Gunn v. Minton: Moving Forward with Patent Attorney Malpractice Litigation

By Dennis Crouch

Sanders v. Flanders (Fed. Cir. 2013)

Scott Hemingway sent me a note regarding his case of Sanders v. Flanders. The legal malpractice action pits the inventor (Mr. Sanders) against his former patent attorney (Mr. Flanders). The Federal Court in W.D. Tex. sided with the patent attorney Flanders and awarded FRCP R. 50 Judgment as a Matter of Law – writing “Eric M. Sanders shall TAKE NOTHING on his claims against Defendant Harold H. Flanders.”

In presenting his case, Sanders had not offered any expert testimony to show that the patent attorney’s failures actually caused harm. In his motion, patent attorney Flanders argued that expert testimony is required in a case and the district court Judge Yeakel agreed.

In this case, Flanders had filed six different patent applications (over a almost a decade) that each lacked full payment to the USPTO. The district court found that Flanders never paid the full fee or notified Sanders of the missing parts prior to abandonment of the applications. Of course, breach of the standard of care is not sufficient to create malpractice liability. Rather, harm must also be shown. Thus, for instance, if the patents would have never issued or if nobody would have cared about the patents then no harm. And, the plaintiff has the burden of proving harm.

Sanders appealed to the Federal Circuit, but in a recent order the court has forwarded the appeal to the Fifth Circuit Court of Appeals based upon the recent Supreme Court case of Gunn v. Minton.

Why the 5th Circuit?: The original jurisdiction of the Federal district court was based on both (1) patent law arising under jurisdiction and (2) complete diversity of the parties. In Gunn, the Court rejected the notion that malpractice cases such as this arise under the patent laws. Following Gunn, the remaining justification for federal court jurisdiction is only diversity. And the, diversity cases are appealed to the regional circuit court of appeals (here the 5th Circuit) rather than to the Federal Circuit.

Now, the 5th Circuit will need to decide (applying Texas and 5th Circuit law) whether expert testimony drawing the link is required.

26 thoughts on “Gunn v. Minton: Moving Forward with Patent Attorney Malpractice Litigation

  1. Re the amazing above allegation that: “the defendant patent attorney’s statement of defenses states that his ‘strategy’ of filing and abandoning cases was necessitated by the fact that the claimed inventions were unpatentable over the prior art.”
    That inspired me to skim through 37 CFR 10 to see if that allegedly admitted conduct was specifically covered in those Rules, as I thought it would be? But the closest I could find was the general 37 CFR 10.18(b)(2)(i)&(ii) and 37 CFR 10.84(a)(2) ?

  2. for those damages

    You missed the sua sponte comment

    Are you proposing an equitable remedy for losing legal strategies?

    No. Again, you missed the comment.

    go back to my earlier comment – you don’t file a federal lawsuit simply to be reimbursed for your $10K in legal fees.

    Is that against the law? Are you assuming a “big payday” – imputing a motive that may – just may – not exist?

  3. For a judge to ignore what is obvious related damages even if not pled (justice sua sponte), is also quite unbelievable.

    The judge didn’t ignore them at all; he explicitly noted that there was no competent evidence for those damages. As far as I can tell, that was uncontradicted – I couldn’t find any response to the defendant’s motion for JMOL.

    justice sua sponte

    Hmmm… Are you proposing an equitable remedy for losing legal strategies?

    I go back to my earlier comment – you don’t file a federal lawsuit simply to be reimbursed for your $10K in legal fees. Mr. Sanders wanted to get to the jury and get a big payday. He failed. I don’t see this getting anywhere at the 5th Circuit. Perhaps the next step is to sue another attorney.

  4. fact that the claimed inventions were unpatentable over the prior art

    This may be a matter of timing (when was this “fact” known), but if this strategy was reviewed with the client, and the client proceeded (directed the representative to file with this knowledge), and still signed the oath or declaration, we have clear fraud on the office.

  5. Quite.

    This is the c_rrp that people like Malcolm should (rightfully) QQ about.

    This type of “representation” before the Office appears to border on the criminal.

    For a judge to ignore what is obvious related damages even if not pled (justice sua sponte), is also quite unbelievable. We have activist judges being cheered on to rewrite law while equity goes out the window.

  6. No damages evidence at all?? Did he sue pro se?

    No damages evidence at all, according to the judge, other than the direct (and apparently unsubstantiated) testimony of the plaintiff. The fees paid to the defendant are mentioned in the complaint, but the plaintiff appeared to focus entirely on the harm arising from the failure to obtain patents and from the plaintiff’s loss of credibility with investors. That’s where the failure to present expert testimony comes in – again, the only evidence for the patentability of the inventions was the plaintiff’s testimony. It doesn’t look like the out-of-pocket fees and expenses came up again.

    And no, Mr. Sanders was not pro se. Mr. Hemingway, mentioned above, signed the complaint and other papers.

    Another fun nugget from the case – the defendant patent attorney’s statement of defenses states that his “strategy” of filing and abandoning cases was necessitated by the fact that the claimed inventions were unpatentable over the prior art. Unbelievable.

  7. “A beneficial strategy” for whom? An application abandoned w/o a valid continuation loses all filing date protection against any intervening art, much less a bar. It becomes a bare conception document, which, absent requisite 102(g) diligence, cannot even win an interference.

    No damages evidence at all?? Did he sue pro se?

  8. It might have been an absolutely brilliant strategy, but it’s probably one that you should review with your client…

    “This particular client was perfectly pleased with the working arrangement until a disagreement over a minor procedural detail was raised.”

  9. Following up, my guess was wrong – this poor sap didn’t even get his money back.

    This case was heard by the jury, but there wasn’t a verdict, so I don’t think the term “JNOV” is correct. Anyway, the plaintiff’s complaint asked for his money back (which he estimated at $10K-$15K), but he apparently produced no evidence to substantiate those sums. (That seems pretty basic to me, but I’m not a trial lawyer.)

    My favorite part of the judge’s order is his recounting of the patent attorney’s testimony as to his legal strategy – see the last sentence of the following:

    Each of the filings made with the PTO was incomplete at the time of filing; each required
    additional fees or documentation to complete the application process. A patent application becomes
    “abandoned” and ceases to move toward successful examination, if, after a certain period of time
    following notice provided by the PTO, deficiencies in the application are not addressed. Flanders
    concedes that he was aware that noncompletion of the required application parts would result in the
    eventual deemed abandonment of the patent application by the PTO. Flanders further concedes that
    he did not notify Sanders about the missing parts of each of the patent applications. Subsequently,
    the PTO declared each application abandoned, because Flanders made no further filings to complete
    the applications. Flanders did not notify Sanders of the PTO’s actions and concedes that he allowed
    Sanders to proceed with the belief that all patent applications filed on his behalf were “pending.”
    Flanders maintains that his pattern of allowing the patent applications to go into abandoned status
    was a part of a beneficial legal strategy to allow Sanders to pursue investment opportunities, while
    continuing to develop a patentable product.

    It might have been an absolutely brilliant strategy, but it’s probably one that you should review with your client…

  10. Because otherwise he would have had at least one claim that should have survived the JMOL. It’s just a guess, however.

    I note now (I missed it earlier) that Dennis’s post says that the judgment was a JNOV, so the case apparently did make it to the jury. Now I’m going to have to look it up…

  11. a good guess that this plaintiff had his fees reimbursed long ago

    Why would you guess that?

    (not snark)

  12. Inequitable conduct defense: a horrible plague that demeans the profession

    Patent attorney malpractice lawsuits: essential to punish all the bad apples who will do anything to make a buck

  13. But once past that initial goalpost with simple proofs of wasted PTO and attorney fees, would it be that hard to convince a jury to award lots more?

    Sure you could, but it would do no good, as a jury award that exceeds the proved damages would (should) not survive a motion for a JMOL. In the present case, the judge wouldn’t let the case get to the jury, apparently because there was no admissible evidence of damages.

    In any event, you don’t sue someone for malpractice just to get your costs back. That would make this a $10,000 case, at best. It’s a good guess that this plaintiff had his fees reimbursed long ago. That wouldn’t have satisfied me, either.

  14. Wouldn’t there be a defacto matter of harm with the partial payments

    Was the client billed for fees that weren’t paid? It’s not clear from the summary.

    Surely, patent practitioners cannot be “in the clear” just because no patent ever issues…

    At the very least the practitioner could be referred to the appropriate disciplinary authority.

  15. Good point, unless there is more to this than just non-payment of fees, like viable PTO rejections in each appplication. But once past that initial goalpost with simple proofs of wasted PTO and attorney fees, would it be that hard to convince a jury to award lots more? [But is this attorney or firm possibly judgement-proof and uninsured?]

  16. then no harm

    Wouldn’t there be a defacto matter of harm with the partial payments (along with the money spent on the attorney’s work) being p1ssed down the drain?

    Surely, patent practitioners cannot be “in the clear” just because no patent ever issues…

  17. Fortunately this guy is no longer practicing.

    Following is claim 1 from what was apparently Mr. Flanders’ last attempt (at least for which he paid a filing fee):

    1. A computer based programming method for producing a section of a numerical control program used to control a machine tool upon either the manual or automatic creation of an appropriately formatted coordinate work sheet file, which in addition to producing said section of the numerical control program, may also be used to graphically verify, and modify said coordinate worksheet file.

    Unsurprisingly, this was rejected. The applicant in this case found a new attorney.

    It seems to me that there ought to be a remedy for gross incompetence like that demonstrated by the court’s findings in the Sanders v. Flanders case. This guy strung along the poor inventor for 10 years, for nothing. That has to be worth something when it comes to damages.

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