Law Firm: Because Third Party Patent Annuity Company Actually Missed the Deadline, We Can’t be Liable for Covering it up.

According to the complaint described in Harrier Technologies, Inc. v. CPA Global Limited et al (No. 3:12-cv-00167-WWE (D. Conn. Dec. 2014), the patentee, Harrier, asserted that CPA Global had let Harrier’s Saudi Arabian patent lapse, and that Kenyon knew of the lapse and deliberately covered it up.  Kenyon asserted an indemnification claim against CPA Global. CPA Global moved to dismiss that claim for failure to state a claim.

Not surprisingly, the district court granted the motion:

Kenyon alleges that to the extent that any entity other than Harrier was responsible for the lapse of the Saudi patent application, CPA’s own negligence, rather than any other negligence, was the direct and immediate cause of that lapse. Here, however, Kenyon is not facing claims of negligence. Kenyon’s alleged wrongful concealment after the fact rather than any initial responsibility for the lapse is at issue through Harrier’s counts of breach of fiduciary duty (Count II) and fraud (Count III). Although Count II of Harrier’s complaint does allege that Kenyon breached its fiduciary duty to Harrier by, inter alia, failing to timely pay the annuity, such failure, as a matter of law, does not fall within the realm of fiduciary duty in Connecticut.  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. CPA cannot have been in exclusive control of Kenyon’s alleged concealment and dishonesty to its client.  Moreover, if Kenyon is to be held liable to Harrier for concealing knowledge about the lapse of the Saudi patent application, and as Kenyon contends, CPA’s negligence caused the lapse, it would necessitate a finding that Kenyon knew of CPA’s negligence in causing the Saudi patent application to lapse. Therefore, Kenyon cannot satisfy the fourth element of a common law indemnification claim — that a party seeking indemnification did not know of the third-party’s negligence. Accordingly, Kenyon has failed to state a plausible claim for indemnification against CPA

(Citations omitted.)   (You can’t make this stuff up.)   The case is behind a paywall and not available outside of Pacer, unfortunately, but that is pretty much the substance.

About David

Professor of Law, Mercer University School of Law. Formerly Of Counsel, Taylor English Duma, LLP and in 2012-13, judicial clerk to Chief Judge Rader.

5 thoughts on “Law Firm: Because Third Party Patent Annuity Company Actually Missed the Deadline, We Can’t be Liable for Covering it up.

      1. 1.1.1

        David, I fully appreciate that every firm screws up from time to time, but few that I know of will voluntarily fess up. Inside counsel will have to bring the evidence to them and rub there noses in it before they will even acknowledge the possibility that there might be something wrong.

        It would be nice if the bar were like West Point were the failure to report an violation is a violation equally as severe.

        1. 1.1.1.1

          Wow – would that only be true as well for advocacy performed on the web (see my post on the main page’s Commil thread).

          Those that mischaracterize the law (and knowingly so) here would be (and should be) in deep trouble.

        2. 1.1.1.2

          I’ve seen firms fess up. I’ve sometimes had to tell them to do so. Mistakes happen and sometimes clients recognize that. But… what is that Nixon thing — the coverup is often worse than the crime? One of the biggest malpractice judgments I was involved in was because the firm screwed up prosecution, then litigated the patent and wouldn’t fess up to its client what it had done wrong, and then litigated the case to hide its original mistake. Not a good day for that firm when the verdict was $80m

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