Gunn v. Minton: Oral Arguments

By Dennis Crouch

Gunn v. Minton (Supreme Court 2013)

The Supreme Court today heard oral arguments in the case of Jerry Gunn, et al. v. Vernon Minton. In the case, Mr. Minton has alleged that his former litigation counsel committed legal malpractice resulting in a dramatic loss of potential patent licensing revenue.

A malpractice claim against a lawyer is traditionally a state law claim. The question that has reached the Supreme Court is, despite the underlying state law claim, whether the Federal Courts have exclusive jurisdiction over this case because it requires substantial consideration of patent law issues. If the Federal Courts have jurisdiction than the Federal Circuit would also have jurisdiction on appeal.

Although there are some nuances, the basic malpractice claim is that his attorneys should have argued that the public use and sale of his patented product was an experimental use and therefore did not create self-sacrificial prior art or trigger the statutory bar of (old) 102(b).

From prior Supreme Court decisions such as Grable, we know that the current rule is that Federal Courts have subject-matter jurisdiction over State Law claims when the well pled complaint includes a “substantial” “contested issue” of Federal law.

The most likely focus of an opinion in this case will be a further definition of the meaning “substantial” and what is meant by a “contested issue.” My take-away is that the Supreme Court has no inclination of severely restricting arising under jurisdiction.

The first question of the case came from Justice Ginsburg who pointedly asked the law firm’s attorney (Ms. Webre) “what do you mean by ‘substantial’? The answer:

I would answer in two layers. First, Mr. Minton’s claim did not involve a legal question of … how does the experimental use doctrine work; how is it applied, what are its parameters. . . .

And it is not a substantial question because, first, from a unique case perspective, it involved merely a hypothetical determination. There were no actual patent rights that would be at issue. Those were already fully, finally, irrevocably determined in the underlying patent litigation in Federal court.

And second, from a jurisprudence standpoint, the question of uniformity of patent law, any decision by a State court in Mr. Minton’s legal malpractice claim would not be binding in any way on either the PTO in a patent application, or on any subsequent Federal court deciding a real patent case.

Ms. Webre’s key argument here is separate that notion of an issue necessary to resolve the case from that of a “substantial issue.” Both are required for Federal Jurisdiction under Grable.

The discussion later moved to the Federal Circuit’s aggrandizement of jurisdiction. Ms. Webre again:

I think it’s interesting to back up a little bit and look at the Federal Circuit’s evolved perception of its own exclusive jurisdiction. In the early years of the Federal Circuit in 1984, the first Chief Justice — the first chief judge of the court, Chief Judge Markey, in the Atari case … the Federal Circuit wrote, “Congress was not concerned that an occasional patent law decision of a regional circuit court or of a State court would defeat its goal of increased uniformity in the national law of patents.”

That was the view of the Federal Circuit’s own jurisdiction in 1984. But in the time evolved, the Federal Circuit has changed its perception of its own jurisdiction and that’s why we are here today. In 2007, the Federal Circuit went awry and changed the standard that no longer follows what this Court articulated in Grable.

They have improperly conflated the necessity and substantiality components of an appropriate Grable analysis, and they totally disregard a proper balance of the State and Federal interests. The Federal Circuit announced that there’s an interest in — Federal interest in uniformity of patent law, and then that was that. That was the end of the inquiry. There is no balance if you don’t look at the State interest on the other side.

In rebuttal, Mr. Michel (attorney for the plaintiff) argued that patent law is fairly unique because the law exclusive Federal jurisdiction. In his view, the exclusivity shows congressional intent that even seemingly minor patent issues should be seen as substantial. Mr. Michel also discussed the potential impact on patent attorneys in each state who will be bound by the patent law malpractice rules derived from state court decisions even though the state courts are not bound to follow Federal Circuit precedent. He particularly pointed out that the Texas state court did not follow the Federal Circuit in this very case. Here, for instance the Texas trial court based its conclusion of no-malpractice on a concept of experimental use that departs severely from Federal Circuit precedent. In the final minutes of her response, Ms. Webre suggested that patent attorneys buck-up and recognize that they are bound by both federal and state law.

Read the transcript here: /media/docs/2013/01/11-1118.pdf

38 thoughts on “Gunn v. Minton: Oral Arguments

  1. Do you want to bet on the outcome of this case?

    No. Sorry, it is really not all that compelling either way.

    when the case is about

    Ahhh – what is the “case about” – that, my friend is the crux of the matter. (hint: “what it is about” can be a complex, nested matter with different portions of law). Tell me – generally speaking – when something “is about” more than one thing, but one of those things demands federal jurisdiction, what happens?

  2. OK, but if the Feds have subject matter jurisdiction, it is exclusive.  That cannot be when the case is about attorney malpractice.  

    Do you want to bet on the outcome of this case?

  3. No doubt, Dennis.  But so long as we have state attorneys, I think the interest of the states licensing the attorneys is overwhelming and decisive.  I truly do not see how the Federal Court have any interests at all in this issue.

  4. Oklahoma/Texas conflict is different from the Federal/State conflict for several reasons that primarily stem from (1) federal supremacy and (2) overlapping geography. 

  5. So, the Texas Supreme Court gets a case involving the misapplication of Oklahoma Law. Should it say that the case must have been filed in Oklahoma to determine what Oklahoma law was?

    Even to frame the question is to demonstrate just how ridiculous that question is.

    I cannot see how Congress could have thought to require issues of malpractice involving questions of patent law be decided by the Federal Courts. Again, we do not have Federally licensed attorneys.

  6. Right – The petition was filed by the law firms asking the US Supreme Court to reject the Texas Supreme Court decision based upon that court's misapplication of federal law.  If the law firms win, then the case goes back to the Texas Supreme Court who will then come out with a new decision.  

  7. Then this case is really about whether the decision of the Texas Supreme Court was right and whether, in fact, the US District Court has jurisdiction at all.

  8. What happened is that the malpractice lawsuit was filed in Texas state court. The law firm won in state court (no malpractice) but the patent owner appealed to Texas Supreme Court who interpreted the patent jurisdictional statute (28 USC § 1338) to hold that the state courts do not have jurisdiction. The patent owner likes this decision because it moots the state court claim and gives him another shot at winning the malpractice lawsuit. Because the state court case turned on a Federal Question (scope of Section 1338), the Supreme Court was able to take the case.

  9. Thanks Ned, it is a small but informative can. If the action in litigation has a mirror to something in prosecution, then by the necessity of that can, how can one say anything other than the issue “arise under?”

  10. anon, small point in your favor.

    But still, state licenses attorneys.  Ideally, they should consult other attorneys when issues of law arise outside of their expertise.  But if they get it wrong?   Is that malpractice?

    I think Texas has the right to make the call on malpractice of its own attorneys.  I think the SC will come out that way as well.

  11. Joking aside, read Sperry v Florida, 373 US 379, USSC 1963. Almost everything we do as patent agents is the practice of law, but the states are preempted against prohibiting things done under a federal licence.

  12. That’s not entirely true. It’s only true to the extent that we are not bound by state bar rules, but we are just as bound by state law as anyone else.

  13. James–

    Right.

    So Gunn’s defense is grounded in failure of the but-for test?

    Are they arguing standard of care as well? I’m not litigation counsel, but under the duty of zealous representation required by all states, it seems that litigation counsel has a duty to present any defense that has a non-zero chance of succeding, if it doesn’t weaken the defense overall, and if the client’s budget allows.

    Did they discuss presenting the defense? In my opinion, a client should be made aware of all possible avenues of defense and their relative merits, so that client and counsel can together reach a decision about what will be argued. In this process, a client reasonably relies on the advice of counsel to make a decision, or reasonably delegates that decision to counsel, but only after having been made aware of the situation.

    IMO the duty to zealously represent includes, among other duties, a duty to inform, as well as a duty to warn–but surely there will be someone who knows more about this than I, someone on an ethics board somewhere.

  14. Anyone know if Thomas M. Michel (counsel for Respondent) is related to former Chief Judge Paul Michel?

    Don’t know. But I’m wondering whether Thomas M. Michel is related to Michael R. Thomas, the guy who invented everything (along with his three grandfathers).

  15. Dennis, OK.
     
    But, AFAIK, we do not have Federal attorneys, just State.  If a state wants to allow their attorneys to make mistakes on Federal law, I think they have that right.  State malpractice is a state concern. 

  16. Anyone know if Thomas M. Michel (counsel for Respondent) is related to former Chief Judge Paul Michel? I’m guessing not, but it’s a pretty unusual last name, in this country at least.

  17. “Ms. Webre suggested that patent attorneys buck-up and recognize that they are bound by both federal and state law.”

    Ahem . . . ma’am, what, exactly, is federal legal malpractice law?

    What remedy does any federal law give to victims of lawyers’ incompetence, negligence, breach of contract, or fraud?

    If a federal statute does not provide a remedy for lawyer malpractice — and none does — then there is no federal law jurisdiction.

  18. Legal malpractice commonly refers to professional negligence.

    It might also embody fraud, negligent misrepresentation, breach of contract, and possibly breach of fiduciary duty.

    In Minton v. Gunn, Minton sued Gunn and company for your-garden-variety negligence.
    Minton: “Gunn, you owed me a duty to argue experimental use in the infringement suit against NASDAQ. You breached that duty by not arguing it. I lost the infringement suit because of that omission. Now, you owe me the license fee I would have obtained from NASDAQ had my patent been valid.”

    Gunn: “Even if we had argued experimental use, you wouldn’t have won the infringement suit, because your use just wasn’t experimental.”

    Interestingly, in the infringement suit Minton conceded that he placed his software on sale by leasing it to a brokerage firm in Dallas. After, the district court ruled for NASDAQ, he moved the court to reconsider by arguing experimental use with different counsel.

  19. Note that for certain purposes, agents HAVE been held to have been practicing law, or giving legal advice.

    Yes – but consider which law and what type of legal advice…

  20. Does “legal malpractice” have any legal significance as a term of art, or are related claims framed simply in terms of negligence, intentional tort, or contract law?

    Being “bound by” both federal and state law is not equivalent to being “sanctioned under” both federal and state law for the same underlying conduct.

    Agents could very well be subject to claims based in state law in negligence, intentional tort, or contract law, the same as attorneys.

    The difference would of course be in the duties and standards of care, etc.; also, the attorney could be professionally sanctioned by a state bar. Note that for certain purposes, agents HAVE been held to have been practicing law, or giving legal advice.

  21. That’s an interesting point.

    I suppose it’s possible to have an outcome where malpractice that involves only practice before the USPTO necessarily raises a substantial question of patent law, while malpractice in the litigation context, where the attorneys are subject to federal and state standards, may sometimes not.

  22. Ms. Webre suggested that patent attorneys buck-up and recognize that they are bound by both federal and state law.

    The same cannot be said of patent agents.

    (opens can)

  23. (Or at least with that result). 

    On Wed, Jan 16, 2013 at 3:14 PM, Dennis Crouch <dcrouch@gmail.com> wrote:

    Of course in this case the state court misapplied Federal Circuit doctrine in order to protect the attorneys. 

  24. Egad!

    Imagine if one, following Federal Circuit patent law, could be sued for malpractice for not following state patent law on the same issue?

    What next, be sued for malpractice in California for not following Illinois law where the actions in California were consistent with California law?

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