There are certain areas of the law which are reserved to the federal courts. These areas of law arise because the relevant law is found in federal statutes, or because the area which was previously spread across both state and federal statute or common law has become preempted by later federal statutes or case law. Patents and trademarks exist because of protections granted by the US Constitution. These and other federal areas are known as “federal questions.” Generally speaking litigation over patents must take place in US District Court, not in state courts.
A legal malpractice case concerning patents may be heard by state court because it is not a direct “federal question.” Economic Alchemy LLC v Byrne Poh LLP 2017 NY Slip Op 31640(U)
August 4, 2017 Supreme Court, New York County Docket Number: 653632/2015 Judge: Manuel J. Mendez is an example.
“On March 31, 2016 Plaintiff Economic Alchemy LLC (“EA”) commenced this action against Defendants alleging that the Defendants- who, as a law firm, represented EA in certain patent applications before the United States Patent and Trademark Office (“USPTO”) beginning on October 11, 2012- were liable for damages because of legal malpractice and breach of contract. EA was formed in 2011 to employ social media and other real time data to quantify economic expectations and to forecast the United States economy. EA alleges that Defendants committed numerous errors in the process of filing five (5) separate “placeholder claim” patents created by EA and failing to amend them at a later date. Allegedly, this has caused substantial impairment to the value of EA’s patent portfolio and caused EA significant damages to mitigate the potential losses. The patents, if granted, would be breakthrough technology that would help track the United States economy in real-time and be a highly attractive software for market speculators.”
“The Defendants have not stated a basis for dismissal of the legal malpractice causes of action under CPLR §3211 [a][7]. To dismiss a complaint for failure to state a cause of action there can be no legally cognizable theory that could be drawn from the complaint. The test of the sufficiency of a complaint is whether liberally construed, it states in some recognizable form, a cause of action known to the law (Union Brokerage, Inc. v Dover Insurance Company, 97 AD2d 732, 468 NYS2d 885 [1st Dept. 1983)). The court must accept as true the facts alleged in the complaint as well as all reasonable inferences that may be extracted from those facts (Amaro v Gani Realty Corp., 60 AD3d 491, 876 NYS2d 1 [1st Dept. 2009)). The court is not permitted to assess the merits of the complaint or any of its factual allegations, but may only determine if, assuming the truth of the facts alleged, the complaint states the elements of a legally cognizable cause of action (Skillgames, LLC v Brody, 1AD3d247, 767 NYS2d 418 [1st Dept. 2003)). Deficiencies in the complaint may be remedied by affidavits submitted by the plaintiff (Amaro, supra).
“Recovery for professional malpractice against an attorney requires proof of three elements: (1) attorney negligence; (2) the negligence was the ‘proximate cause’ of the actual loss sustained; and (3) quantifiable damages (Cosmetics Plus Group, Ltd. v Traub, 105 AD3d 134, 960 NYS2d 388 [1st Dept. 2013)). It requires the plaintiff to establish that counsel failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that ‘but for’ the attorney’s negligence the plaintiff would have prevailed in the matter or would have avoided damages (Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker, 56 A.D.3d 1, 865 N.Y.S.2d 14, 15 [1st Dept. 2008)).
The Complaint sufficiently pleads attorney negligence. Plaintiff alleges that the Defendants “fail[ed] to provide competent representation to EA, repeatedly miss[ed] US PTO deadlines, [lied] about the status of patent applications and provid[ed] erroneous information” (Complaint). Importantly, Plaintiff plead that Defendants “filed ‘placeholder’ patents that were supposed to be used temporarily to meet the deadline, but never filing the legitimate claims” to amend them as they promised (id).
This court has jurisdiction to entertain lawsuits regarding contracts relating to patents regardless if the validity of the patent may somehow be involved (Am. Harley Corp. v Irvin Indus., Inc., 27 NY2d 168, 263 NE2d 552, 315 NYS2d 129 [1970)). It is not for this court to determine whether Plaintiff’s software is currently patentable under recent Supreme Court decisions and therefore, Plaintiff sufficiently plead that Defendants’ negligence was the “proximate cause” of its damages. Plaintiff alleges that “[h)ad Byrne Poh not committed malpractice, upon information and belief, EA would have received patent protection for all five patents by March of 2014” (id). “