High Court Requests CAFC Reconsider Patent Malpractice After Gunn v. Minton

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By Tony Dutra  


In a surprise to no one, the Supreme Court on Feb. 25 granted a petition for writ of certiorari, vacated an opinion on jurisdiction over patent attorney malpractice claims by the U.S. Court of Appeals for the Federal Circuit, and remanded the case to the appeals court for further consideration (Byrne v. Wood, Herron & Evans L.L.P., U.S., No. 11-1497, review granted, decision vacated, remanded 2/25/13).

The decision was unsurprising after the Supreme Court's decision in Gunn v. Minton, No. 11-1118 (U.S. Feb. 20, 2013) (35 PTD, 2/21/13). The court there held unanimously that patent attorneys should normally face legal malpractice claims in state court despite the exclusive grant of jurisdiction over patent claims to federal courts. That ruling overturned a state court's decision that it was obliged to move the case to federal court under Federal Circuit precedent.

The remand asked the appeals court to reconsider its opinion in light of Gunn v. Minton. The Gunn opinion appears to leave little wiggle room for federal court jurisdiction. “Although such cases may necessarily raise disputed questions of patent law, those cases are by their nature unlikely to have the sort of significance for the federal system necessary to establish jurisdiction,” the court said.

On the same day, the high court denied cert in a California case concerning patent licenses in which the state court asserted jurisdiction.

Underlying Issue in Byrne

The cert petition in Byrne came from a denial of en banc rehearing of the issue in the Federal Circuit.

Stephen E. Byrne lost a patent infringement lawsuit against Black & Decker Corp. Afterward, he blamed the Wood, Herron & Evans law firm for negligently failing to secure adequate patent protection for his invention during patent prosecution.

Byrne sued the law firm for malpractice in Kentucky state court, but the matter was removed to the U.S. District Court for the Eastern District of Kentucky because it was deemed to involve a substantial question of patent law. The Federal Circuit affirmed jurisdiction in an unpublished opinion (231 PTD, 12/1/11).

Byrne requested rehearing en banc, which the court denied. Byrne v. Wood, Herron & Evans L.L.P., 676 F. 3d 1024, 102 U.S.P.Q.2d 1073 (Fed. Cir. 2012).

In dissent, Judge Kathleen M. O'Malley, joined by Judge Evan J. Wallach, suggested that the court revisit its jurisprudence on the issue.

Judge Timothy B. Dyk wrote a concurring opinion, joined by Judges Pauline Newman and Alan D. Lourie, the two longest serving active judges on the court. Their opinion relied on companion cases decided by the Federal Circuit in 2007. Air Measurement Technologies Inc. v. Akin Gump Strauss Hauer & Feld L.L.P., 504 F.3d 1262, 84 U.S.P.Q.2d 2002 (Fed. Cir. 2007), and Immunocept L.L.C. v. Fulbright & Jaworski L.L.P., 504 F.3d 1281, 85 U.S.P.Q.2d 1085 (Fed. Cir. 2007).

The Supreme Court's opinion in Minton v. Gunn noted those two cases, but did not specifically say they constituted bad law.

However, the court specifically addressed the argument that allowing state courts to resolve this type of claim will not undermine development of the uniform body of patent law in federal court. Federal courts will still have exclusive jurisdiction “over actual patent cases,” it said. It added that even if novel questions of patent law arise for the first time in a state court case within a case, “they will at some point be decided by a federal court in the context of an actual patent case, with review in the Federal Circuit.”

Cert Denied When State Kept Case

The court denied review of a related case that challenged the decision by the Court of Appeal of the State of California to keep a different kind of claim with a patent issue rather than move it to federal court.

Patent licensor Caldera Pharmaceuticals Inc. filed a complaint seeking $400 million in damages for license breach and fraud as to patent applications with rights owned by the Regents of the University of California. Though the charges revolved around actions taken by the Regents in prosecuting patents--directed to methods used in the development of chemicals and pharmaceuticals--the court paid strict attention to the text of Caldera's actual complaint, which only compared the licensor's conduct to the terms of the license agreement. Caldera Pharmaceuticals Inc. v. Regents of the University of California, No. A129727 (Cal. Ct. App. April 24, 2012) (82 PTD, 4/30/12).

Caldera did not present a malpractice claim, and the state court rejected the Regents' attempts to characterize the claims as necessarily invoking the Federal Circuit's malpractice jurisprudence.

The court also stated that “just because a patent is in the vicinity does not inevitably and invariably bring the controversy within the ambit of exclusive federal jurisdiction,” the California court said. Its conclusion, in line with the reasoning in Gunn v. Minton, was that “it does not appear that a substantial issue of patent law is essential to Caldera's causes of action.”