v. Gunn

    Similarly, in Minton v. Gunn (pdf), a divided Texas appellate court held that a legal malpractice claim premised on an unsuccessful outcome of an underlying patent infringement lawsuit was not subject to exclusive federal court jurisdiction.

    The client plaintiff alleged he had lost his $100M patent lawsuit because his lawyers had failed to timely plead and brief the experimental use doctrine as a defense to a successful § 102(b) on-sale bar summary motion.

    The majority opinion held that the federal patent issues were primarily factual and therefore not substantial. In addition, the majority determined that federal court jurisdiction would usurp state court authority over a traditional domain of state law.

    The majority further held that the Federal Circuit decisions were not binding on the Texas state court, reasoning that a Texas state court was only obligated to follow higher Texas courts and the United States Supreme Court.

    Because the lawyer defendants prevailed in having the malpractice claims summarily dismissed, the plaintiff was in the odd position of attacking his own decision to file in state court.

    Connecting these cases to Air Measurement and Immunocept

    Despite this emerging line of contrarion cases, most federal and state cases are adhering to the Air Measurement and Immunocept holdings and are dismissing state court claims for patent legal malpractice.

    Some practice pointers emerge from this split in authorities. At a initial pleading stage of a patent malpractice case, it may be very difficult to forecast all the patent issues that might come into play a year or more later at trial.

    Yet, there is one patent issue that is material in many cases - the valuation of the alleged patent rights, which in turns depends on patent claim scope. See TattleTale Portable Alarm Systems, Inc. v. Calfee, Halter & Griswold (pdf)(in a case involving an alleged failure to pay patent maintenance fees, the court observed that the “damages in the case sub judice cannot be determined without a determination of patent scope.”).

    The amount of damage asserted in patent legal malpractice cases tends to be much higher than in many other malpractice case. his underlying damages analysis is necessary because of the “case-within-a case” or “suit-within-a-suit” nature of legal malpractice claims in general.

    To avoid any lurking statute of limitations issue--remember that a federal court can review its subject matter jurisdiction at any time pursuant to Fed. R. Civ. P. 12(h)(3)--simultaneous filing of state and federal court complaints may be warranted despite the resulting inefficiencies involved.

    If the federal court declines to exercise removal jurisdiction (removal is invariably sought by defendants), the federal court complaint may be dismissed and the state court claim remanded.

    Complaints alleging more generic standard of care violations that commonly give rise to legal malpractice allegations--missed deadlines, failures to communicate with the client in a timely and forthright matter, and other ethical lapses--are more likely to trigger federal court dismissal.

    The Warrior Sports dismissal is illustrative. Even if patent legal malpractice damages must be analyzed through the lens of patent law, defendants appear to have a more difficult time persuading judges that the resolution of such damage issues will turn on a substantial issue of federal patent law.

    It may take years before the Supreme Court addresses and resolves this emerging split in case authorities.

    Until then, how courts will be to adjudicating a special class of patent legal malpractice claims will be highly dependent on: (1) whether a complaint details alleged errors that appear to be specific to patent prosecution and litigation; and (2) the federalism predilections of the assigned judges.