Patent Attorney Malpractice: Case-Within-A-Case-Within-A-Case

Akron Intellectual Property Journal, Dec 2012

A. Samuel Oddi

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Patent Attorney Malpractice: Case-Within-A-Case-Within-A-Case

Akron Law Journals Patent Attorney Malpractice: Case-Within-A-Case- Within-A-Case A. Samuel Oddi Please take a moment to share how this work helps you through this survey. Your feedback will be important as we plan further development of our repository. Follow this and additional works at: http://ideaexchange.uakron.edu/akronintellectualproperty Part of the Intellectual Property Law Commons Recommended Citation Oddi, A. Samuel (2012) "Patent Attorney Malpractice: Case-Within-A-Case-Within-A-Case," Akron Intellectual Available at: http://ideaexchange.uakron.edu/akronintellectualproperty/vol6/iss1/4 - PATENT ATTORNEY MALPRACTICE: CASEWITHIN-A-CASE-WITHIN-A-CASE A. Samuel Oddi* III. IV. I. INTRODUCTION: CASE-WITHIN-A-CASE As literary devices, a “story-within-a story” and a “play-within-aplay” have a long lineage.1 Shakespeare seems to have been particularly fond of these devices.2 The legal analog may be seen as the “case* Giles Sutherland Rich Professor in Intellectual Property, University of Akron School of Law. I would like to thank Dean Martin Belsky and Associate Dean William Jordon, University of Akron School of Law, for the grant of release time to undertake the completion of this article. I would also like to thank Kyle Passmore, Deputy Law Librarian, University of Akron School of Law, for her valuable research assistance, and my research assistant, Angela Cox, J.D. 2013, University of Akron School of Law, for her dedicated assistance in the preparation of this article. Finally, I would like to express my gratitude to my wife, Lorys Oddi, for her rigorous, but always helpful, editorial skills in reviewing numerous drafts of this article. 1. See, e.g., MIGUEL DE CERVANTES SAAVEDRA, DON QUIXOTE: COMPLETE AND UNABRIDGED (Walter Starkie trans., Signet Classics, reprint ed. 2009); FYODOR DOSTOEVSKY, THE BROTHERS KARAMAZOV (Andrew R. MacAndrew trans., Bantam Classics 1984); THOMAS KYD, THE SPANISH TRAGEDY (Charles T. Prouty ed., Harlan Davidson 1951). 2. See Richard L. McGuire, The Play-within-the-play in 1 Henry IV, 18 SHAKESPEARE QUARTERLY 47, 47 (1967); see also, e.g., WILLIAM SHAKESPEARE, A MIDSUMMER NIGHT’S DREAM (Simon & Schuster, reprint ed. 2004); WILLIAM SHAKESPEARE, HAMLET (Cyrus Hoy ed., 10- ODDI_MACRO_NEW FOOTNOTES FINAL.DOCM within-a-case” (“trial-within-a-trial,” “suit-within-a-suit”) arising in legal malpractice cases.3 The case-within-a-case terminology seems to be the most commonly used and hence will be used herein.4 While it is clear that the “case” is the malpractice case,5 it is not so clear what the “case-within-” is,6 which is usually referred to as the “underlying case.”7 Often, it seems to be presumed that the underlying case is limited to W. W. Norton Co., 2d. ed. 1992); WILLIAM SHAKESPEARE, THE TAMING OF THE SHREW (Jonathan Bate and Eric Rasmussen eds., Modern Library, reprint ed. 2010). 3. See 4 RONALD E. MALLEN & JEFFREY M. SMITH, LEGAL MALPRACTICE § 36:12 (2011); see also RESTATEMENT (THIRD) OF THE LAW: THE LAW GOVERNING LAWYERS § 53 cmt. b (2000); John H. Bauman, Damages for Legal Malpractice: An Appraisal of the Crumbling Dike and the Threatening Flood, 61 TEMP. L. REV. 1127 (1988) (discussing problems of limiting damages according to the case-within-a-case methodology to failure to obtain a judgment rather than the actual harm resulting from the malpractice); Lawrence W. Kessler, Alternative Liability in Litigation Malpractice Actions: Eradicating the Law Resort of Scoundrels, 37 SAN DIEGO L. REV. 401 (2000) (examining the development of alternative duty and proof doctrines and advocating for the application of the various doctrines in legal malpractice actions); Joseph H. Koffler, Legal Malpractice Damages in Trial Within a Trial–A Critical Analysis of Unique Concepts: Areas of Unconscionability, 73 MARQ. L. REV. 40 (1989) (discussing problems of fairness in applying the trial-within-a-trial doctrine in legal malpractice actions and making recommendations to eliminate the fairness problems); Adam J. Myers III, Misapplication of the Attorney Malpractice Paradigm to Litigation Services: “Suit Within a Suit” Shortcomings Compel Witness Immunity for Experts, 25 PEPP. L. REV. 1 (1997) (analyzing the application of the suit-within-a-suit doctrine in litigation services malpractice suits); Noreen L. Slank, Suit Within a Suit: A Doctrine Michigan Courts Hate to Love, 72 MICH. B. J. 1174 (1993) (defending the suit-within-a-suit doctrine and classifying it as “the tort system’s most powerful predictor of the correct result in a wide variety of legal malpractice actions.”). 4. See 4 MALLEN & SMITH, supra note 3, § 36:6. 5. Malpractice will be used herein as the generic term with the understanding that the malpractice claim may be based on professional negligence, breach of fiduciary duty, breach of contract, fraud, or other theory. See 1 MALLEN & SMITH, supra note 3, § 8:1: Most actions brought by clients against their attorneys are for negligence, fiduciary breach, breach of contract or fraud. Although there are other theories, these bases of liability are familiar, usually easier to establish and provide full relief. Debate about whether legal malpractice is based on contract or tort, and the nature of the tort, usually concerns application of a statute of limitations, or a statute providing a special remedy or damage recovery. Because alternative theories often are based on the same factual allegations as a negligence cause of action, such claims frequently are treated as redundant and are disregarded. In several jurisdictions, however, an action for legal malpractice, though sounding in tort, is an action in contract. (footnotes omitted) However, negligence will be referred to herein as the default theory in that it is the most commonly relied upon either solely or in combination of one or more of the other theories. See RESTATEMENT (THIRD) OF THE LAW: THE LAW GOVERNING LAWYERS §§ 48 cmt. c (2000) (theories of liability: tort and contract), 49 (breach of fiduciary duty); see also A. Samuel Oddi, Patent Attorney Malpractice: An Oxymoron No More, 2004 U. ILL. J.L. TECH. & POL’Y 1 (discussing the various elements and theories of malpractice cases involving patent attorneys). 6. See infra text accompanying notes 21-35. 7. See BLACK’S LAW DICTIONARY 245 (9th ed. 2009) (“case-within-a-case rule. Torts. The requirement that a legal-malpractice-action plaintiff show that, but for the attorney’s negligence, the plaintiff would have won the case underlying the malpractice action.”). 10- ODDI_MACRO_NEW FOOTNOTES FINAL.DOCM 73 litigation, which would have involved a trial culminating in a judgment being entered in favor of one of the parties.8 In many instances, litigation (real or hypothetical), indeed, is the source of the plaintiff’s injury and resulting damages as a consequence of an attorney’s malpractice.9 For example, if an attorney should miss a statute of limitations, thus barring the plaintiff from recovering against a party asserting the statute, the plaintiff must prove that, but for the negligence of its attorney, it would have prevailed against that party had the case been tried and gone to judgment.10 8. See, e.g., Bebo Const. Co. v. Mattox O’Brien, P.C., 990 P.2d 78, 83 (Colo. 1999) (“The plaintiff must demonstrate that the claim underlying the malpractice action should have been successful if the attorney had acted in accordance with his or her duties.”). 9. The RESTATEMENT (SECOND) OF TORTS §§ 1, 7, 12A (1965) provides separate definitions for “injury,” “harm,” “damages,” and “interest: § 7 Injury and Harm (1) The word “injury” is used throughout the Restatement of this Subject to denote the invasion of any legally protected interest of another. (2) The word “harm” is used throughout the Restatement of this Subject to denote the existence of loss or detriment in fact of any kind to a person resulting from any cause. . . . 12 A. Damages The word “damages” is used throughout the Restatement of this subject to denote a sum of money awarded to a person injured by the tort of another. §1. Interest The word “interest” is used throughout the Restatement of this subject to denote the object any human desire. Mallen & Smith, however, do not find these definitions useful, stating: The terms “damages” and “injury” frequently are used interchangeably. There is a difference, however, which can be important. The Restatement (Second) of Torts defines “injury” as “the invasion of any legally protected interest of another” and “damages” as “a sum of money awarded to a person injured by the tort of another.” Using those definitions, damages are the monetary value of an injury. The difference in meaning can be significant, if the issue concerns when a statute of limitations commences to run. Often, the date of injury is earlier than the date when the damages are ascertainable or fully developed. The Restatement’s general tort definition of “injury” is vague for use in the context of legal malpractice claims. A more useful and precise definition for a legal malpractice injury is the loss of a right, remedy or interest, or the imposition of a liability. Damages concern the measure of that injury. 1 MALLEN & SMITH, supra note 3, § 21.1 (footnotes omitted). The Restatement (Third) of the Law: The Law Governing Lawyers, appears to use the terms “injury” and “damages” interchangeably. See RESTATEMENT (THIRD) OF THE LAW: THE LAW GOVERNING LAWYERS § 48 (2000) (using “injury within the meaning of § 53,” with § 53 referring to “injury, as determined under generally applicable principles of causation and damages.”). For convenience, the terms “injury” and “damages” will be used interchangeably herein unless otherwise indicated. 10. See, e.g., Basset v. Sheehan, 184 P.3d 1072, 1077 (N.M. Ct. App. 2008) (granting summary judgment in favor of defendant firm, where plaintiff was unable to show that it would have prevailed against underlying defendant if the statute of limitations for the underlying claim had not been missed). 10- ODDI_MACRO_NEW FOOTNOTES FINAL.DOCM On the other hand, there are many situations where clients are injured due to the malpractice of attorneys that do not involve being denied a favorable judgment in litigation.11 An example of this in the context of patent law would be the negligent failure of a patent attorney to file a patent application on behalf of a client in a timely manner to avoid a statutory bar.12 This situation obviously does not involve litigation; nonetheless, the client has suffered the loss of a patent if it can be established that a patent would have been granted but for the failure of the attorney to file the application in a timely manner.13 If no patent would have been granted (e.g., because of prior art), the plaintiff would be unable to establish a causal connection between the attorney’s negligence and any damage suffered.14 On the other hand, even if the patent would have been granted, plaintiff will still have to establish in the malpractice case that it suffered damages—perhaps in the form of loss of infringement damages or license royalties.15 When the malpractice plaintiff has suffered injury in the form of loss of a favorable judgment as a consequence of the malpractice of its attorney, this type of case-within-a-case will be termed herein as the “judgment” model.16 According to this model, the malpractice plaintiff must prove that it would have received a more favorable judgment in the underlying case (litigation) but for the malpractice of the attorney.17 However, this model is only a species of the general class of injuries that may be suffered by clients due to the malpractice of their attorneys.18 When the malpractice plaintiff has suffered injury in other than the form of the loss of a favorable judgment as a consequence of the malpractice of its attorney, this type of case-within-a-case will be termed herein as the “non-judgment” model.19 The plaintiff, of course, bears 75 the burden of proving it suffered actual damages of a nature other than the loss of a favorable judgment in the underlying case.20 To further illustrate these models, a more comprehensive definition of the “casewithin-” (i.e., the underlying case) may be helpful. Indeed, “case” has a broader connotation than litigation/trial/suit. The venerable Black’s Law Dictionary gives the following definition: “case . . . [a] civil or criminal proceeding, action, suit, or controversy at law or in equity.”21 Thus, according to this definition, it would be appropriate to consider a “controversy” as being included within the “case-within-” (the underlying case) as well as “proceeding, action, suit” to which “trial” could be added. Courts, particularly those who are following the judgment model, often refer to “case-within-a-case” as a doctrine,22 rule,23 requirement,24 A plaintiff may show that the defendant’s negligence or fiduciary breach caused injury other than the loss of a judgment. For example, a plaintiff may contend that, in a previous action, the plaintiff would have obtained a settlement but for the malpractice of the lawyer who then represented the plaintiff. A plaintiff might contend that the defendant in the previous action made a settlement offer, that the plaintiff’s then lawyer negligently failed to inform plaintiff of the offer (see § 20(3)), and that, if informed, plaintiff would have accepted the offer. If the plaintiff can prove this, the plaintiff can recover the difference between what the claimant would have received under the settlement offer and the amount, if any, the claimant in fact received through later settlement or judgment. Similarly, in appropriate circumstances, a plaintiff who can establish that the negligence or fiduciary breach of the plaintiff’s former lawyer deprived the plaintiff of a substantial chance of prevailing and that, due to that misconduct, the results of a previous trial cannot be reconstructed, may recover for the loss of that chance in jurisdictions recognizing such a theory of recovery in professional-malpractice cases generally. The plaintiff in a previous civil action may recover without proving the results of a trial if the party claims damages other than loss of a judgment. For example, a lawyer who negligently discloses a client’s trade secret during litigation might be liable for harm to the client’s business caused by the disclosure. RESTATEMENT (THIRD) OF THE LAW: THE LAW GOVERNING LAWYERS § 53 cmt. b. 20. See ASTech, 676 F. Supp. 2d at 402. 21. BLACK’S LAW DICTIONARY 243 (9th ed. 2009). The use of this source seems particularly apropos in view of the Federal Circuit’s reliance on it in Davis v. Brouse McDowell, L.P.A. for the definition of a “claim” in a malpractice complaint. 596 F.3d 1355, 1360 (Fed. Cir. 2010). 22. See, e.g., Davis, 596 F.3d at 1360-61 (citing Envtl. Network Corp. v. Goodman Weiss Miller, LLP, 893 N.E.2d 173, 175 (Ohio 2008) and Vahila v. Hall, 674 N.E.2d 1164, 1168-69 (Ohio 1997)); see also Dan Nelson Constr., Inc. v. Nodland & Dickson, 608 N.W.2d 267, 271 (N.D. 2000). 23. See, e.g., Bauer v. Dyer, 782 So. 2d 1133, 1140 (La. Ct. App. 2001); Young v. Gum, 649 S.E.2d 469, 473 (N.C. Ct. App. 2007). 24. See, e.g., Air Measurement Techs., Inc. v. Akin Gump, 504 F.3d 1262, 1269 (Fed. Cir. 2007) ; Adamasu v. Gifford, No. 273895, 2008 Mich. App. LEXIS 1034, at *3 (Mich. Ct. App. May 15, 2008). or element,25 thus giving the impression that it is mandatory that the malpractice plaintiff prove that it would have prevailed to judgment in the underlying case to recover in the malpractice case. Recognizing that “case” has a broader meaning than “litigation” to include “controversies” may help to avoid this significant limitation to the scope of legal malpractice cases (controversies). Other courts have preferred to categorize “case-within-a-case” as a methodology26 or analysis27 rather than as a doctrine/rule/requirement/element. There seems to be considerable merit in this usage because the “case-within-a-case” methodology is being used whether the malpractice plaintiff is alleging damages for the failure to obtain a favorable judgment in the underlying litigation (judgment model) or actual damages suffered as a result of malpractice in representation in the underlying controversy (nonjudgment model).28 In both the judgment and non-judgment models, in the context of a malpractice case based on negligence, the duty and breach elements (constituting negligence) are the same for both the malpractice case and the underlying case (controversy), where malpractice is alleged to have occurred.29 However, in the “judgment” model, the causation and damage elements are conflated, with the only damage recoverable by the plaintiff being the hypothetical loss of a favorable judgment had the trial been held in the underlying case.30 Accordingly, the only “cognizable” damage in the “judgment” model is the loss of a favorable judgment in the hypothetical underlying case-within-a-case.31 There is, of course, no causal relationship between the negligent conduct of the defendant attorney and any damage suffered by the malpractice plaintiff, if damage 77 is limited to the loss of a favorable judgment in the underlying case and the plaintiff cannot establish that specific form of damage. In the “non-judgment” model, the duty-breach-causation elements are the same as in the “judgment” model;32 however, the damage element is determined by the nature of the damage the malpractice plaintiff pleads it has actually suffered, and such damage is not limited to prevailing in any hypothetical underlying case that would have resulted in a favorable judgment.33 In other words, the malpractice plaintiff in the “non-judgment” model is not required to prove it would have obtained a judgment in the underlying case, but only that it suffered actual damages causally related to defendant attorney’s negligence in the underlying transaction.34 These damages may be based on a variety of theories.35 In using the “case-within-a-case” methodology, it is important to recognize that the underlying case that precipitated the malpractice claim is not limited to litigation that would have resulted in a favorable judgment for the malpractice plaintiff, but also includes any controversy where, due to the malpractice of the attorney, plaintiff has suffered damages.36 The judgment and non-judgment models provide an explanatory framework. The elements of a legal malpractice case remain the same in both models, with the understanding that the damage element may be satisfied by the loss of a favorable judgment or other actual damages in the underlying case (controversy).37 A. Jurisdiction—Federal or State Malpractice cases brought against patent attorneys have a further complication. Malpractice cases traditionally fall within the jurisdiction 32. See 4 MALLEN & SMITH, supra note 3, § 36:1. 33. RESTATEMENT (THIRD) OF THE LAW: THE LAW GOVERNING LAWYERS § 53 cmt. b. 34. Id. 35. See 3 MALLEN & SMITH, supra note 3, Part IV (damages); see also John C.P. Goldberg, What Clients Are Owed: Cautionary Observations on Lawyers and Loss of Chance, 52 EMORY L.J. 1201, 1212-13 (2003) (advocating against the application of the loss-of-chance doctrine in legal malpractice cases); Kessler, supra note 3, at 516-17 (advocating for the application of the loss-ofchance doctrine in legal malpractice cases and arguing that calculating the lost settlement value of a case is the best method by which to calculate loss of chance); Polly A. Lord, Loss of Chance in Legal Malpractice, 61 WASH. L. REV. 1479 (1986) (discussing the loss-of-chance doctrine and advocating for application of the doctrine in certain legal malpractice cases); Id. at 1491-94. (advocating for the application of the loss-of- chance doctrine in legal malpractice actions that meet certain criteria). 36. See supra text accompanying notes 29-35. 37. See supra text accompanying notes 29-35. of state courts as state common law causes of action.38 Cases “arising under” the federal patent statute are within the exclusive jurisdiction of the federal courts.39 The issue then becomes whether malpractice cases against patent attorneys should fall within the jurisdiction of state courts, which would then be required to resolve questions of patent law, or whether such cases should fall within the exclusive jurisdiction of federal courts, which would then be required to resolve state questions of malpractice law. For better or worse, depending on one’s point of view, the Court of Appeals for the Federal Circuit has, at least so far, broadly assumed federal subject matter jurisdiction in malpractice cases involving patent attorneys based upon its definition of what constitutes a “substantial question of federal patent law.”40 The result, essentially, is that federal courts will decide state malpractice issues rather than state courts deciding federal patent law issues, although at least two judges on the Federal Circuit would limit the scope of the court’s jurisdiction but for stare decisis, and there are pockets of resistance in both state and federal courts to this perceived usurpation of historic state jurisdiction over legal malpractice claims.41 The Court of Appeals for the Federal Circuit was created by the Federal Court Improvement Act of 1982.42 The Federal Circuit was granted exclusive jurisdiction under 28 U.S.C. § 1295(a)(1) over “an appeal from a final decision of a district court of the United States . . . in any civil action arising under, or in any civil action in which a party has 38. See Minton v. Gunn (Minton I), 301 S.W.3d 702, 709 (Tex. App. 2009), overruled on other grounds by Minton v. Gunn (Minton II), 355 S.W.3d 634 (Tex. 2010). 39. 28 U.S.C. § 1338(a) (2006). See infra text accompanying note 44 (quoting statute). 40. On the federal subject matter jurisdictional issue, see generally 4 MALLEN & SMITH, supra note 3, § 35:4; DONALD CHISUM, CHISUM ON PATENTS §21.02 [1] & Supp (2011 ed.); see also Robert A. Mathews, Annotated Patent Digest § 36:19 (database updated Sept. 2011) (digesting jurisdictional cases involving patent attorney malpractice); Michael Ena, Comment, Jurisdictional Issues in the Adjudication of Patent Law Malpractice Cases in Light of Recent Federal Circuit Decisions, 19 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 219 (2008) (discussing Air Measurement/Immunocept and their implications for patent law practitioners); Christopher G. Wilson, Note, Embedded Federal Questions, Exclusive Jurisdiction, and Patent-Based Malpractice Claims, 51 WM. & MARY L. REV. 1237 (2009) (supporting state jurisdiction). 41. See Byrne v. Wood, Herron & Evans, LLP, 2011 -1012, 2011 U.S. App. LEXIS 23127 (Fed. Cir. Nov. 18, 2011) (discussed infra text accompanying notes 267-96); see also infra text accompanying notes 402-17, 424-53 (discussing cases challenging the jurisdiction of the Federal Circuit). As stated in Warrior Sports, Inc. v. Dickinson Wright, P.L.L.C., 666 F. Supp. 2d 749, 752 (E.D. Mich. 2009), vacated, 631 F.3d 1367 (Fed. Cir. 2011) , “[T]he Federal Circuit appears to impose . . . an all-embracing test, effectively aggregating ever greater swaths of state-law claims into its jurisdictional sweep.” 42. Federal Court Improvement Act of 1982, Pub. L. No. 97-164, 96 Stat. 25. 79 asserted a compulsory counterclaim arising under, any Act of Congress relating to patents . . . .”43 Under § 1338(a), federal district courts are granted “original jurisdiction of any civil action arising under any act of Congress relating to patents. . . .”44 Prior to this grant of exclusive appellate jurisdiction to the Federal Circuit, appeals from patent decisions of district courts were to the regional court of appeals.45 Among the reasons given for the creation of the Federal Circuit were to have patent cases decided by the expertise of a specialized court and to provide greater consistency in decisions relating to patents.46 With this creation of exclusive appellate jurisdiction in the Federal Circuit, questions had to arise of the interfaces of that jurisdiction with the regional federal circuit courts of appeal and with state courts. This article will first provide a brief history of the jurisdictional controversy between federal courts and between federal courts and state courts. Then, the question will be examined of how the subject matter jurisdictional question has been resolved with respect to patent attorney malpractice cases to the extent it has been to date in the federal and state courts. The manner in which the case-within-a-case doctrine or methodology has been used in deciding the jurisdictional question will also be investigated. In addition, the relevance of the use of the judgment or non-judgment model to determine patent attorney malpractice will be explored. Consideration will also be given to those decisions that have opposed a broad imposition of federal jurisdiction over malpractice cases involving patent attorneys. In conclusion, some general observations will be offered concerning the jurisdictional and substantive issues raised in patent attorney malpractice cases. A detailed discussion of all jurisdictional issues arising in patent attorney malpractice cases, however, will not be undertaken here as the focus of this article is the case-within-a-case methodology in the resolution of the basic question of whether there is federal or state jurisdiction over the case.47 1. United States Supreme Court and “Arising Under” Jurisdiction In 1988, the Supreme Court, in Christianson v. Colt Industries Operating Corp. (Christianson IV),48 interpreted § 1338(a) in order to resolve a jurisdictional controversy between the Federal Circuit and the Court of Appeals for the Seventh Circuit and hence to avoid, as Justice Brennan referred to it, “a perpetual game of jurisdictional ping pong.”49 Both courts denied having jurisdiction.50 Christianson was a former employee of Colt who began to sell M-16 rifle parts in competition with Colt.51 Colt brought suit in a federal district court against Christianson and others for patent infringement, and breach of proprietary information and non-disclosure agreements.52 After Colt voluntarily dismissed its claims against Christianson, he brought antitrust actions under the Clayton and Sherman Acts against Colt, and also included allegations that the Colt patents were invalid for failing to satisfy the enabling and best-made requirement of 35 U.S.C. § 112 of the Patent Act.53 In the district court, Christianson prevailed on antitrust counts against Colt and also had nine of Colt’s patents declared invalid.54 Colt appealed to the Federal Circuit; however, the Federal Circuit declined jurisdiction and referred the case to the Seventh Circuit.55 The Seventh Circuit, sua sponte, raised the jurisdictional issue and determined that it did not have subject matter jurisdiction; rather, the Federal Circuit did.56 The Federal Circuit then “in the interest of justice” proceeded to take the appeal and reversed the district court.57 81 The Supreme Court granted certiorari and resolved the controversy by applying prior “arising under” holdings.58 The Court concluded: Linguistic consistency, to which we have historically adhered, demands that § 1338(a) jurisdiction likewise extend only to those cases in which a well-pleaded complaint establishes either that federal patent law creates the cause of action or that the plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the wellpleaded claims.59 The Court concluded that neither the antitrust claims nor the state claim arose under patent law, so the jurisdictional issue here depended upon “whether patent law ‘is a necessary element of one of the well pleaded [antitrust] claims.’”60 As the antitrust claims could be resolved without reference to patent law, the Court held that the Federal Circuit did not have “arising under” jurisdiction.61 Thus, there are two prongs to the appellate jurisdiction of Federal Circuit: (1) “primary” jurisdiction where “federal patent statute creates the cause of action”62 (e.g. patent infringement), and (2) “substantial question” jurisdiction where “plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims.”63 With respect to the interface between state jurisdiction and federal jurisdiction, in 1986, the Supreme Court had held in Merrell Dow Pharmaceuticals, Inc. v. Thompson64 that “a complaint alleging a violation of a federal statute as an element of a state cause of action, when Congress has determined that there should be no private, federal cause of action for the violation, does not state a claim ‘arising under the Constitution, laws, or treaties of the United States,’” that would grant federal jurisdiction under 28 U.S.C. § 1331.65 58. Christianson IV, 486 U.S. 800, 807 (1988). 59. Id. at 808-09 (emphasis added). 60. Id. 61. Id. at 812-13. The Court also concluded that in the “interests of justice” trying to resolve a “ping pong” situation did not authorize a court to decide a case in the absence of subject matter jurisdiction. Id. at 818. 62. Id. at 808-09. 63. Id. 64. Merrell Dow Pharms., Inc. v. Thompson, 478 U.S. 804 (1986). 65. Id. at 817 (citation omitted). In Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing,66 decided in 2005, the Court resolved a conflict within the circuits as to whether Merrell Dow required a federal cause of action “arising under” the statute in question as a condition for exercising federal jurisdiction.67 The Court held that it did not when the question involved the interpretation of an Internal Revenue Code provision relating to the notice requirement for quieting title.68 The Court stated that Merrell Dow was not to the contrary;69 however, it did provide the following qualification: Because arising-under jurisdiction to hear a state-law claim always raises the possibility of upsetting the state-federal line drawn (or at least assumed) by Congress, the presence of a disputed federal issue and the ostensible importance of a federal forum are never necessarily dispositive; there must always be an assessment of any disruptive portent in exercising federal jurisdiction. . . . These considerations have kept us from stating a “single, precise, all-embracing” test for jurisdiction over federal issues embedded in state-law claims between nondiverse parties. . . . Instead, the question is, does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities.70 As will be seen by the following decisions of the Federal Circuit defining its subject matter jurisdiction under § 1338(a) in patent attorney malpractice cases, it has laid primary emphasis on Christianson VI, liberally interpreting what constitutes a “substantial question of federal patent law” within the context of the “case-within-a-case.”71 2. Federal Circuit Jurisdiction and Case-Within-a-Case In a series of cases prior to any case dealing with patent attorney malpractice, the Federal Circuit held that it had jurisdiction based on a substantial question of patent law arising in a number of contexts.72 In Additive Controls & Measurement Systems, Inc. v. Flowdata, Inc.,73 decided in 1993, the court held that there was federal jurisdiction over a state business disparagement claim that required proof of noninfringement of a patent to resolve the case.74 Similarly, in Hunter Douglas, Inc. v. Harmonic Design, Inc.,75 decided in 1998, the court found federal jurisdiction over a state law claim of injurious falsehood that required proof of the invalidity of a patent.76 In 2000, the court in U.S. Valves, Inc. v. Dray,77 held that there was § 1338 jurisdiction over a breach of contract claim that required proof of patent infringement.78 In 2002, the court held in University of West Virginia v. VanVoorhies79 that there was § 1338 jurisdiction over the issue of whether there was a breach of duty to assign a patent required determination if the disputed patent application was a continuation-in-part application.80 It was not, however, until 2007 that the Federal Circuit had an opportunity to address the issue of whether it had subject matter over a state malpractice case involving patent attorneys in two cases, decided on the same day by the same panel.81 In Air Measurement Technologies, Inc. v. Akin Gump (Air Measurement),82 plaintiff (AMT) filed a malpractice claim against its former patent firms (defendants) in a Texas state court alleging that, due to the defendants’ negligence, plaintiff was “forced . . . to settle the prior litigation far below the fair market value of the patents because the prior litigation defendants were, inter alia, able to raise as defenses invalidity (e.g., an on sale bar) and unenforceability (due to inequitable conduct) that would not have existed without attorney error.”83 Indeed, six infringement cases were settled by AMT “for a total of approximately $10 million without a judicial determination of infringement, invalidity, or unenforceability of AMT’s patents.”84 The defendants then removed the case to the Federal District Court for the Western District of Texas.85 Plaintiff then moved to have the case remanded to state court, which was denied.86 The parties then changed their jurisdictional positions, with defendants now moving to have the case remanded to state court, which was opposed by plaintiff AMT.87 The district court again refused to remand the case.88 Defendants appealed the jurisdictional issue to the Federal Circuit, which accepted it as presenting an issue of “first impression.”89 To resolve the question, the Federal Circuit (opinion by Chief Judge Michel, joined by Judges Lourie and Rader) applied the “second prong” of Christianson test to determine “whether patent law is a necessary element of [plaintiff’s] malpractice claim.”90 The court recited the elements of a malpractice case in Texas91 and concluded that the case-within-a-case “requirement” applied: Because AMT’s malpractice claim stems in part from unsuccessful prior litigation, AMT must establish that they would have prevailed in the prior litigation but for Akin Gump’s negligence that compromised the litigation. This is called the “case-within-a-case” requirement of the proximate cause element of malpractice.92 As authority for the proposition that the “case-within-a-case requirement” is a component of the “proximate cause” element of a malpractice action, the court cites and quotes from a Texas appellate court case: “Because the plaintiff must establish that the underlying suit would have been won ‘but for’ the attorney’s breach of duty, this ‘suit within a suit’ requirement is necessarily a component of the plaintiff’s burden on cause in fact.” 93 This reliance is not further explained, but the court goes on to conclude: 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.94 While “proof of patent infringement is necessary to show AMT would have prevailed in the prior litigation,” it does not follow that “patent infringement is a ‘necessary element’ of AMT’s malpractice claim . . . .”95 The damages being claimed by AMT in the malpractice claim are not infringement damages, but rather “impaired settlement value” as a consequence of defendants’ alleged malpractice.96 Thus, the Federal Circuit seems to adopt, without elaboration, the “judgment” model of the case-within-a-case methodology, leading to the same requirements for a finding of federal jurisdiction as for malpractice action where the plaintiff must prove that it would have obtained a judgment in the underlying case.97 This result will be further explored below.98 To buttress its jurisdictional finding the Federal Circuit reasoned: Indeed, we would consider it illogical for the Western District of Texas to have jurisdiction under § 1338 to hear the underlying infringement suit and for us then to determine that the same court does not have jurisdiction under § 1338 to hear the same substantial patent question in the “case-within-a-case” context of a state malpractice claim.99 Thus, the logical conclusion would seem to be that, if the underlying case (infringement) would invoke the “first prong” of the “arising under” jurisdiction interpretation of § 1338(a) in Christianson VI, then the “second prong” would also be satisfied. It seems clear that if plaintiff must prove patent infringement, there is a “significant question of patent law,” but the fact that a district court has jurisdiction over a patent infringement case does not necessarily lead to the conclusion that a finding of patent infringement is the only means by which the patent 93. Id. at 1269 (citing Ballesteros, 985 S.W.2d at 489) (emphasis added). 94. Id. (citing Christianson IV, 486 U.S. 800, 809 (1988)) (emphasis added). 95. Id. (emphasis added). 96. See id. at 1270-71. 97. See id. 98. See infra text accompanying notes 119-29. 99. Air Measurement Techs., Inc. v. Akin Gump, 504 F.3d 1262, 1269 (Fed. Cir. 2007) (emphasis added). owner might have suffered damages as a consequence of patent attorney negligence.100 As the court considered proof of infringement as critical to the jurisdiction issue, it also noted that, in addition to proving patent infringement within the “‘case-within-a-case’ context,” the plaintiff would have to show that it would have prevailed against the defenses that the prior litigants raised.101 These defenses included allegations of a statutory bar and inequitable conduct.102 The court did not consider these as “jurisdiction-defeating defenses contemplated by Christianson, . . . for they are part of the malpractice causation element rather than the defenses raised by [defendants] in the current litigation.”103 However, in the context of whether these defenses had to be valid or merely available, the court states rather cryptically: “To the extent that AMT has to prove or overcome invalidity, invalidity may be a substantial question of patent law.”104 The court then states the ultimate importance of proving infringement for jurisdictional purposes: “Regardless of the defenses AMT would have to address, if any, AMT would certainly have to prove patent infringement; that alone confers § 1338 jurisdiction.”105 The court does not address the question of whether the defenses themselves would raise a substantial question of patent law justifying the grant of federal jurisdiction.106 Certainly, the potential invalidity of a patent because of a statutory bar or its unenforceability because of inequitable conduct is as critical to the patent owner as is proving infringement.107 Indeed, the issue of infringement, of course, depends on the validity and enforceability of the patents being asserted.108 The Federal Circuit finally addressed the damage issue, but still within the context of patent infringement.109 In an attempt to avoid federal jurisdiction, defendants contended that the “impaired settlement value theory . . . is a novel theory of malpractice that does not require the resolution of a substantial question of patent law.”110 The court dismisses this argument, viewing “the impaired settlement value theory as a theory of damages not a theory of liability for malpractice.”111 It defined “the impaired settlement value theory as calculat[ing] the difference between the actual settlement amount and the predicted settlement amount absent [of] malpractice.”112 But then the court goes on without further elaboration: “In addition to computation of damages, AMT must still prove it would have been successful in the underlying litigation but for the alleged errors, which will require proof of patent infringement.”113 This conclusion begs the question: Why in addition to the computation of damages (presumably according to the loss of settlement value theory) must plaintiff prove infringement? It would appear that the purpose of a settlement is to avoid the expense and uncertainty of the outcome of an infringement trial.114 The settlement presumably would have occurred prior to any judgment of infringement being reached.115 Indeed, in this case, the six infringement cases were settled for about $10 million without any determination of infringement or entering of a judgment to that effect.116 What plaintiff is claiming is that, because of the negligent handling of the litigation, it was unable to settle the infringement case at a higher value than it would otherwise have had defendants not been negligent.117 This determination is 109. Air Measurement, 504 F.3d at 1271. 110. Id. at 1270. 111. Id. at 1271. 112. Id. The court presumably accepts this theory of damages based on Texas state law. However, Professor Dobbs observes: [T]he fact that every case has a settlement value, even if it is very small, does not mean that the plaintiff-client whose case would have been lost even by the best lawyering should recover a settlement value from her malpracticing lawyer. It is convenient to treat these examples in the discussion of remedies, but they suggest that the case with a case puzzle probably has not been finally solved. DAN B. DOBBS, THE LAW OF TORTS § 486 (2000). 113. Air Measurement, 504 F.3d at 1271. 114. See Jay P. Kesan & Gwendolyn G. Ball, How Are Patent Cases Resolved? An Empirical Examination of the Adjudication and Settlement of Patent Disputes, 84 WASH. U. L. REV. 237, 312 (2006) (finding that “most patent cases settle fairly quickly . . . thereby reducing the actual cost of patent litigation considerably.”). 115. Id. 116. Air Measurement, 504 F.3d at 1266. 117. Id. independent of any finding of infringement. The value of the settlement would, seemingly, depend on the strength of the patent, which, according to plaintiff, was undermined by defendants’ negligence.118 If plaintiff must prove that the patent was infringed, this eliminates loss of settlement value as a theory of damages. The confusion is confirmed by the following sentence of the court: “Thus, the impaired settlement value theory does not obviate the ‘casewithin-a-case’ element of AMT’s claim.”119 Indeed, the case-within-acase methodology is essential to plaintiff’s malpractice claim, because, if plaintiff can prove impairment of the settlement value that would not have occurred but for the negligence of defendants, plaintiff would have satisfied the elements of its malpractice case—presuming that the nonjudgment model is recognized.120 Plaintiff may be able to prove that there was a loss of settlement value even if the patents would hypothetically have been found not to be infringed. It would seem, if patents involved in litigation have a settlement value prior to a judgment being entered by a court for infringement, that settlement value may be adversely affected by negligent conduct on the part of plaintiff’s attorneys in the infringement litigation. It does not seem justified to presume that a patent has a settlement value only if it would have been infringed. The final argument raised by defendants in Air Measurement against the grant of federal jurisdiction was that “Grable adds a new dimension to the Christianson test based on the congressionally118. Id. at 1271; On settling patent infringement cases, see Kesan & Ball, supra note 114, at 243 (footnotes omitted): There is general agreement that the costs associated with pursuing a patent lawsuit are high. Previous authors have cited legal costs of patent litigation running from $500,000 to $3 million per suit or $500,000 per claim at issue per side. These costs create incentives for the parties to settle their dispute rather than seek a final judgment on the merits. Throughout the case, the parties will be receiving additional information about the strength of their positions through the results of discovery, the court’s construction of the patent claims at issue, rulings on motions for summary judgment, rulings on preliminary injunctions, and the like. Economic theory suggests that when it becomes obvious that a patent is very likely to be invalidated, it is in the best interests of the patent holder to offer a cheap license to keep the patent rights intact, and it is in the best interests of the defendant to accept such an offer rather than incur further significant legal costs. Specifically, it is in the interest of the alleged infringer to accept a license if its cost would be less than the cost of continued litigation. Only patent disputes where it is difficult to predict who will win are likely to proceed further to a final determination on the merits. 119. Air Measurement, 504 F.3d at 1271 (emphasis added). 120. See supra text accompanying notes 19-20 and 26-34. 89 approved balance between federal and state jurisdiction.”121 The Federal Circuit rejects this argument, asserting that there is a strong federal interest in adjudicating patent infringement issues in federal courts as patents are issued by a federal agency and also that litigants benefit from the expertise of federal judges in “construction and infringement matters.”122 It is not apparent from the reasoning in Air Measurement whether the Federal Circuit is adopting a judgment model of the case-within-acase methodology. The problem faced by plaintiff—now having prevailed on the federal jurisdiction issue—is whether, in order to recover any damages, it must prove infringement of its patents and prevail over the defenses of invalidity as being statutorily barred and unenforceability for inequitable conduct.123 If the court is adopting the judgment model, it would result in the introduction of a case-within-a-case methodology in the underlying case (the case-within-) to establish jurisdiction (duty-breach-causationdamages (infringement)).124 The same case-within-a-case methodology would then be applied to the underlying case to resolve the malpractice (duty-breach-causation–damages (infringement or “impaired settlement value”?)).125 Hence, the result is the application of the case-within-acase-within-a-case “approach.”126 The consequences of this approach would seem to result in “the tail wagging the dog,” with the resolution of the jurisdiction issue seemingly determining the scope of the malpractice case. For jurisdiction, the malpractice plaintiff must prove infringement and must also prove infringement for malpractice damages to be awarded, even though the claimed damage is diminished settlement value, not infringement damages.127 The court conflates the jurisdictional issue (“substantial question of patent law”) with the malpractice case,128 while federal “arising under” jurisdiction need only be established by a substantial question of patent law being raised, presumably with respect to any element (duty, breach, causation, damage) of the malpractice case.129 121. Air Measurement, 504 F.3d at 1271. 122. Id. at 1272. 123. See id. at 1270-71. 124. See supra text accompanying notes 31-35. 125. See supra text accompanying notes 31-35. 126. The word “approach” is used here for want of a better term. 127. Air Measurement, 504 F.3d at 1271. 128. Id. 129. See infra text accompanying notes 251-55. malpractice action453 where the defendant attorney was accused of negligently allowing plaintiff’s patent to expire and hence losing the benefit of a broadened claim in a reissue patent, which would have been otherwise infringed by a third party.454 With respect to the patent in question and the issue of its hypothetical infringement, the state trial court, inter alia, had held a Markman hearing, construed the claims, including determining whether mean plus function claims, and applied the doctrine of equivalents.455 The Nebraska Supreme Court concluded on the jurisdictional issue: We conclude that contrary to the defendant’s suggestion, this case is not one “arising under” the patent law within the meaning of § 1338(a). The sole cause of action presented in this case is professional negligence. Patent law is implicated only incidentally, in that the measure of New Tek’s alleged damages requires consideration of the hypothetical infringement of the [reissue] patent. But the precise question is not whether Orthman Manufacturing infringed on the [reissue] patent; rather, the question is whether, absent [defendant attorney’s] negligence, New Tek would have been successful in an infringement action against Orthman. . . . The construction and alleged infringement of the [reissue] patent is relevant only insofar as it helps us to determine who would have prevailed in that hypothetical action. Simply stated, it is difficult to see how this case arises under federal patent law when on the record before us, the only patent that has been construed, and of which infringement is alleged, has expired. The federal government has no interest in hypothetical determinations regarding an unenforceable patent.456 The court remanded the case to the lower court to reconsider the issue of infringement under the doctrine of equivalents.457 Magnetek, Inc. v. Kirkland & Ellis,458 decided by the Appellate Court of Illinois, First District, in 2011, presents a malpractice case against a patent firm, which denies federal jurisdiction on the basis of collateral estoppel.459 The controversy began in 1998 when the underlying infringement case was brought in the District Court for the Northern District of Illinois by the patent owner Nilssen against the plaintiff Magnetek, who was represented in the infringement case by 453. Id. at 346. 454. Id. at 343-44. 455. Id. at 344. 456. Id. at 346. 457. Id. at 355. 458. Magnetek, Inc. v. Kirkland & Ellis, 924 N.E.2d 803 (Ill. App. Ct. 2011). 459. See id. at 818-19. defendant Kirkland.460 The parties agreed to arbitrate the claim and, as part of the settlement agreement, Nilssen agreed not to pursue willful infringement and Magnetek agreed not to assert inequitable conduct as a defense.461 The arbitration resulted in an award of over $23 million for Nilssen, which was settled for $18.75 million.462 It was not until 2008 that Nilssen petitioned for the certification of the arbitration award in federal district court.463 Magnetek, with new counsel, then moved to have the arbitration award vacated on the grounds that it had, in the meantime, discovered facts that would have rendered the patent in question unenforceable based upon the inequitable conduct of Nilssen.464 In fact, in an infringement case originally filed in 2001, the patent in question (‘409), among others, had been held unenforceable in Nilssen v. Osram Sylvania, Inc. (Osram I),465 decided by the District Court for the Northern District of Illinois in 2006, because of inequitable conduct, which was affirmed by the Federal Circuit the following year.466 Kirkland had represented Osram in the infringement case and does not deny that it asserted the inequitable conduct defense on Osram’s behalf.467 Nonetheless, the district court refused to vacate the arbitration award because Magnetek could not produce clear and convincing evidence of the fraud before the Patent Office, and that such evidence was not discoverable prior to the arbitration.468 After this decision, Magnetek filed a malpractice claim against defendant Kirkland in the Circuit Court for Cook County.469 The defendant moved to have the case dismissed for lack of subject matter jurisdiction, which was granted by the state court, and Magnetek appealed.470 The Illinois Appellate Court concluded that the inequitable conduct holding against the patent owner Nilssen was governed by the doctrine of collateral estoppel,471 stating: 10- ODDI_MACRO_NEW FOOTNOTES FINAL.DOCM The doctrine of collateral estoppel dictates that the final determination of the unenforceability of the ‘409 patent applies in the underlying lawsuit. The Supreme Court and the Federal Circuit have long recognized that when a patent has been held to be unenforceable in a suit involving one alleged infringer, an unrelated party may rely on that unenforceability decision under the principles of collateral estoppel.472 Then the court relied upon the Federal Circuit’s interpretation of Grable in Lab. Corp. as requiring a “disputed” question of federal patent law: Consequently, as the Federal Circuit discussed in [Lab. Corp.], the issue of the unenforceability of the ‘409 patent, based on the defenses asserted by Osram and now claimed by Magnetek, “has been resolved and is no longer disputed.” [citing LabCorp] While a finding of legal malpractice would depend on the unenforceability of the ‘409 patent, the circuit court would not have to conduct an independent analysis of unenforceability because the district court established, and the Federal Circuit affirmed, the merits of that claim and neither party contests those decisions. . . . Therefore, there is no “disputed” federal patent issue raised by Magnetek’s legal malpractice complaint that would give rise to federal jurisdiction.473 The presumably “substantial” but not “disputed” question of patent law of inequitable conduct having been once and for all determined thus eliminated any further basis for federal jurisdiction.474 The malpractice case would have to proceed in state court under that determination to resolve whether the plaintiff Magnetek could establish all elements of its malpractice case accordingly.475 The court did not consider that Kirkland was prejudiced by the fact that the Osram case was decided after the arbitration because the law of inequitable conduct was the same at both times.476 Other courts that have either refused to follow or have distinguished Air Measurement and Immunnocept are detailed in the Appendix. 472. Id. at 818 (citations omitted). 473. Id. at 819 (citing Lab. Corp. IV, 599 F.3d 1277, 1284 (Fed. Cir. 2010) (citations omitted)). 474. Magnetek, 924 N.E.2d at 810. 475. Id. at 819. 476. Id. at 820. 10- ODDI_MACRO_NEW FOOTNOTES FINAL.DOCM Summary Most courts, federal and state, appear to accept the jurisdictional scope of Air Measurement and Immunocept and apply the case-within-acase methodology in resolving the jurisdictional question of whether a significant question of patent law is raised within the elements of the malpractice case. It also appears that malpractice plaintiffs prefer state jurisdiction, while defendant patent attorney prefer federal jurisdiction. Conventional wisdom might suggest that plaintiffs perceive that state courts provide a local advantage and judges familiar with handling malpractice cases, while defendant attorneys may perceive it to be advantageous to be in the more familiar federal court system and also to rely upon the expertise in patent matters of the federal courts, particularly appeals to the Federal Circuit. Presumably, the federal district courts that seem to reject or severely limit Air Measurement/Immunocept will be brought into line as seen in Warrior Sports and what may be expected in the Fifth Circuit under USPPS. Also, it may be expected that decisions like that of the Nebraska Supreme Court in the New Tek cases may be blunted by defendant patent attorneys using the removal process to federal district courts, presuming these courts will be receptive to removal. III. OTHER JURISDICTIONAL ISSUES BEYOND CASE-WITHIN-A-CASE There are a number of issues relating to jurisdiction in patent attorney malpractice cases that are beyond the scope of this article and will have to wait for further developments. These include: how should a “claim” in a complaint as the basis for federal jurisdiction be defined as contrasted to a “theory” underlying the claim;477 when, if ever, should a defense raising a substantial question of patent law justify the grant of 477. See, e.g., Eddings v. Glast, Phillips & Murray, Civil Action No. 3:07-CV-1512-L, 2008 U.S. Dist. LEXIS 48589 (N.D. Tex. June 24, 2008) (if the malpractice plaintiff can recover on any theory not involving patent law, no federal jurisdiction); Danner, Inc. v. Foley & Lardner, LLP, No. CV 09-1220-JE, 2010 U.S. Dist. LEXIS 63590 (D. Or. June 23, 2010) (remanded malpractice case to state court distinguishing Davis as only involving one claim and at least one of the theories did not involve patent law). Compare Davis v. Brouse McDowell, L.P.A., 596 F.3d 1355, 1359-60 (Fed. Cir. 2010) (broadly defining “claims” and finding federal jurisdiction on one claim raising substantial question of patent law and assuming supplemental jurisdiction over claim of failure to file PCT applications) with Clearplay, Inc. v. Max Abecassis, 602 F.3d 1364 (Fed Cir. 2010) (finding no jurisdiction because none of claims required patent law to resolve) (see text accompanying notes 233-44). See also Revolutionary Concepts, Inc. v. Clements Walker PLLC, 2010 NCBC 4 (N.C. Super. Ct. 2010) (malpractice plaintiff permitted to voluntarily dismiss claim involving question of patent law to retain state jurisdiction). 10- ODDI_MACRO_NEW FOOTNOTES FINAL.DOCM federal jurisdiction;478 should federal jurisdiction be granted in malpractice cases involving foreign or PCT applications or patents;479 what is the impact of 28 U.S.C. § 1447 on the Federal Circuit’s jurisdiction;480 how should the statute of limitations be applied;481 478. See, for example, E-Pass Techs., Inc. v. Moses & Singer, LLP, 117 Cal. Rptr. 3d 516 (Cal. Ct. App. 2010), in which a plaintiff’s malpractice claim was that defendant patent attorneys were negligent in advising it to file infringement suits. Defendants argued that the state court lacked jurisdiction because its defense was that the patents were infringed. Id. at 520. The court held that plaintiff’s claim was based on the state issue of whether defendants had breached the standard of care and the matter of its defense involving patent law did not oust state court jurisdiction. Id. at 525-27. Compare Air Measurement Techs., Inc. v. Akin Gump, 504 F.3d 1262, 1266 (Fed. Cir. 2007) , in which the Federal Circuit stated: In addition to proving patent infringement in the “case-within-a-case” context, AMT will have to show that it would have prevailed against the defenses the prior litigants raised. These are not the sort of jurisdiction-defeating defenses contemplated by Christianson, 486 U.S. at 809, for they are part of the malpractice causation element rather than the defenses raised by Akin Gump in the current litigation. Id. at 1270. See discussion supra text accompanying notes 81-127. It is interesting to note that plaintiff E-Pass filed a malpractice action in federal district court after the trial court but before the appellate court decision alleging that defendant patent attorneys had “misunderstood and misconstrued the [ ]patent in the underlying federal actions.” E-Pass Techs. v. Moses & Singer, LLP, No. C-09-5967 EMC, 2011 U.S. Dist. LEXIS 128018, at *31 (N.D. Cal. Nov. 4, 2011) . The district court refused to dismiss the action on diversity grounds but also maintained subject matter jurisdiction on the basis of the allegation, citing Air Measurement. Id. at *30-31. 479. See, e.g., Antiballistic Sec. & Prot., Inc. v. Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., 789 F. Supp. 2d 90 (D.D.C. 2011) (no federal question as alleged malpractice was not filing Canadian patent applications; U.S. patents had issued); Davis, 596 F.3d at 1357 (one claim was for failure to file PCT applications and a second claim was for failure to properly file U.S. applications). See also Revolutionary Concepts, 2010 NCBC 4 (“Where the issues involve foreign patent rights and issues of whether a lawyer complied with a standard of care, federal jurisdiction is not mandated.”). 480. See Arc Products, L.L.C. v. Kelly, 424 Fed. App’x 944, 946 (Fed. Cir. 2011) , dismissing appeal in No. 4:10-CV-1248 CEJ, 2010 WL 4363427 (E.D. Mo. Oct. 27, 2010) and Genelink Biosciences, Inc. v. Colby, 423 Fed. App’x 977, 979 (Fed. Cir. 2011) , dismissing appeal in CIVIL NO. 09-5573(NLH)(AMD), 2010 U.S. Dist. LEXIS 66177 (D.N.J. July 1, 2010). In both district court cases, defendant attorneys had moved to remove the malpractice case to federal court and the malpractice plaintiffs moved to remand to state court. Both district courts granted the remand on the basis that there was no federal jurisdiction. Defendants appealed to the Federal Circuit, with the opinions being issued on the same day by the same panel. Although indicating that the district court’s ruling in the New Jersey case “appears contrary to this court’s precedent,” the Federal Circuit in Arc Products held that: “We have no authority to reverse or affirm the merits of the court’s decision beyond a determination of the court’s characterization of its remand as resting upon lack of subject-matter jurisdiction” according to 28 U.S.C. § 1447(d), which states: “An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise. . . . ” Arc Products, 424 Fed. App’x at 946. The same result was reached in Genelink Biosciences, 423 Fed. App’x at 978. See Scott F. Haiber, Removing the Bias Against Removal, 53 CATH. U. L. REV. 609 (2004); Rhonda Wasserman, Rethinking Review of Remands: Proposed Amendments to the Federal Removal Statute, 43 EMORY L.J. 83 (1994); see also Thomas C. Goodhue, Note, Appellate Review of Remand Orders: A Substantive/Jurisdictional Conundrum, 91 IOWA L. REV. 1319 (2006). 10- ODDI_MACRO_NEW FOOTNOTES FINAL.DOCM should the broad federal jurisdictional sweep of Air Measurement/Immunocept be extended to malpractice involving copyright, trademark or other forms of intellectual property law?482 The case-within-a-case methodology would appear to provide a workable methodology for resolving the federal or state jurisdictional issue in malpractice cases involving patent attorneys. In the paradigm negligence case, a substantial question of patent law can arise with respect to any of the elements of the case—duty, breach, causation, or damages. The same is true with respect to malpractice cases based on other state-based theories of malpractice, including breach of fiduciary duty, breach of contract, or fraud. Federal jurisdiction should not be limited to cases where malpractice plaintiffs are claiming the loss of a favorable judgment in the underlying case (the judgment model). To avoid this limitation, a broader definition of “underlying case” should be recognized to expend beyond litigation to any “controversy” (the nonjudgment model), raising a significant question of patent law in any element of the malpractice case. Reference to the judgment/nonjudgment models may avoid the complications raised in Air Measurement of the “case-within-a-case-within-a-case,” where federal jurisdiction according to the Federal Circuit required the malpractice plaintiff to establish that it would have obtained a judgment of infringement in an infringement suit that had been settled, while claiming damages in the malpractice based upon “diminished settlement value.” While the case-within-a-case methodology may be workable, it appears clear from a review of the post Air Measurement/Immunocept cases that malpractice plaintiffs prefer state courts and defendant patent 481. The statute of limitations may provide an obstacle to recovery by malpractice plaintiffs who file in either state or federal district courts and have their cases dismissed for lack of subject matter jurisdiction. See, e.g., Landmark Screens, LLC v. Morgan, 107 Cal. Rptr. 3d 373 (Cal. Ct. App. 2010) (plaintiff filed in state court, which dismissed for lack of jurisdiction) (discussed supra text accompanying notes 407-28). 482. Compare Singh v. Duane Morris LLP, 538 F.3d 334 (5th Cir. Tex. 2008) (no federal jurisdiction in malpractice case involving trademarks) (discussed supra text accompanying notes 327-34), with Harness, Dickey & Pierce, P.L.C, v. Powerhouse Marks, LLC, Case numbers 0810292&08-10484, 2008 U.S. Dist. LEXIS 78561(E.D. Mich, Sept. 29, 2008) (federal jurisdiction in trademark malpractice case). Compare James H. Anderson, Inc. v. Johnson, No. 08 CV 6202, 2009 U.S. Dist. LEXIS 65001 (N.D. Ill. July 27, 2009) (copyright malpractice case that follows Singh no federal jurisdiction), with Katz v. Holland & Knight LLP, No. 1:08cv1137, 2009 U.S. Dist. LEXIS 10721 (E.D. Va. Feb. 12, 2009) (federal jurisdiction in copyright malpractice case). 10- ODDI_MACRO_NEW FOOTNOTES FINAL.DOCM attorneys prefer federal courts, thus requiring resolution of the jurisdiction issue in many cases by the lower court (state or federal district), leading, of course, to many appeals. Whether the jurisdictional advantages perceived by the parties are worth the additional time and expense cannot be determined by reading the cases; however, both parties run the risk of having an appeals court ruling that the trial court, and hence the appellate court, did not have subject matter jurisdiction, and there is the potential problem of the statute of limitations. Thus, careful consideration must be given by both sides in patent attorney malpractice cases to subject matter jurisdiction beyond perceived (real or imagined) jurisdictional advantages. 10- ODDI_MACRO_NEW FOOTNOTES FINAL.DOCM 140 AKRON INTELLECTUAL PROPERTY JOURNAL 10- ODDI_MACRO_NEW FOOTNOTES FINAL.DOCM 142 AKRON INTELLECTUAL PROPERTY JOURNAL 10- ODDI_MACRO_NEW FOOTNOTES FINAL.DOCM 144 AKRON INTELLECTUAL PROPERTY JOURNAL 10- ODDI_MACRO_NEW FOOTNOTES FINAL.DOCM h. i. j. k. l. m. n. o. p. q. AKRON INTELLECTUAL PROPERTY JOURNAL [6:71 No. 09AP-1051, 2010 Ohio App. LEXIS 1704 (Ohio Ct. App. 10th Dist. May 11, 2010). 661 F. Supp. 2d 125 (D. Mass. 2009). No. 2:08-02451, 2010 U.S. Dist. LEXIS 135847 (D.N.J. Dec. 23, 2010). 585 F. Supp. 2d 995 (N.D. Ill. 2008). 918 N.E.2d 1117 (Ill. Ct. App. 2009). No. C 09-04013 MHP, 2010 U.S. Dist. LEXIS 62404 (N.D. Cal. June 22, 2010). No. 08-cv-582-bbc, 2009 U.S. Dist. LEXIS 9910 (W.D. Wis. Feb. 10, 2009). No. 8:07-cv-1291-T-23TBM, 2008 U.S. Dist. LEXIS 22449 (M.D. Fla. Mar. 21, 2008). No. 08 CVS 4333, 2010 NCBC LEXIS 8 (N.C. Super. Ct. Mar. 9, 2010). 3 A.3d 518 (N.J. Super. Ct. App. Div. 2010). I. Introduction : Case-Within-a- Case ...................................... 71 A. Jurisdiction-Federal or State ..................................... 77 B. Brief History of Jurisdictional Issues........................... 80 State Courts....................................................................... 115 A. Federal Circuit Versus Regional Circuit Tension ...... 115 B. Courts following Air Measurement/Immunocept ...... 117 Measurement/ Immunocept ....................................... 128 C. Summary .................................................................... 134 Other Jurisdictional Issues Beyond Case-Within-a-Case . 134 Conclusions ...................................................................... 136 25 . See, e.g., Spaise v . Dodd, No. A03 - 1430 , 2004 Minn. App. LEXIS 607, at * 22 ( Minn. Ct . App . June 1, 2004 ) (requiring appellant to prove that he would have been successful in the Adams , 466 N.W.2d 39 , 42 (Minn. Ct. App. 1991 ). Air Measurement , 504 F.3d at 1269, uses case- within-a-case “context” (quoted infra text at note 478). 26. See , e.g., Cecala v . Newman , 532 F. Supp . 2d 1118 , 1140 (D. Ariz . 2007 ) ; ASTech , LLC v. Husick, 676 F. Supp . 2d 389 , 400 - 01 (E.D. Pa. 2009 ); Herrington v . Superior Court , 132 Cal. Rptr. 2d 658 , 659 (Cal. Ct. App. 2003 ). 27 . See , e.g., Stockbridge v . Chedraue, No. 206942 , 1999 Mich. App. LEXIS 417, at *3 (Feb. 26, 1999 ); Apollo Enters ., Inc. v. ScripNet, Inc., 301 S.W.3d 848 , 870 (Tex. App. 2009 ) (citing Tex. Logos , L.P. v. Brinkmeyer, 254 S.W.3d 644 , 654 (Tex. App. 2008 )). 28 . See ASTech , 676 F. Supp . 2d at 401 -02 (discussing application of the case-within-a-case which it did not) . 29. See 4 MALLEN & SMITH, supra note 3 , § 36 : 1 . 30. RESTATEMENT (THIRD) OF THE LAW: THE LAW GOVERNING LAWYERS § 53 cmt . b ( 2000 ). 31 . Id . 43 . 28 U.S.C.S. § 1295 ( a)(1) (Lexis 2011 ). 44 . 28 U.S.C. § 1338 (a) ( 2006 ). 45 . See Rochelle Cooper Dreyfuss , The Federal Circuit: A Case Study in Specialized Courts, 64 N.Y.U.L. REV . 1 , 6 - 8 ( 1989 ) (discussing the divergence among the regional circuits in patent cases as a region for the creation of the Federal Circuit). 46. For the historical background of the creation of the United States Court of Appeals for the APPEALS FOR THE FEDERAL CIRCUIT: A HISTORY 1982-1990 (Marion T . Bennett ed., 1991 ); Federal Circuit 25th Anniversary Edition , 17 FED. CIR. B.J. 123 ( 2007 ); Richard H. Seamon, The Provenance of the Federal Courts Improvement Act of 1982 , 71 GEO. WASH. L. REV. 543 ( 2003 ); Randall R. Rader , Specialized Courts: The Legislative Response, 40 AM. U. L. REV. 1003 ( 1991 ). 47 . See infra text accompanying notes 477-82 (identifying a number of these jurisdiction issues) . 48 . Christianson v. Colt Indus. Operating Corp. (Christianson IV) , 486 U.S. 800 ( 1988 ). 49. Id. at 818-19. 50. Id. at 803. 51. Id. at 804. 52. Id. 53. Id. at 805 . 54. Christianson v. Colt Indus. Operating Corp. (Christianson I) , 613 F. Supp . 330 , 331 - 32 (C.D. Ill . 1985 ). 55 . Christianson v. Colt Indus. Operating Corp. (Christianson II) , 798 F.2d 1051 , 1055 (7th Cir . 1986 ). 56 . Id . 57 . Christianson v. Colt Indus. Operating Corp. (Christianson III) , 822 F.2d 1544 , 1560 (Fed. Cir . 1987 ), vacated by 486 U.S. 800 ( 1988 ). 66 . Grable & Sons Metal Prod., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308 ( 2005 ), reh'g denied , 545 U.S. 1158 ( 2005 ). 67. Id. at 311-12. 68. Id. at 319-20. 69. Id. at 316. 70. Id. at 314 . 71. However, more recently in Laboratory Corp. of America Holdings v. Metabolite (Lab. Corp. IV) , 599 F.3d 1277 ( Fed. Cir . 2010 ), the Federal Circuit appeared to be giving more deference to Grable. See infra text accompanying note 221 (discussing this case). Moreover, in the most LLP , 2011 - 2012 , 2011 U.S. App. LEXIS 23127, at *13, * 15 - 17 (Fed Cir. Nov. 18 , 2011 ), two judges would revisit the scope of federal jurisdiction . See infra text accompanying notes 267-96 (discussing this case) . 72 . Additive Controls & Measurements Sys ., Inc. v. Flowdata, Inc., 986 F.2d 476 , 478 - 79 (Fed. Cir . 1993 ); Hunter Douglas, Inc . v. Harmonic Design, Inc., 153 F.3d 1318 ( Fed. Cir . 1998 ); U.S. Valves , Inc., v. Dray, Sr., 212 F.3d 1368 , 1372 (Fed. Cir. 2000 ); Univ. of W. Va., Bd. of Trs. v. Vanvoorhies, 278 F.3d 1288 , 1295 (Fed. Cir. 2002 ). 73 . Additive Controls, 986 F.2d 476 . 74 . Id. at 478 . 75. Hunter Douglas, 153 F. 3d 1318, overruled on other grounds by Midwest Indus ., Inc. v. Karavan Trailers , Inc., 175 F.3d 1356 ( Fed. Cir . 1999 ), overruled in part by Traffix Devices v . Mktg . Displays, 532 U.S. 23 ( 2001 ). 76 . Id. at 1329 . 77. U.S. Valves, 212 F.3d 1368 . 78 . Id. at 1372. Accord Scherbatskoy v. Halliburton Co., 125 F.3d 288 , 291 ( 5th Cir . 1997 ) (finding § 1338 jurisdiction and transferring case to Federal Circuit court where proof of breach of accompanying notes 324-40 . 79. Univ. of W. Va., Bd. of Trs. v. Vanvoorhies, 278 F.3d 1288 ( Fed. Cir . 2002 ). 80 . Id. at 1295 . 81. See Air Measurement Techs., Inc. v. Akin Gump , 504 F.3d 1262 , 1265 (Fed. Cir. 2007 ). 82 . Id . No. 08 -cv-130-bbc, 2008 U.S. Dist. LEXIS 98079 (W.D. Wis . Dec. 2 , 2008 ). No. 07 -cv-02447 - MSK-MSH, 2008 U.S. Dist. LEXIS 13471 (D. Colo . Feb. 13 , 2008 ). 762 F. Supp . 2d 543 (D. Mass . 2011 ). No. 11-C-0148, 2012 U.S. Dist. LEXIS 27621 (E.D. Wis . Mar. 2 , 2012 ). No. 09-cv-311 , 2010 U.S. Dist. LEXIS 101567 (S.D. Ohio Sept . 13 , 2010 ), aff'd, 418 Fed. App'x 924 (Fed. Cir . 2011 ). No. 07 - 12097 -GAO, 2008 U.S. Dist. LEXIS 63117 (D. Mass. Aug. 15 , 2008 ). 786 F. Supp . 2d 240 (D.D .C. 2011 ).


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A. Samuel Oddi. Patent Attorney Malpractice: Case-Within-A-Case-Within-A-Case, Akron Intellectual Property Journal, 2012,