Commercial Litigation and Arbitration

Federal Circuit Extends Federal Jurisdiction to All Patent-Related Legal Malpractice Claims, Even Where No Patent Has Issued and No Actual Patent Rights Are at Stake

Byrne v. Wood, Herron & Evans, LLP, 2012 U.S. App. LEXIS 6021 (Fed. Cir. Mar. 22, 2012) (denial of petition for rehearing en banc):

Dyk, J., Concurring

Under the Supreme Court's decision in Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 809 (1988), federal jurisdiction under 28 U.S.C. § 1338 exists if "the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims." We have followed Christianson in subsequent cases involving legal malpractice, holding that federal jurisdiction exists, for example, "when the adjudication of the malpractice claim requires the court to address the merits of the plaintiff's underlying patent infringement lawsuit," Warrior Sports, Inc. v. Dickinson Wright, P.L.L.C., 631 F.3d 1367, 1371 (Fed. Cir. 2011), and when a "claim drafting error is a necessary element of the malpractice cause of action," Immunocept, LLC v. Fulbright & Jaworski, LLP, 504 F.3d 1281, 1285 (Fed. Cir. 2007). In so holding, we have recognized the strong federal interest in patent law uniformity as manifested by Congress's decision to give exclusive jurisdiction to the federal district courts and on appeal to this court. See Immunocept, 504 F.3d at 1285-86; Air Measurement Techs., Inc. v. Akin Gump Strauss Hauer & Feld, L.L.P., 504 F.3d 1262, 1272 (Fed. Cir. 2007); see also USPPS, Ltd. v. Avery Dennison Corp., 647 F.3d 274, 284 (5th Cir. 2011). All of the malpractice cases that we have held are within the scope of section 1338 as pleaded have required the resolution of substantive patent law issues.

Footnote 1. See, e.g., Warrior Sports, 631 F.3d at 1372 ("[T]o prove the proximate cause and injury elements of its tort claim, Michigan law requires [plaintiff] to show that it would have prevailed on its infringement claim . . . ."); Carter v. ALK Holdings, Inc., 605 F.3d 1319, 1325 (Fed. Cir. 2010) ("[T]he determination of [the patent attorney's] compliance with the MPEP and the CFR is a necessary element of [plaintiff's] malpractice cause of action . . . ."); Davis v. Brouse McDowell, L.P.A., 596 F.3d 1355, 1360 (Fed. Cir. 2010) ("[Plaintiff] can prevail only by proving that U.S. patents would have issued on her applications but for Defendants' malpractice--i.e., that her inventions were patentable under U.S. law."); Touchcom, Inc. v. Bereskin & Parr, 574 F.3d 1403, 1413 (Fed. Cir. 2009) ("[Plaintiff] will be required to show that, had appellees not omitted a portion of the source code from its application, the resulting U.S. patent would not have been held invalid."); Immunocept, 504 F.3d at 1285 ("[T]here is no way [plaintiff] can prevail without addressing claim scope."); Air Measurement Techs., 504 F.3d at 1269 ("[T]he district court will have to adjudicate, hypothetically, the merits of the infringement claim.").

The existence of these issues necessarily makes the issues "substantial" within the meaning of Christianson, 486 U.S. at 809, and indicates a "serious federal interest" in federal adjudication within the meaning of Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308, 313 (2005).

Judge O'Malley's dissent, in arguing that section 1338 does not confer jurisdiction over malpractice claims dependent on federal patent law, minimizes the substantial federal interest in federal adjudication of the patent law issues in these cases. Patent-related malpractice claims necessarily involve attorney conduct before the U.S. Patent and Trademark Office ("PTO") or before the federal courts (because of our exclusive jurisdiction), and there is a substantial federal interest in ensuring that federal patent law questions are correctly and uniformly resolved in determining the standards for attorney conduct in these proceedings, even when the patent law issue is case-specific. See generally Grable, 545 U.S. 308. Indeed, attorney conduct in patent cases is implicated by the patent law itself, such as by the doctrine of inequitable conduct, the exceptional-case statute, and the statutory provisions authorizing regulation of PTO practice. See Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276, 1290 (Fed. Cir. 2011) (en banc) (noting that an attorney's submissions to the PTO may be a basis for an inequitable conduct finding); Brooks Furniture Mfg., Inc. v. Dutalier Int'l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005) (noting that attorney misconduct may be a predicate for an exceptional case finding under 35 U.S.C. § 285); Carter v. ALK Holdings, Inc., 605 F.3d 1319, 1324 (Fed. Cir. 2010) ("The standards for practice before the PTO are governed by federal law . . . ."). So too all federal patent rights are created by actions of a federal agency, the PTO. See Grable, 545 U.S. at 315 ("The Government thus has a direct interest in the availability of a federal forum to vindicate its own administrative action . . . ."). ***

O’Malley, J., Dissenting

In 2007, the Federal Circuit weighed in on this issue in what one commentator has described as a "substantial shift in the view of whether federal or state courts have jurisdiction over patent-related legal malpractice claims." Robert W. Hesselbacher, Jr., Which Court Decides? Legal Malpractice Claims Arising from Patents, 51 No. 5 DRIFTD 32 (May 2009). In that year, a single panel of this court issued two decisions on the same day that, according to the panel, resolved an "issue of first impression" — i.e., whether § 1338 jurisdiction exists where a legal malpractice claim requires resolution of an underlying question of patent law. See Air Measurement Techs., Inc. v. Akin Gump Strauss Hauer & Feld, L.L.P., 504 F.3d 1262 (Fed. Cir. 2007) ("AMT"); Immunocept, LLC v. Fulbright & Jaworski, LLP, 504 F.3d 1281 (Fed. Cir. 2007).

Since 2007, this court has issued three more precedential decisions applying AMT and Immunocept to other malpractice claims involving an underlying patent prosecution or litigation error. See Warrior Sports, Inc. v. Dickinson Wright, P.L.L.C., 631 F.3d 1367 (Fed. Cir. 2011) (vacating district court's order remanding a malpractice claim alleging patent prosecution errors); Davis v. Brouse McDowell, L.P.A., 596 F.3d 1355 (Fed. Cir. 2010) (finding § 1338 jurisdiction over a malpractice claim based on an attorney's failure to file timely patent applications); Touchcom, Inc. v. Bereskin & Parr, 574 F.3d 1403 (Fed. Cir. 2009) (finding that the plaintiff's malpractice claims alleging patent prosecution errors arose under federal law). Through these cases, we have gone so far as to extend § 1338 jurisdiction to cases in which no patent has issued and no actual patent rights are at stake. See Davis, 596 F.3d at 1361-62 (extending jurisdiction where the plaintiff would have to prove that, but for her attorney's missed patent application filing deadline, her invention would have been patentable).

Footnote 4 The panel majority in the present matter emphasized that cases involving only a hypothetical patent clearly do not implicate a substantial federal interest. See Byrne v. Wood, Herron & Evans, LLP, 2011 WL 5600640, at *5 (Fed. Cir. Nov. 18, 2011) ("[W]e believe this court should re-evaluate the question of whether jurisdiction exists to entertain a state law malpractice claim involving the validity of a hypothetical patent . . . ." (emphasis in original)). Other courts have articulated the same point. E.g., Roof Technical Servs., Inc. v. Hill, 679 F. Supp. 2d 749, 753 (N.D. Tex. 2010) (Explaining that, "there is a federal interest in the uniform application of patent laws, but that interest is not implicated here, where no patent rights are actually at stake"); Genelink Biosciences, Inc. v. Colby, 722 F. Supp. 2d 592, 598-99 (D.N.J. 2010) (Finding that "because no patent was issued, no patent rights are at stake, and there are therefore no fears that substantive patent law would [be] altered by inconsistency"). Such cases present the most clear-cut situation in which federal question jurisdiction is not appropriate because they have zero potential impact on the validity or enforceability of an issued patent. But that should not suggest that malpractice cases in which the underlying actions involved issued patents properly belong in federal court. In virtually every patent-related malpractice action that requires a "case within a case" analysis, there will be a hypothetical patent issue raised — i.e., in a world where no malpractice occurred, would the patentee have fared better, for example, in its patent application or infringement suit? In that sense, the patent issue in any malpractice action will involve only an academic inquiry into what likely would have happened absent the attorney negligence, and the answer will affect only the result of the state law claim, not the rights or scope of any live patent.

*** Federal Circuit case law on this issue has been out of step with that of other federal and state courts.

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