Malpractice claims against patent lawyers must be brought in federal court, the U.S. Court of Appeals for the Federal Circuit has ruled in two companion cases of first impression. The rulings extend federal jurisdiction to an area that is traditionally the exclusive province of state courts.
Even though legal malpractice claims arise out of state law, the CAFC said, they require interpretation of federal patent law and therefore fall within the federal courts' exclusive jurisdiction.
In the first of the two Oct. 15 decisions, Air Measurement Technologies v. Akin Gump Strauss Hauer & Feld, the CAFC held that the federal court had exclusive jurisdiction over a case alleging errors by counsel in patent prosecution and litigation. In the second, Immunocept v. Fulbright & Jaworski, it found federal jurisdiction over a case alleging attorney error in claim drafting.
"We hold that at least where, as here, establishing patent infringement is a necessary element of a malpractice claim stemming from alleged mishandling of patent prosecution and earlier patent litigation, the issue is substantial and contested, and federal resolution of the issue was intended by Congress, there is "arising under" jurisdiction under (28 U.S.C.) § 1338," Chief Judge Paul Michel wrote in Air Measurement.
Both cases came to the CAFC from the Western District of Texas. In Air Measurement, the plaintiff, Air Measurement Technologies (AMT), filed its malpractice complaint in state court but the law-firm defendants removed the case to federal court. AMT sought to return the case to state court, alleging that the federal court lacked subject-matter jurisdiction. When the district court denied the request, AMT appealed.
AMT had developed technology to protect firemen and other emergency personnel by monitoring oxygen levels in self-contained breathing apparatuses. The company later discovered that the attorney they had retained to patent the technology had made various mistakes in its prosecution and subsequent litigation.
AMT sued the lawyer and his law firms for legal malpractice and on other grounds, all based solely on Texas state law.
The CAFC considered these facts in light of the two-part test for determining federal jurisdiction in patent cases set out by the U.S. Supreme Court in the 1988 case, Christianson v. Colt Indus. Operating Corp. That case requires a finding that a complaint either alleges a cause of action created by federal patent law or turns on resolution of a substantial question of patent law.
That second prong applied here, the CAFC concluded, because an essential element in proving malpractice is proof that the plaintiff would have prevailed in the prior litigation but for the malpractice.
"Because proof of patent infringement is necessary to show AMT would have prevailed in the prior litigation, patent infringement is a 'necessary element' of AMT's malpractice claim and therefore apparently presents a substantial question of patent law conferring § 1338 jurisdiction," the CAFC reasoned.
In the second of the two cases decided by the CAFC, Immunocept had retained counsel to secure patent protection for "large pore hemofiltration" technology to treat sepsis, shock and other medical conditions. It later hired a second patent attorney to prosecute additional applications based on the technology.
When Immunocept sought investors to help bring the invention to market, one potential partner's due diligence revealed a fatal flaw in the drafting of the patent claim that severely limited its scope. Because of that, the partner withdrew its interest.
Immunocept sued its lawyers for malpractice in federal court, alleging the patent statute as the basis of jurisdiction. The law firm responded with a motion for summary judgment, alleging that the claim was barred by the statute of limitations and that the damages sought were overly speculative, which the district court granted.
On appeal, the CAFC ordered the parties to file briefs addressing the question of federal jurisdiction over the malpractice case. Both parties did so, agreeing that jurisdiction was proper.
Even though both parties agreed to federal jurisdiction, the CAFC decided to address the issue, based on its own authority to consider its jurisdiction. As in the Air Measurement case, it again looked to the Supreme Court's Christianson test to reach its result.
The CAFC noted that Immunocept's complaint alleged only one source of attorney error – a claim drafting mistake. Immunocept could not prove its case without addressing the issue of the scope of the patent claim, and that brings the case under federal jurisdiction, the CAFC said.
"Because patent claim scope defines the scope of patent protection … we surely consider claim scope to be a substantial question of patent law," the CAFC said. "As a determination of patent infringement serves as the basis of § 1338 jurisdiction over related state law claims, so does a determination of claim scope."
Thus, the CAFC concluded, it was satisfied that Congress intended the federal courts to have exclusive jurisdiction over malpractice cases involving the drafting and scope of a patent claim.
The two cases are:
Air Measurement Technologies v. Akin Gump Strauss Hauer & Feld, Case No. 2007-1035 (Oct. 15, 2007).
Immunocept v. Fulbright & Jaworski, Case No. 2006-1432 (Oct. 15, 2007).