Akin Gump Files Petition to Institute Derivation Against Former Vendor Alleging Its Lawyer’s “Idea” was Stolen

By David Hricik, Mercer Law School

First, some background to the technology for this interesting set of disputes. In some legislatures, a bill that changes an existing statute doesn’t do it by redline: the bill does not show new language by underlining and deletions to existing text by strike throughs. Instead, in some legislatures, a bill must say something like “in 28 USC 1332, strike ‘$75,000’ and replace it with “$100,000”.  That can get complicated, especially if there are statutes that cross-reference each other, different enactment dates, and so on.  There are systems that are used to write bills, but even the people who design them hadn’t solved how to do the “replace X with Y” type of bill drafting and the need to do so had apparently been known in the field for a while.

Xcential Legislative Technologies is a company that provides bill drafting (and other) technology to legislatures.  Akin Gump is a law firm that does a lot of lobbying.  In 2019, an Akin Gump lawyer apparently reached out to Xcential to request a demo of its bill-drafting technology. NDAs in place, Xcential met with an Akin Gump lawyer and, among other things, he described that known problem that, again, a problem that apparently people in this field had known about but which no one had solved, or at least solved in a good way: how to design a system that would generate bills that conformed with the “strike through X and replace with Y” mode required by some legislative bodies.

If I understand the facts correctly, Xcential then set out to solve the problem in order to sell services to Akin Gump.  According to Akin Gump’s suit (discussed below), when Xcential returned to demonstrate its solution to the Akin Gump lawyer, the Akin Gump lawyer upon seeing it repeatedly said “holy shit”… but balked at Xcential’s price tag.

They went their separate ways.

Xcential then filed a patent application naming its long-time coding and legislative drafting expert as the sole inventor. The patent application is here.

In 2022, Akin Gump filed a petition to institute derivation, asserting that its lawyer had in fact conceived of the claimed invention. Those petitions are pretty rare and this one is here.

In addition, Akin Gump sued Xcential and the named inventor individually (here). Depending on who you believe, the lawyer — who allegedly doesn’t have any coding experience — had conceived of the claimed invention before it was shown to him by Xcential and he said “holy shit.” You can read more about this suit here. A press release from the company is here. (I don’t see anything on Akin Gump’s site talking about the suit, or I would include it.)

Xcential has filed counterclaims against Akin Gump (here).  Among other things, it asserts Akin Gump misappropriated Xcential’s confidential information, committed slander of title, and includes other claims.

In the suit, Akin Gump moved for preliminary injunction. I may be missing something, but its theory is that its lawyer’s “idea” to draft a bill to meet the “replace X with Y” required format was a “trade secret” and the Xcential patent application (with all of the support necessary to solve the problem) is the theft of that “secret.”  Akin Gump’s preliminary injunction motion is here.  Xcential’s rather, um, direct response to it, here.

Call me skeptical — or maybe it’s because I’ve written a book on statutory interpretation, worked in the US House, and worked in the Arizona State Senate — but the “idea” to draft legislation drafted in the “replace x with y” way was kinda widely known and not “revolutionary” (as Akin Gump’s preliminary injunction motion says). Further, at least under the trade secret laws I’ve looked at, knowing a problem exists isn’t a trade secret. It’s the solution that might be.

Finally, and perhaps it is just coincidence, but the firm that had been representing Akin Gump withdrew and Akin Gump is now representing itself.

Stay tuned…

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.