Statute of limitation issues are especial difficult in transactional legal malpractice calculations.  In litigation legal malpractice, the last date of representation is generally not too hard to agree upon.  Here, in Elizabeth Arden, Inc. v Abelman, Frayne & Schwab , 2010 NY Slip Op 51836(U) Decided on October 22, 2010; Supreme Court, New York County;  Fried, J. it is not so easy.

In short, after two cosmetic giants transferred patents between them, at least one was incorrectly allowed to expire.  This legal malpractice case hinges on when the AFS firm rendered its last work, and whether it was expected to make filings and pursue patent work for Elizabeth Arden.

"In this legal malpractice action, plaintiff Elizabeth Arden, Inc. (Arden) seeks damages against the defendant law firms, Abelman, Frayne & Schwab (Abelman), and The Firm of Karl F. Ross, P.C. (Ross), as well as two individual attorneys at each firm, Joseph J. Catanzaro (Catanzaro; Abelman includes Catanzaro unless the context otherwise requires), and the estate of Herbert Dubno (Dubno), relating to patent number 5,268,166 (the patent), which lapsed on December 7, 2001.

The patent covered a cosmetic application system, and would have expired on July 9, 2012, if all three periodic maintenance fees had been timely paid to the Patent and Trademark Office (PTO).

The patent was licensed to Mystic Tan, Inc., pursuant to a license agreement dated May 6, 1999 (the license agreement), which would have continued for the expected life of the patent. Arden had a contractual duty pursuant to the license agreement to maintain the patent. "

"Arden, in consultation with Abelman, intentionally decided not to pay the required maintenance fee, in order to reduce costs. Arden charges Abelman with malpractice for not advising it of the existence of the third-party license agreement. Arden also charges both Abelman and Ross with negligence for failing to bring a timely petition before the PTO to revive the patent on the ground of unintentional delay in paying the maintenance fee.

The regulations of the PTO allow for two distinct grounds for reinstatement of a lapsed patent, unintentional delay in payment (37 CFR 1.137 [b]), and unavoidable delay (37 CFR 1.137 [a]). The former requires merely a statement that the delay in payment was unintentional. The latter applies a more stringent standard and requires an evidentiary showing. Both require that the entire delay from the date of lapse be either unintentional or unavoidable, respectively. "

"On December 6, 2001, the last day before the end of the grace period for payment of the maintenance fee, Shore-Sirotin sent Catanzaro by fax a copy of the schedule that he had sent her with the notation "drop" next to the lapsed patent. In accordance with this apparent instruction from Shore-Sirotin, Abelman did not pay the maintenance fee on the lapsed patent prior to expiration of the grace period on December 7, 2001.

Shore-Sirotin testified at her deposition that Marina never informed her of the Mystic Tan license. The Abelman firm also did not advise Arden not to drop the patent because it was licensed to Mystic Tan.

Several months after the patent had lapsed, Shore-Sirotin learned from Honig that the patent was licensed, and immediately sent an e-mail dated March 19, 2002, referencing the patent and its United Kingdom analogue, to Pat Tormey, an Abelman legal assistant, stating, "[P]lease do NOT DROP these patents in the U.S … We have licensed these patents in the U.S. and have a duty to maintain them [capitalization in original]" (deft.’s ex 10 [A])."

"Application of the continuous representation doctrine "is limited to situations in which the attorney who allegedly was responsible for the malpractice continues to represent the client in that case. When that relationship ends, for whatever reason, the purpose for applying the continuous representation rule no longer exists" (Glamm v Allen, 57 NY2d 87, 94 [1982]).

In order for the continuous representation doctrine to apply,

there must be clear indicia of an ongoing, continuous, developing, and dependant relationship between the client and the attorney which often includes an attempt by the attorney to rectify an alleged act of malpractice. One of the predicates for the application of the doctrine is continuing trust and confidence in the relationship between the parties. However, its application is limited to instances in which the attorney’s involvement in the case after the alleged malpractice is for the performance of the same or related services and is not merely the continuity of a general professional relationship [internal citations omitted]"

(Luk Lamellen U. Kupplungbau GmbH v Lerner, 166 AD2d 505, 506-507 [2d Dept 1990]).

The rationale for the continuous representation doctrine is that a client with a pending case is not expected

to jeopardize his pending case or his relationship with the attorney handling that case during the period that the attorney continues to represent the person. Since it is impossible to envision a [*7]situation where commencing a malpractice suit would not affect the professional relationship, the rule of continuous representation tolls the running of the Statute of Limitations on the malpractice claim until the ongoing representation is completed [citation omitted]

(Shumsky v Eisenstein, 96 NY2d 164, 167 -168 [2001]).

Applying the foregoing principles, Arden has failed to raise a factual issue as to whether the statute of limitations is tolled by the continuous treatment doctrine."