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Patent Practice Professional Liability Reporter

Your Pacific Northwest Law Firm

The Patent Legal Malpractice Implications of “Walker Process” Antitrust Claims

By Paul D. Swanson on Posted in Conflicts of Interest, Inequitable Conduct, Insurance Claims, Legal Malpractice, Patent Litigation, Patent Prosecution, Proximate Causation, Rules of Professional Responsibility

As experienced trial lawyers know, successfully trying or defending a case is all about presenting a compelling, understandable theme and narrative that comports with a judge and jury’s common sense and experience.

Juries especially are prone to favor litigants and lawyers they like and case theories they easily understand.  That is human nature on display in the courtroom.

Certain types of patent claim theories and defenses possess greater “narrative allure” than others.  In patent litigation, the inventor’s journey of discovery is often a key trial narrative, including a recitation of the trials and tribulations incurred on his or her way to obtaining an official U.S. patent—together with its certified seal and blue ribbon.

For those accused of infringing patents—whether through being named as a defendant or identified as a culprit in a cease-and-desist letter writing campaign—the best choice for a compelling defense story is often less apparent.  Affirmative defenses, compulsory counterclaims or declaratory judgment causes of action are often asserted in blunderbuss fashion in order to preserve any and all claim or defense theories.

Patents and their dense, impenetrable prose and complicated technical and scientific jargon often make little sense to the uninitiated—i.e., to almost everyone other than inventors, patent prosecutors, expert witnesses, and patent litigators.  Advances in cognitive science are now showing that jurors will seek to avoid the mental strain associated with deciphering difficult trial testimony and jargon, and will instead rely on simpler, preconceived notions of how businesses and their executives operate in rendering their jury verdict decisions.[1]

By virtue of its relative simplicity and the seeming ease by which it can be understood by a lay jury, a “Walker Process” antitrust claim offers an appealing defensive/offensive claim theory for alleged patent infringers.  Named after a leading Supreme Court case[2] decided in 1965, a Walker Process claim stands for the proposition that “the enforcement of a patent procured by fraud on the Patent Office may be violative of § 2 of the Sherman Act provided that the other elements necessary to a § 2 [monopolization] claim are present.”[3]

The financial incentives for pursuing a Walker process claim are quite significant: a prevailing litigant may be able to recover treble damages and attorneys’ fees.  These claims most often appear as a compulsory counterclaim to an allegation of patent infringement.  However, they can also be asserted affirmatively, along with declaratory judgment claims for patent non-infringement, invalidity and unenforceability.

The jury appeal and potential monetary rewards of a Walker Process claim also raise corollary patent legal malpractice risks for both parties.  For the party prevailing on such a claim, the risks for the other side are obvious: a patent has been held unenforceable due to inequitable conduct and the client is facing a potentially huge monetary exposure or judgment for damages and the successful party’s attorneys’ fees and costs.  Even if the Walker Process claim is ultimately unsuccessful, the losing party may argue that the patent counsel’s prosecution conduct increased the litigation costs of enforcing a patent right and resulted in a weakened settlement position.

For the party who pursues and loses a Walker Process claim, the failure of the claim may well be due to an inability to meet one or more of the procedural and substantive requirements that accompany Walker Process claim litigation.  For example, if the client is not properly advised about these detailed requirements, or if proof was not appropriately marshalled and applied to various Walker Process claim elements, the failed claim may also subject the patent litigator to unwelcome malpractice exposure.

This article discusses both the potential jury appeal of and corollary patent legal malpractice risks associated one of the most alluring claims in the patent litigation pantheon. Continue Reading

Is it Time for Federal Courts to Stop Exercising Jurisdiction Over Patent Legal Malpractice Claims?

By Paul D. Swanson on Posted in Conflicts of Interest, Expert Witness, Federal Jurisdiction, Legal Malpractice, Patent Litigation, Patent Prosecution, Rules of Professional Responsibility

During past month when many patent practitioners may have been distracted by the “laws of nature” meaning of the Mayo v. Prometheus decision, the Court of Appeals for the Federal Circuit issued four precedential rulings confirming the exclusive authority of federal courts to adjudicate patent legal malpractice claims.  Only the Supreme Court can alter this fixed jurisdictional landscape.  Is this issue finally cert-worthy?

The Federal Circuit first held that federal courts should exercise exclusive jurisdiction over patent legal malpractice claims in two separate panel decisions issued in October 2007.  In the view of a super-majority of Federal Circuit judges, exclusive jurisdiction is a done deal.  As Judge Dyk stated in his concurring opinion denying a rehearing in the Byrne v. Wood Herron case, “I see no reason to revisit this court’s repeated holdings that where the outcome of malpractice cases turns on federal patent law, federal jurisdiction exists.”

But some of members of the Federal Circuit beg to differ with this jurisdictional result.  Two impassioned dissents and two begrudging concurrences authored by Judge Kathleen O’Malley may well compel SCOTUS review.

Judge O’Malley’s dissent case in the Byrne case is blunt.  She rebukes the Federal Circuit for its supposed jurisdictional land grab: “It is time we stop exercising jurisdiction over state law malpractice claims.”  Per O’Malley, rather than “force the Supreme Court to correct our jurisdictional mistakes, we should take this opportunity to do so ourselves.”  She is not alone in her convictions.  Judge Evan Wallach, the appellate court’s newest member, joined in Judge O’Malley’s dissent.

In dissenting from a denial of a Memorylink v. Motorola rehearing some three weeks later, Judge O’Malley again opined that this “court’s routine extension of jurisdiction to purely state-law malpractice claims is improper and conflicts with governing Supreme Court precedent.”

Having already dissented twice, Judge O’Malley reluctantly concurred with the Federal Circuit’s dismissal of the state law claims implicating patent law in the USPPS v. Avery Dennison decision issued on April 17, because “our case law compels that we exercise subject matter jurisdiction over it.”  Although she conceded the import of the Federal Circuit’s holdings, Judge O’Malley added a stinging rejoinder that the “case exemplifies the mischief our jurisdictional over-reaching has caused in situations where a state law claim involves an underlying patent issue.”  Interestingly enough, Judge Mayer (a Federal Circuit judge since 1987) joined in this concurring opinion.

Finally, in a decision issued on April 23, 2012, Judge O’Malley concurred in the result of the Federal Circuit’s decision in Landmark Screens v. Morgan, Lewis & Bockius, but wrote separately because “our case law in this area treads unduly into matters which are—and should remain—governed by state law [and] I encourage our court to address the scope of our jurisdiction in these matters en banc.”

With this kind of jurisdictional gauntlet being laid down, the filing of petitions for writs of certiorari appears imminent.  Will the Supreme Court seize on this opportunity to rein in an expansionist Federal Circuit?  Or will it deny any forthcoming cert petitions and implicitly bless the Federal Circuit’s exercise of authority over patent legal malpractice claims?  This brief article examines this question further in light of legislative history of the Federal Courts Improvement Act of 1982 and a review of Byrne, Memorylink, USPPS and Landmark Screens case facts. Continue Reading

The Perils of Patent Prosecution Delegation: A Cautionary Tale

By Paul D. Swanson on Posted in Expert Witness, Legal Malpractice, Patent Prosecution, Rules of Professional Responsibility

What happens when a start-up company (Protostorm) retains a sole practitioner to prepare provisional patent applications, another solo lawyer to prepare the corresponding U.S. non-provisional application, and yet another firm to file the resulting Patent Cooperation Treaty (“PCT”) application?  This is getting complicated, right?

Add to this mix these salient facts: (1) neither Protostorm nor its counsel appears to ever proofread the completed PCT patent application after it is filed; (2) Protostorm fails to pay its patent attorneys and closes up shop; and then (3) some five years later, the start-up principals learn that Google might be infringing upon their patent right.

The answer to this delegation of patent prosecution question is an abandoned, misdesignated PCT patent application and a flurry of client and attorney fingers all pointing at each other.  In other words, a patent legal malpractice mess that is very hard to resolve through summary judgment proceedings.

This Protostorm cautionary tale takes place against the immutable backdrop of a statute prohibiting the unauthorized practice of patent law.  35 U.S.C. § 33 provides that “[w]hoever, not being recognized to practice before the Patent Office, holds himself out or permits himself to be held out as so recognized or as being qualified to prepare or prosecute applications for patent, shall be fined not more than $1000 for each offense.”

A violation of 35 U.S.C. § 33 and related USPTO rules can have a profound, reverberating effect leading to patent unenforceability, as one Protostorm ethics expert opines.

The facts giving rise to the Protostorm legal malpractice claim will seem commonplace enough in our information age.  Protostorm wants to obtain worldwide patent rights for an online computer game and related software.  Its regular corporate counsel does not engage in patent work, so it refers the company to a lawyer (Kathy Worthington) who is knowledgeable about intellectual property matters.  By her own admission, she is not registered to practice before the USPTO.  Worthington, in turn, introduces her new client to Antonelli, Terry, Stout & Kraus, LLP (“ATS&K”), a law firm specializing in patent work.

All goes well with the preparation filing of a first U.S. provisional application.  Worthington prepares it and an ATS&K attorney (admitted to practice before the USPTO) reviews, signs and files it.  Worthington’s bills are sent to Protostorm’s corporate counsel for payment.  Protostorm is advised that a non-provisional patent application must be filed within one year in order to take advantage of the provisional patent application’s filing priority date.

Then patent prosecution runs head-on into a § 33 roadblock.  Worthington prepares and files a second provisional application to address some additional invention developments.  The second provisional patent application is reviewed by the Protostorm’s corporate counsel, but is not reviewed nor supervised by patent counsel authorized to appear before the USPTO. Continue Reading

Emerging Fissures in Exercising Federal Jurisdiction Over Patent Legal Malpractice Cases

By Paul D. Swanson on Posted in Federal Jurisdiction, Legal Malpractice

Over four years have elapsed since the Federal Circuit first held that federal courts possess exclusive jurisdiction over patent legal malpractice claims.  In Immunocept, LLC v. Fulbright & Jaworski, LLP, 504 F.3d 1281 (Fed. Cir. 2007), the court ruled that patent claim scope issues alleged in patent legal malpractice claim raise substantial federal issues.  Similarly, in Air Measurement Technologies, Inc. v. Akin Gump Strauss Hauer & Feld, L.L.P., 504 F.3d 1262 (Fed. Cir. 2007), the same Federal Circuit panel ruled that patent litigation malpractice allegations also raise substantial federal issues.

Alleged errors in patent prosecution and patent litigation both raise substantial federal issues because the “case-within-a-case” analytical structure of a legal malpractice claim generally requires an underlying analysis of patent law standards, proximate causation issues, and patent damages calculations.  In other words, the legal malpractice allegations cannot be determined without an analysis of the merits of the underlying patent right at issue.

The reasoning of the Immunocept/Air Measurement cases is increasingly under attack.  Even a Federal Circuit panel recently stated that “we believe this court should re-evaluate the question of whether federal jurisdiction exists to entertain a state law malpractice claim involving the validity of a hypothetical patent . . . .”  Byrne v. Wood, Herron & Evans, et al., 2011 WL 5600640 (Fed. Cir. 2011)(non-precedential decision).  Predictably, the losing appellant requested a rehearing of this case en banc.  That request is pending.

Federal Circuit jurisprudence presently does not make distinction about whether a hypothetical or issued patent claim is at issue for the federal jurisdictional purposes.  Both types of patent legal malpractice claims are subject to exclusive federal jurisdiction.  However, state and federal courts have seized on a distinction between hypothetical and issued patent claims as potentially dispositive of the jurisdictional determination. Continue Reading

The Jurisdictional Power of the “Case-Within-A-Case” Doctrine in Patent Legal Malpractice Litigation

By Paul D. Swanson on Posted in Inequitable Conduct, Patent Litigation, Proximate Causation

 

The Federal Circuit’s recent precedential decision, Warrior Sports, Inc. v. Dickenson Wright, P.L.L.C. (issued on January 11, 2011), demonstrates (once again) the sheer power and ability of the “case-within-in-case” doctrine to jurisdictionally transform a state law malpractice claim into a case arising under federal patent law.

In an unusual twist, the Warrior Sports plaintiff and defendants agreed that the federal court could exercise federal question jurisdiction over the patent legal malpractice claim. But the federal court judge (the Hon. Gerald E. Rosen from the Eastern District of Michigan) was not convinced. He issued a show cause order requiring the plaintiff to establish why the state law claim should not be dismissed for lack of federal subject matter jurisdiction.

The state law malpractice claim arose out of alleged administrative and litigation errors that occurred with respect to a reissued patent for a “Scooped Lacrosse Head” (U.S. Patent No. RE 38,216). As recited in the district court’s order dismissing the case, plaintiff claimed that defendants “(1) failed to pay a maintenance fee resulting the lapse of Warrior’s patent, (2) forced Warrior to settle previous litigation on terms Warrior considers unfavorable, (3) failed to timely effectuate the reinstatement of Warrior’s patent, and (4) committed sundry other breaches of their professional duties, the precise contours of which breaches are not altogether clear from the Complaint.”

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“It’s Too Late Baby, Now It’s Too Late Though We Really Did Try to Make It”: The Perils of Missing Patent Litigation Deadlines

By Paul D. Swanson on Posted in Patent Litigation

The recently concluded (and now appealed) Gardner v. Toyota Motor Corporation patent case offers yet another important lesson in the pitfalls of missing case schedule deadlines.  These deadlines inundate patent litigation, especially with the advent of many local patent rules.

Even the best substantive points and arguments can turn sour when they are brought by procedurally tardy litigants.  Arguing that “we really did try to make it” does not play well to a federal court audience, even if Carole King’s song “It’s Too Late” topped the Billboard record charts in 1971.

The plaintiff, Conrad Gardner, is the inventor of U.S. Patent No. 7,290,627, entitled “Extended Range Motor Vehicle Having Ambient Pollutant Processing.”  His case did not start out its life on a judge’s troublesome list, but it appears to have ended there.  If anything, Gardner’s patent claims had some very sympathetic hallmarks for a case venued in Seattle federal court.  Gardner is in his mid 70s.  In addition to being a former Boeing engineer, Gardner is a patent attorney and former patent examining attorney for the United States Patent and Trademark Office (USPTO).  Surely, he knows the ropes of patent prosecution.

The ’627 patent covers hybrid vehicle technology for automobiles.  More specifically, the patent “relates to the use of an internal combustion engine and separate electric motor for powering a hybrid vehicle.”   View Order    Gardner filed his patent lawsuit in 2008 claiming that Toyota’s Prius, Camry and two-wheel drive Highlander automobile models infringed the ’627 patent.

The numerical imbalance (2 vs. 6 attorneys) between plaintiff and defense counsel did not seem that overmatched when the case was first filed.  In addition to the plaintiff being a patent lawyer and former patent examiner, Gardner was represented by out-of-state patent counsel and a solo practitioner with extensive commercial litigation experience.  Five attorneys from the well-known Finnegen Henderson law firm entered appearances on behalf of Toyota, as well as a local counsel from a Seattle law firm.

So, how did the case unravel for Gardner?  A perplexing inability to meet case schedule deadlines provides an atmospheric explanation.  Much of Toyota’s consternation stemmed from Gardner’s tardy submissions with respect to simultaneous filings often required by local patent rules, e.g., proposed claim element terms for construction and disclosures of extrinsic evidence and responsive claim construction briefs.

Delays in filing simultaneous submissions can lead to a tactical advantage for the late filer—as Toyota would convincingly argue.  Gardner’s counsel appeared to make a habit of granting himself one more day to work on these “simultaneous” submissions.  It’s always nice—but certainly not fair—to know where the other side is coming from when preparing your so-called simultaneous submission.
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How a “Plague” of Inequitable Conduct Charges Curiously Became a “Scourge” and Why We Should Guard Against the Use of Pejorative Patent Terminology

By Paul D. Swanson on Posted in Inequitable Conduct

 

Infectious disease terminology serves as the reigning metaphor in Federal Circuit cases decrying the rampant assertion of inequitable conduct defenses in patent litigation. The Federal Circuit’s first use of the word plague in this context can be traced back to Burlington Indus., Inc. v. Dayco Corp., 849 F.2d 1418, 1422 (Fed. Cir.1988), when the court stated that “the habit of charging inequitable conduct in almost every major patent case has become an absolute plague.” (Emphasis added.)

“Inequitable conduct” charges at one time were more commonly labeled as “fraud on the Patent Office” claims. Because the latter label was deemed “pejorative,” it was dropped. But as the Dayco panel observed, “the change of name does make the thing itself smell any sweeter.” Id., at 1422.

Judge Pauline Newman is a frequent dissenter in Federal Circuit cases affirming the unenforceability of a patent based on an inventor’s or patent attorney’s alleged inequitable conduct. She describes the seeming proliferation of inequitable conduct defenses in patent litigation as follows:

“Inequitable conduct” in patent practice means misconduct by the patent applicant in dealings with the patent examiner, whereby the applicant or its attorney is found to have engaged in practices intended to deceive or mislead the examiner into granting the patent. It is a serious charge, and the effect is that an otherwise valid and invariably valuable patent is rendered unenforceable, for the charge arises only as a defense to patent infringement.

As this litigation-driven issue evolved, the law came to demand a perfection that few could attain in the complexities of patent practice. The result was not simply the elimination of fraudulently obtained patents, when such situations existed. The consequences were disproportionally pernicious, for they went far beyond punishing improper practice. The defense was grossly misused, and with inequitable conduct charged in almost every case in litigation, judges came to believe that every inventor and every patent attorney wallowed in sharp practice.

Ferring B.V. v. Barr Laboratories, Inc. 437 F.3d 1181, 1195 (Fed. Cir. 2006)(dissenting opinion).

The Federal Circuit’s en banc decision in Kingsdown Medical Consultants, Ltd. v. Hollister, Inc., 863 F.2d 867 (Fed.Cir. 1988) was intended to curb the patent litigator’s seemingly ravenous appetite for willy-nilly assertions of inequitable conduct. That case held that the intent element of inequitable conduct must be established by clear and convincing evidence of deceptive intent. Gross negligence is not supposed to suffice and “does not of itself justify an inference of an intent to deceive.” Id., at 872.

 

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The Sangamon River as Abe Lincoln’s Mother of Invention

By Paul D. Swanson on Posted in Inventor Witness, Patent Litigation

“Then, I said, let us begin and create in idea a State; and yet the true creator is necessity, who is the mother of our invention.”

In tracing the lineage of perhaps the most popular bromide about the inventive process, I discovered (somewhat to my surprise) that the saying “necessity is the mother of invention” finds its origins in a Socratic dialogue in Plato’s The Republic about the nature of an ideal state.

What started out as a discussion about political structures has become a catch-all description for what often motivates the inventive process.

Like this transmogrified quotation from Plato’s The Republic, much of United States’ patent history in the late 18th and 19th centuries is recounted in nostalgic, patriotic terms. The fondness of our earliest American presidents for our patent system (especially Thomas Jefferson and James Madison) is often duly emphasized.

President Lincoln’s love of inventions is emblematic.  His experiences in navigating to and from his homestead on the Sangamon River in Illinois led directly to the inventive work forming the basis for U.S. Patent No. 6,469, entitled “Buoying Vessels Over Shoals.”

He states, “Be it known that I, Abraham Lincoln . . . have invented a new and improved manner of combining adjustable buoyant air chambers with a steamboat or other vessel for the purpose of enabling their draught of water to be readily lessened to enable them to pass over bars, or through shallow water, without discharging their cargoes . . . .”

Should patent practitioners care about what potential jurors can (or cannot) call to mind about our collective American history of patenting in previous centuries?  Or is it just dusty, musty history, best forgotten?

This post examines some of the “mythology” of patents and inventors and how those ideas may subtly impact a jury’s expectations about inventors and inventions.  Patent litigators, especially, ignore the inherited mindset of jurors at their peril.

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Have You Been “Hired,” But Not “Retained”? and Other Life Lessons from Davis v. Brouse McDowell

By Paul D. Swanson on Posted in Expert Witness, Legal Malpractice, Patent Prosecution, Proximate Causation

Davis v. Brouse McDowell (pdf) is the Federal Circuit’s first precedential patent legal malpractice decision issued in 2010. It offers yet another cautionary tale for both plaintiffs and defendants in their pursuit and defense of patent legal malpractice claims.

Most will read and analyze the Davis case for its ultimate holding, i.e., conclusory expert witness testimony regarding the patentability of a “lost” or foregone patent right is insufficient to support the “case-within-a-case” causation element of a legal malpractice claim.

While that take-away point is crucially important, the underlying district court record also discloses a paradigm example of how client relationships can unravel at their outset.  Some real life lessons of the case are revealed by the halting interactions between the seemingly prospective client and counsel in their early dealings with each other.  One of the key factual issues becomes “When was an attorney-client relationship formed?”

The salient facts are these.  In late 2003, Heather Davis contacted Daniel Thomson, then a partner in the Brouse McDowell law firm “to find out just some general questions about intellectual property.”  (The quoted material is from the district court’s summary judgment decision (pdf).) 

The two spoke over the phone. Davis explained that she was interested in finding an attorney she could “eventually” work with in connection with her alleged invention of an “IP-Exchange” where intellectual property could be bought and sold.  Davis stated that she was particularly interested in pursuing international coverage for her inventions.  (More after the jump.)

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Jury Notes and Special Verdicts in Patent Cases: A Case Study in Jury Comprehension

By Paul D. Swanson on Posted in Jury Instructions, Patent Litigation, Patent Pleadings

It is commonplace to bemoan the lack of juror comprehension in patent cases and to describe jury deliberations as a “black box” resisting analysis.

The Federal Circuit favors the use of special jury verdicts to alleviate such criticisms. Special verdicts can focus jury attention on the facts that may or may not support key patent findings such as those relating to infringement under the doctrine of equivalents, obviousness or other invalidity determinations, and damage and reasonable royalty calculations.

Whether special verdicts achieve “better” overall results than general verdicts, however, is a debatable proposition in light of social science research into how juries think and reason.

The underlying record in a recent Federal Circuit decision, Therasense v. Becton Dickinson and Co. (pdf), provides a good working example for evaluating jury comprehension issues when both jury notes and a special verdict are utilized at trial.

Case Background and Result. The Therasense case involves an ’890 patent directed to electrochemical sensors for measuring glucose levels in blood. The plaintiff alleged that BD Test Strips manufactured and sold by the defendants infringed two claims of the subject patent.

After a trial taking place over four weeks, the jury returned a special verdict (pdf) finding infringement pursuant to the doctrine of equivalents, but in response to the very next special jury verdict question found that the ’890 patent was invalid based on anticipation or obviousness grounds.

The bulk of the Federal Circuit’s decision focuses on the jury’s answer to the following special verdict question: ” Have defendants proven by clear and convincing evidence that Claims 11 and 12 of the ’890 patent are invalid by reason of anticipation or obviousness. Yes  √   No ___.”

More after the jump.

 

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