When is Legal Malpractice a "Federal Question?"
State Court cases may be removed to Federal Court in two instances. One is where there is complete diversity of citizenship and the requisite dollar-damage amounts; the second is where the claim "arises" under federal law. One such instance may be questions of legal malpractice in the patents area. We are certainly aware of case law in the SDNY in which such arguments were decided with mixed results. Today, we read of a US Supreme Court case that may clear up the dispute. In Gunn v. Minton, No. 11-1118, U.S. Sup Ct. the question is simply whether the legal malpractice case should be heard in state or federal court.
"The central question is whether legal malpractice claims against attorneys representing the inventors, for failing to raise an “experimental use” defense to the “on-sale bar” doctrine, constituted a question of exclusive state law, or one of exclusive federal jurisdiction and law – like traditionally all Patent Law issues. The issue turns on whether such a state court claim can create or affect Federal patent rights."
Lexis-Nexis writes: "At oral argument, Webre said the Federal Circuit's rulings "improperly conflate the question of necessity of a federal issue with the question of whether that issue is substantial," representing a "total disregard [of] a proper balance of the state and federal interests."
"The Federal Circuit announced that there's an interest in - federal interest in uniformity of patent law, and then that was that. That was the end of the inquiry. There is no balance if you don't look at the state interest on the other side. And in legal malpractice cases in general and in Mr. Minton's claim in particular, there are substantial state interests. There is the general interest, the right of a state to develop its own state claims, its own state law and its own state courts. But there is also a state interest in governing the relationship between attorney and client that happens through the legal malpractice process," Webre added.
When asked by Justice Sonia Sotomayor whether an allegation of malpractice involving the PTO would qualify for "arising under" jurisdiction, Webre answered in the negative. Though such a scenario would "be a more substantial federal question than the one presented here," Webre nonetheless said no "arising under" jurisdiction exists because "it involves only a hypothetical actual set of patent rights."
"No judgment that can happen in a state legal malpractice case actually impacts any patent rights," Webre replied.
Disputed, Substantial Issues
By contrast, Thomas M. Michel, representing Minton, urged the Supreme Court to affirm. The state district court "made holdings about . . . whether . . . the experimental use exception is a question of law or a question of fact," as well as a determination that "knowledge of the buyer is conclusive, rather than a factor" to be considered, Michel argued.
"Those are all . . . disputed, substantial issues of federal patent law," he added.
To reverse the Texas Supreme Court could also burden the PTO, Michel warned, because the agency "will have to take . . . as guidance" the state district court's injection of a "brand-new requirement" that an expert witness must testify to establish an experimental use testing exception. In addition, Michel said a reversal would free state courts to choose whether they will interpret and apply Federal Circuit precedent; should they choose not to, it could subject patent attorneys to varying standards and regulations on a state-by-state basis. Justice Antonin Scalia was not persuaded by the argument, however, asking Michel, "Why is that worse than the fact that if it goes to federal court, all of the lawyers in the state in all malpractice cases are going to be supposedly bound by the federal court's holding as to state issues of malpractice?"
"I mean, it seems to me it's Twiddle Dum or Twiddle Dee, whichever court system you go to, you are going to terrorize the lawyers of that state on the basis of an opinion of a court that is not dispositive on those issues," Scalia added.
Minton is represented by Michel and Robley E. Sicard of Griffith, Jay & Michel in Fort Worth, Texas; Coyt Randal Johnston, Robert L. Tobey and Coyt Randal Johnston Jr. of Johnston Tobey in Dallas; Theodore F. Shiells of Shiells Law Firm in Dallas; Gregory W. Carr of Carr in Frisco, Texas; and Daniel R. Ortiz of Charlottesville, Va. The petitioners are represented by Webre of Scott, Douglass & McConnico of Austin, Texas."