Federal Circuit Divided on Federal Jurisdiction over Legal Malpractice Claims

Stephen Byrne v. Wood, Herron & Evans (Fed. Cir. 2011)

Byrne’s malpractice claim alleges that his former patent attorneys at WHE failed to secure broad enough patent protection for his weed trimming device. See RE 34,815. In 2004, Byrne sued Black & Decker but lost on summary judgment. In that case, the district court ruled that B&D’s device could not infringe because of it did not include a “generally planar outboard flail stabilizing surface” as required by Byrne’s patent claims.

In the subsequent legal malpractice claim, WHE filed a summary judgment motion arguing that the prosecution history showed clearly that the “generally planar” limitation was necessary in order to distinguish Byrne’s invention from the cited prior art.  WHE also argued that Mr. Byrne’s claim should fail because he had so fully participated in the prosecution, including the addition of that limitation into the claim. In the responsive motion, Byrne filed an affidavit discussing the scope of the cited prior art and arguing that the limitation was not necessary for patentability.  Acting sua sponte, the district court rejected Byrne’s testimony — holding that he was not qualified to offer expert testimony as one of ordinary skill in the art.  Without any rebuttal evidence, the court then granted WHE’s motion for summary judgment of no malpractice.

Jurisdiction over Patent Prosecution Malpractice. In several recent cases, the Federal Circuit has expanded the scope of federal court and Federal Circuit jurisdiction over patent malpractice cases. Writing for a 2–1 majority, Judge O’Malley agreed that stare decisis compels federal jurisdiction in this case, but argued that the jurisdictional law should be revisited for cases like this where the cause of action is based upon state-law (malpractice) and the patent issue is only a question of a hypothetical patent claim.

Indeed, it is only the “special and small category” or “slim category” of cases in which a state law cause of action will trigger federal jurisdiction. . . .

[I]t is difficult to see teh federal interest in determining the validity of a hypothetical patent claim that is ancillary to a state law malpractice action. The outcome of such determinations invariably will rest on case-specific inquiries comparing prior art against patent claims that have not and will never issue. As such, these determinations, which involve only application and not interpretation of patent law, have little or no bearing on other cases. On the other hand, finding federal jurisdiction over malpractice cases involving questions of hypothetical patent claims opens the federal courthouse to an entire class of actions, thereby usurping state authority over this traditionally state law tort issue. . . .

Applying these federalism considerations, several courts either have outright disagreed with our analysis or have found a meaningful distinction when only hypothetical patent rights are at stake. . . . In many cases, the procedural posture prevents us from reviewing these decisions, thus allowing courts simply to ignore our law. We address the issues in this appeal, however, because our existing case law compels us to do so.

This is the type of issue that the Supreme Court tends to hear, and a high quality petition for certiorari would have a good chance of gaining the high court’s attention.  Aiding this theory are the growing number of state and federal court decisions that have criticized the Federal Circuit jurisdictional holdings and the general rarity non-patent-related cases of finding federal question “arising under” jurisdiction where no federal cause of action is alleged. 

On the merits, the Federal Circuit ruled that the lower court abused its discretion by refusing to let the inventor testify regarding the scope and content of the prior art and its relation to the invention. The particular problem with the lower court’s finding was that it made no finding of the qualifications of one of ordinary skill in the art and whether Byrne possessed that level of skill.  In several prior cases, the Federal Circuit has held that inventors typically possess at least ordinary skill in the relevant art and therefore “it is especially inappropriate for the district court to strike Byrne’s affidavit without going through the exercise of identifying the requisite level of skill.”  On remand, the district court will likely hear Byrne’s testimony and consequently reject WHE’s summary judgment motion.

19 thoughts on “Federal Circuit Divided on Federal Jurisdiction over Legal Malpractice Claims

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  3. Well, I wasn’t defending the strategy, just the fact that you could get one. I think, depending upon the person, they could have quite a bit of credibility with a jury on how the PTO looked at things at the time, but maybe no moreso than a credible inventor. I think there is an enormous burden to overcome in the first place, to try to prove that claims would have been allowed but for the negligence of the practitioner. Like trying to prove what one of the findings of a fact of a jury would have been. Also, do they have to prove the claims would have been “materially” broader, or is maybe the removal of a single word enough to be “broader”? Maybe a word from the preamble?

  4. Good point Steve. I was thinking of a current PTO examiner.

    For any such “former PTO examiner’s,” and with turnover that has happened – there are quite a few, would such be able to opine on their actions as government employees, or are you looking at some other form of “weight” to be given their testimony?

  5. Paul,
    You have got to be joking? So your saying the big Firm will just crush the big Company if there is a problem. Isn’t that all relative.. Big problem small problem.Sort of like the wasted News questions said to the people that just lost their Child. … Like Are you sad? Do you miss Her. What a waste of type!

  6. Well, I know one US agent having such a routine. It is fair enough to inform about such possibilities using what had to be a form letter. I was less happy about the excessive invoice attached to the form letter.

  7. The MPEP references that section – and a whole lot more.

    Your own slant here is less accurate than the first anon – obtaining such expert testimony is not easy and requires a waiver showing just cause. Further, the examiner is very much hamstrung as to what he can testify to, and that even must be pre-supplied in eriting.

  8. As a practical matter, already many large firms refuse to handle patent application preparation and prosecution from individual inventors because of malpractice suit risks and upper limits on malpractice insurance coverage, plus the unbillable time. If a patent attorney’s good faith belief that a particular claim term is necessary to distinguish over prior art [and the client is kept informed] can be easily second-guessed in hindsight for huge amounts of alleged damages exceeding insurance caps, I wonder if individual inventors may find it even harder to find a good patent attorney?

  9. 37 CFR § 104.21(b)(2): This subpart does not apply to any legal proceeding in which: A former employee is to testify as an expert in connection with a particular matter in which the former employee did not participate personally while at the Office.

    It’s better to read that which has the force of law…than the MPEP which does not.

  10. Paul, the issue was whether the trial judge should have granted summary judgment. Procedurally the trial judge erred in not considering the opinion of the inventor and in not giving the inventor an opportunity to comment on such a prospective ruling.

    On any rehearing I can’t imagine that any new evidence could qualify as being compelling at law. A judge is not bound to accept the opinion of a former PTO examiner.

    A bigger question is whether the patent attorney informed the inventor as to the effect of limitations in the claim and gave the inventor an opportunity to approve the limitation or to object. To what extent are inventors entitled to receive from their patent attorney explanations and coaching to help them understand the boundaries of the rights that they are obtaining?

  11. I don’t see how any inventor’s [lay] opinions on THAT issue could possibly overcome expert testimony from, say, a former PTO examiner from that art unit at the time?

    I think we’ve all been in the situation where the examiner mails a rejection, our client insists that the claim is patentable over the art cited, and our deftly-worded argument results in the claim being allowed as previously presented.

    The inventor may well be more expert than the examiner in certain pertinent respects, e.g. the art doesn’t teach what the examiner thinks it does, or the references may not be combined as the examiner suggests. Unless such an argument was attempted, it’s plausible the broader claim might have been allowed.

    Whether a narrowing amendment approved by the client amounts to professional malpractice is the more problematic question. If I were suing my lawyer, I’d want a bit more than that to hang my hat on.

  12. The Court holds that: “In the context of a malpractice suit in which a plaintiff alleges that, but for the attorney’s negligence, he would have obtained broader patent claims, a plaintiff must show that broader patent claims “would have been held patentable on examination in the [United States Patent and Trademark Office] . . ., in accordance with the criteria of patentability applied during examination.” Davis, 596 F.3d at 1364.”
    I don’t see how any inventor’s [lay] opinions on THAT issue could possibly overcome expert testimony from, say, a former PTO examiner from that art unit at the time?

  13. I wonder if it would be a good for a law firm to tell a client, upon allowance, that they can file a continuation to try an secure a broader claim (putting aside file wrapper estoppel issues for the moment). Regardless of what the client decides, the law firm would be able to say that the client was presented with the option of getting an additional patent. Would such an counseling option successfully protect the law firm from this type of lawsuit?

  14. Is the underlying conduct really malpractice though? If every patent that doesn’t capture a product where it theoretically could have been drafted to is malpractice, then I would say most patents are the products of malpractice. An attorney doesn’t have a crystal ball. I really hope this suit gets thrown out on the actual merits.

  15. On a related note, state courts appear to still have original jurisdiction if patent infringement or any other case-within-a-case patent issues are presented as only counterclaims. I think this is true even post-AIA, which superseded Holmes Group only for purposes of appeals from a federal district court hearing patent counterclaims.

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