Negligence Letting Patent Application Lapse Doesn't Excuse Law Firm's Later Conduct

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By Blake Brittain

Dec. 3 — A third party's alleged negligence in letting a patent application lapse did not make it responsible for a law firm's alleged breach of fiduciary duty in concealing the lapse, the U.S. District Court for the District of Connecticut ruled Dec. 2.

The court determined that any negligence by the third party was unrelated to the question of whether the firm's subsequent actions were inappropriate, and dismissed the firm's claim for indemnification.

Harrier Technologies, Inc., which designs technologies for the petroleum industry, retained Kenyon & Kenyon LLP to file patent applications on its behalf. A patent application filed for Harrier in Saudi Arabia lapsed in 2006, and Kenyon said the lapse occurred due to negligence by CPA Global Ltd., an international intellectual property management company.

Harrier filed claims of fraud and breach of fiduciary duty against Kenyon for intentionally concealing that the Saudi application had lapsed and misleading Harrier about Kenyon's responsibility for the lapse. Kenyon countersued CPA for indemnification from Harrier's claims, and CPA moved to dismiss the counterclaim.

The court ruled that any negligence by CPA was irrelevant to Harrier's fraud and breach claims against Kenyon, and dismissed Kenyon's counterclaim for indemnification.

“Simply put, the argument that CPA’s negligence in failing to renew the patent application was primarily responsible for Kenyon’s alleged dishonesty and deception toward Harrier cannot stand,” the court said.

The court also said that Kenyon could not recover from CPA because Kenyon's knowledge of CPA's actions necessarily meant that Kenyon could not fulfill the common-law indemnification requirement of a lack of awareness of the third party's negligence.

To contact the reporter on this story: Blake Brittain in Washington at bbrittain@bna.com

To contact the editor responsible for this story: Tom P. Taylor at ttaylor@bna.com

Full text at http://www.bloomberglaw.com/public/document/Harrier_Techs_Inc_v_CPA_Global_Ltd_No_312cv00167WWE_2014_BL_33675.