High Court to Say Where to Sue Patent Lawyers
WASHINGTON (CN) - A finding that state-law claims of legal malpractice against trial lawyers over patent matters fall under federal jurisdiction will go to the U.S. Supreme Court.
Since the Federal Circuit has exclusive jurisdiction over appeals involving patents, the high court said it will consider whether state courts and federal courts are strictly following the Federal Circuit's mistaken standard, thereby magnifying its jurisdictional error and sweeping broad swaths of state law claims - which involve no actual patents and have no impact on actual patent rights - into the federal courts.
Specifically, the case concerns a lawsuit former securities broker Vernon Minton filed against the attorneys who had originally prosecuted his patent infringement litigation in the federal court: Jerry Gunn; Williams Squire & Wren; James Wren; Slusser & Frost; William Slusser; Slusser Wilson & Partridge; and Michael Wilson.
Minton had filed the patent suit over a patent he obtained in 2000 for an interactive securities trading system.
The system contained features very similar to the Texas Computer Exchange Network, a software program he developed years earlier for his Texas International Stock Exchange.
Minton had filed the patent a year leasing the network software to New York-based R.M. Stark & Co.
He sued the NASD and The NASDAQ Stock Market for infringement in 2002.
Minton's attorneys were unaware of the lease when they filed the infringement suit, and NASD won summary judgment in the case by invoking the on-sale bar in the U.S. Patent Act. This law deems a patent invalid when the invention claimed by the patent is sold "more than one year prior to the date of the application for patent in the United States."
Minton claimed that his patent claimed different software than the leased system, but a federal judge in Texas was not persuaded by the argument and declared his patent invalid.
The courts also shot down a second legal maneuver - the experimental use exception - that Minton attempted with new counsel in a motion for reconsideration.
His subsequent legal malpractice case alleged that the original attorneys were negligent in failing to argue this theory in the first place. He said that his case against NASD could have netted him a $100 million settlement.
A state court awarded the attorneys summary judgment, and the Second Court of Appeals in Fort Worth affirmed, despite Minton's claims that his malpractice suit arose under exclusive federal patent law jurisdiction.
The Texas Supreme Court voted 5-3 to reverse in December 2011, finding that the case has exclusive federal jurisdiction.
Three justices argued in dissent that "there is no right to a second day in a different court."
"The defendants, having won on the merits in state court, must now repeat a no doubt costly and time-consuming defense all over again in federal court, a result not required by the mainstream of federal question jurisprudence," Justice Eva Guzman wrote, joined by Justices David Medina and Don Willett.