The situation is not unusual. Attorneys represent client in a transnational setting, and the transaction is compromised, but not yet finished. Three years are about to pass. What is the plaintiff to do? If you do not sue, the statute will pass. if you do sue, defendant will say that it is too early. Economic Alchemy LLC v Fincham Downs, LLC 2020 NY Slip Op 31177(U) May 6, 2020 Supreme Court, New York County,Docket Number: Index No. 156052/2018, Judge: Louis L. Nock shows one way for resolution.
“As alleged in the amended verified complaint (the “Complaint”), 1 plaintiff, a financial technology intellectual property holding company, retained defendant law firm in 2013 to represent it with regard to five pending patent applications. Those applications seek to acquire
patents for plaintiff’s “methods and systems to estimate market risks and present and future economic conditions . . . . ” (Complaint ¶ 7.) Plaintiff retained defendant law firm after discharging a prior law firm which, in plaintiff’s view, made “incorrect” and “negligent”
filings in respect of the applications (id., ¶ )9 Plaintiff ultimately discharged defendant law firm, as well, and retained a third law firm to carry on the patent application work. Notably, the applications were still pending before the U.S. Patent and Trademark Office (the “USPTO”) as of the time of the commencement of this lawsuit and the making of the instant motion to dismiss.
In other words, there is, as yet, no determination from the deciding authority – the USPTO – on whether or not plaintiff is entitled to her applied-for patents. As will be observed below, that is a significant factor in the assessment of plaintiff’s claim herein that it has been economically injured through any alleged negligence by defendants, causing a delay in obtaining the patents.
In this action, plaintiff alleges the following:
• Defendant law firm “unnecessarily introduced a limiting feature in the applications that
was not contained in the specification portion of the applications wherein plaintiff’s
inventions are described” (Complaint ¶ 11);
• Defendant law firm “filed a design patent application . . . which included references to
some of plaintiff’s registered trademarks that were incorrectly used and not followed by
the” trademark protective symbols (id., ¶ 13);
• Defendant law firm “filed a specification” which similarly did not include trademark
protective symbols (id., ¶ 15).
The motion to dismiss presents a variety of arguments, including an assertion of lack of
personal jurisdiction over defendants, who are Connecticut domiciliaries; the fact that plaintiff’s
current, third, patent counsel can correct any alleged patent application infirmities claimed to
have been committed by defendants prior to the retention of said third law firm; and that the
economic losses alleged by the plaintiff are purely speculative.
To succeed on a legal malpractice claim, a plaintiff must demonstrate “(1) that the attorney was negligent; (2) that such negligence was a proximate cause of plaintiff’s losses; and (3) proof of actual damages” (Global Business Inst. v Rivkin Radler LLP, 101 AD3d 651, 651 [1st
Dept 2012]; see also, Rudolph v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438 ). “Proximate cause requires a showing that ‘but for’ the attorney’s negligence, the plaintiff would . . . not have sustained any ascertainable damages” (Barbara King Family Trust v Voluto
Ventures LLC, 46 AD3d 423, 424 [1st Dept 2007]). “[T]he failure to show proximate cause mandates the dismissal of a legal malpractice action regardless of whether the attorney was negligent” (Wo Yee Hing Realty Corp. v Stern, 99 AD3d 58, 63 [1st Dept 2012]). An ultimate determination by the USPTO on whether plaintiff will be granted her applied-for patents or not, and whether, fundamentally, plaintiff’s processes are patentable property to begin with, can change the entire landscape of the instant litigation. If the determination is “no” on either or both of those two yet-unanswered questions, plaintiff may be hard pressed to demonstrate, if not incapable of demonstrating, any tangible loss, and, for that matter, any tangible loss that was proximately caused (via “but for” causation) by the defendants herein. That is because the entire factual theory of this case is predicated on an assumption that patentable property was deprived of its rightful protection on account of actions and/or inactions of the defendants. The USPTO will need to first determine the keystone questions of patentability, non-patentability, and the reasons therefor, relating to plaintiff’s patent applications lying at the very heart of this action at law for damages. Therefore, the court perceives no just option at this time but to grant the motion to dismiss to the extent of staying the prosecution of this action pending a final determination by the U.S. Patent and Trademark Office concerning the subject matter patent applications.”