Octane: Malpractice Claims by Clients Forced to Pay the Other Side’s Fees?

Three things have concerned me about Octane.

The first is that, for the first time, there is a “gap” (if you will) between zealous advocacy under Rule 11 (and other similar statutes) and the fee shifting statute. So, as a lawyer, I may be ethically required to do something that could result in my client paying the other side’s fees.

Think on that for a second.

The second thing — and this does not exactly take a clairvoyant — is that a client who is forced to pay the other side’s fees may sue a lawyer who did not advise the client of that risk.   Clients who have been forced to pay fees to their opponents because of state statutes have already done this. E.g., Air Turbine Techn., Inc. v. Quarles & Brady, LLC, 165 So.2d 816 (Fla. Ct. App. 2015) (granting summary judgment to lawyer because advice that client did not likely face fee shifting — under a state statute, not 285 — was reasonable and in good faith at the time the advice had been given).

So, lawyers should be careful to recognize both the “holding back” that might be necessary because of Octane or to have a full discussion with their client about the risks of “going all the way” to the limits of Rule 11.  I don’t like the way the law is right now, though I do think as a matter of statutory interpretation Octane was correctly decided.

The third thing, and I’ve written about this before, is the open possibility that fees can be imposed directly against the lawyer under Section 285.  That post is here.  As I pointed out in that post, there’s not been a lot of thought put into whether 285 can be used against lawyers, and as a matter of statutory interpretation, there are arguments on both sides.  In that earlier post, I pointed out that non-precedential cases have, without much analysis, held 285 couldn’t be used directly against lawyers.  A few months after I wrote that post, a second court in that same district also in a non-pref opinion followed the holding of the first court, writing:

Unlike other types of sanctions, sanctions under § 285 may not be assessed against counsel—only against a party. Rates Tech. Inc. v. Broadvox Holding Co., LLC, 56 F.Supp.3d 515, 526 (S.D.N.Y.2014) (citing Phonometrics, Inc. v. ITT Sheraton Corp., 64 Fed. Appx. 219, 222 (Fed. Cir. 2003)). As my colleague Judge Scheindlin recently explained, “Generally”, “[w]hen a fee-shifting statute that authorizes the courts to award attorneys’ fees to prevailing parties does not mention an award against the losing party’s attorney [as is the case in section 285], the appropriate inference is that an award against attorneys is not authorized.” Id. n.97 (alterations in original) (quoting Healey v. Chelsea Resources, Ltd., 947 F.2d 611, 624 (2d Cir. 1991)).

Advanced Video Techs. LLC v. HTC Corp., No. 1:11 CIV. 06604 (CM), 2015 WL 7621483, at *5 (S.D.N.Y. Aug. 28, 2015).

 

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 “Octane: Malpractice Claims by Clients Forced to Pay the Other Side’s Fees?

  1. 2

    One Golden Rule of private practice is (or ought to be): No nasty surprises (for the client of course).

    Patent attorneys in private practice are (or ought to be) constantly apprehensive of ever hearing their client say to them “Consigliere, why didn’t you tell me back then, what you are telling me now? To foresee problems, and warn me of them, that’s what I pay you for, isn’t it?”

    Always was, always will be. So what’s new here?

  2. 1

    So the malpractice here is not paying the other side, but rather it is the lack of proper notice of risks, right?

    All types of risk are the things that clients must be kept appraised of. This includes any aspect of the fluid legal landscape of the patent world, from taking of property, to the (arbitrary) application of any “Gist/Abstract” sword, to items such as this “refinement” of risk.

    I am not seeing this as any per se change in the conversations about risk that need to take place. Risk is fluid and especially now in the extreme uncertainties of Court scrivining and poorly drafted AIA directions.

    For “fun,” let clients read the CAFC en banc Alice decision to show the risk and lack of cohesion in the mashed nose of wax.

    1. 1.1

      I think there’s conversations that need to occur… I’m updating one of my books and reading a lot of the fallout from Halo and Octane… it’s becoming a mess.

      1. 1.1.1

        Went back to the January 2015 article, and this statement of your bears repeating (again?… still…?):

        I guess where I come out on these things is: courts are supposed to apply statutes, not make policy. That seems to be lost in patent law more than any other area I know (see, e.g., Myriad, CLS,…)

        1. 1.1.1.1

          Don’t get me started on 101… just don’t…

          As for this statute, I can see both sides of how to interpret it. I don’t think the two district court cases, or the weird (really weird) CAFC case they cite to, do the task.

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