Counsel Concerns

The U.S. Court of Appeals for the Federal Circuit ruled it has subject matter jurisdiction over a legal malpractice suit filed over the handling of a patent. Warrior Sports Inc. v. Dickinson Wright P.L.L.C., 2010-1091. The Michigan law firm Artz & Artz (which later merged with Dickinson Wright) had represented Warrior Sports, an owner of patents for lacrosse sports gear, in the patent application, reissue proceedings and litigation of U.S. Patent No. RE 38,216. When Warrior alleged that competitor STX L.L.C. infringed on the '216 patent, STX raised an inequitable conduct defense by claiming that attorney John S. Artz had misrepresented the makeup of a prior art lacrosse stick to the Patent and Trademark Office.

After Warrior and STX settled their litigation, Warrior filed a malpractice suit in the U.S. District Court for the Eastern District of Michigan alleging that, due to negligence by the Dickinson Wright lawyers, Warrior had to settle its infringement action with STX for less than Warrior might have otherwise received. The district court dismissed the malpractice suit, however, on the ground that it involved state law issues. Dickinson Wright appealed the dismissal to the Federal Circuit.

Under 28 U.S.C. '1295(a)(1), the Federal Circuit has appellate jurisdiction if the jurisdiction of a district court “was based, in whole or in part” on 28 U.S.C. '1338(a). Section 1338(a) gives federal district courts exclusive jurisdiction over “any civil action arising under any Act of Congress relating to patents.”

The Federal Circuit explained: “Because Michigan law creates Warrior's [malpractice] cause of action, we must decide whether patent law is a 'necessary element' of Warrior's right to relief as set forth in its complaint.” The appeals court continued: “The single count in the complaint can be divided into three claims: (1) negligence during the '216 reissue proceedings, allowing STX to invoke an inequitable conduct defense; (2) negligence in failing to pay the required maintenance fee on the '216 patent [which resulted in expiration of the patent]; and (3) negligence during the reinstatement proceedings for the '216 patent, including failing to pursue the reinstatement on a timely basis and failing to communicate with Warrior.”

Looking at the elements of a legal malpractice claim under Michigan law, the Federal Circuit noted, in finding the malpractice suit arose under patent law: “As part of its prima facie case, Warrior must prove that it suffered a compensable loss that was proximately caused by appellant's negligence. If the accused products do not infringe the '216 patent, then the availability of the inequitable conduct defense did not proximately cause any harm to Warrior. That is, to prove the proximate cause and injury elements of its tort claim, Michigan law requires Warrior to show that it would have prevailed on its infringement claim against STX and would have been entitled to an award of damages as a result. It is true, as Warrior points out, that the district court in the STX litigation had already construed the claims of the '216 patent. But it had not determined whether the accused products infringed. To the contrary, it had denied summary judgment of infringement.”

The U.S. Court of Appeals for the Federal Circuit ruled it has subject matter jurisdiction over a legal malpractice suit filed over the handling of a patent. Warrior Sports Inc. v. Dickinson Wright P.L.L.C., 2010-1091. The Michigan law firm Artz & Artz (which later merged with Dickinson Wright) had represented Warrior Sports, an owner of patents for lacrosse sports gear, in the patent application, reissue proceedings and litigation of U.S. Patent No. RE 38,216. When Warrior alleged that competitor STX L.L.C. infringed on the '216 patent, STX raised an inequitable conduct defense by claiming that attorney John S. Artz had misrepresented the makeup of a prior art lacrosse stick to the Patent and Trademark Office.

After Warrior and STX settled their litigation, Warrior filed a malpractice suit in the U.S. District Court for the Eastern District of Michigan alleging that, due to negligence by the Dickinson Wright lawyers, Warrior had to settle its infringement action with STX for less than Warrior might have otherwise received. The district court dismissed the malpractice suit, however, on the ground that it involved state law issues. Dickinson Wright appealed the dismissal to the Federal Circuit.

Under 28 U.S.C. '1295(a)(1), the Federal Circuit has appellate jurisdiction if the jurisdiction of a district court “was based, in whole or in part” on 28 U.S.C. '1338(a). Section 1338(a) gives federal district courts exclusive jurisdiction over “any civil action arising under any Act of Congress relating to patents.”

The Federal Circuit explained: “Because Michigan law creates Warrior's [malpractice] cause of action, we must decide whether patent law is a 'necessary element' of Warrior's right to relief as set forth in its complaint.” The appeals court continued: “The single count in the complaint can be divided into three claims: (1) negligence during the '216 reissue proceedings, allowing STX to invoke an inequitable conduct defense; (2) negligence in failing to pay the required maintenance fee on the '216 patent [which resulted in expiration of the patent]; and (3) negligence during the reinstatement proceedings for the '216 patent, including failing to pursue the reinstatement on a timely basis and failing to communicate with Warrior.”

Looking at the elements of a legal malpractice claim under Michigan law, the Federal Circuit noted, in finding the malpractice suit arose under patent law: “As part of its prima facie case, Warrior must prove that it suffered a compensable loss that was proximately caused by appellant's negligence. If the accused products do not infringe the '216 patent, then the availability of the inequitable conduct defense did not proximately cause any harm to Warrior. That is, to prove the proximate cause and injury elements of its tort claim, Michigan law requires Warrior to show that it would have prevailed on its infringement claim against STX and would have been entitled to an award of damages as a result. It is true, as Warrior points out, that the district court in the STX litigation had already construed the claims of the '216 patent. But it had not determined whether the accused products infringed. To the contrary, it had denied summary judgment of infringement.”