Dennis Crouch's Patently-O: 1 new topics, including “Federal Circuit Gives Malpractice Case New Hope by Remanding to State Court”

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Federal Circuit Gives Malpractice Case New Hope by Remanding to State Court Posted: 15 Jan 2015 09:08 AM PST In NeuroRepair v. Nath Law Group (Fed. Cir. 2015), the Federal Circuit has dismissed NuroRepair’s malpractice case against its patent prosecution attorneys – holding that the Federal Courts lack subject matter jurisdiction because the case does not arise under the patent law.  Citing Gunn v. Minton, 133 S. Ct. 1059 (2013).  The basics of the case here appear to be that the client was upset with the defendants alleged (1) lack of communication; (2) ineffective pursuit of the patent application; and (3) failure to accurately record and bill time. However, the district court had sided with the attorneys – finding no malpractice. Although patent attorneys are regulated by the USPTO’s Office of Enrollment and Discipline (OED), malpractice cases are generally based upon state law – here, the plaintiff alleged “professional negligence, breach of fiduciary duty, breach of written contract, breach of oral contract, breach of implied covenant of good faith and fair dealing, negligent misrepresentation, and false promise” – all of which are protected by California law rather than Federal Law.  The lawsuit was originally filed in California State Court (Superior Court) but then removed by the defendants to Federal Court on the grounds that the case “related to patents.” All of that occurred prior to the Supreme Court’s decision in Gunn v. Minton. And, as in the Gunn case, the plaintiff has appealed – asking that the entire case be set aside because of a lack of subject matter jurisdiction. Federal Law provides for exclusive federal jurisdiction over patent cases – this means that state courts cannot decide patent infringement cases.  However, there exists a large grey area of cases that arise under a state cause of action (such as breach of contract or legal malpractice) but that turn on an interpretation of either a patent or the Patent Act.  Are those “patent cases?” In Gunn v. Minton, the Supreme Court released most of this grey-area to state court jurisdiction — holding that a state law claim relating to patents creates arising under jurisdiction if it “necessarily raise[s] a stated federal [patent] issue, [2] actually disputed and [3] substantial, [4] which a federal forum may entertain without disturbing any Congressionally approved balance of federal and state judicial responsibilities.”  Quoting Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg., 545 U. S. 308 (2005).  The Court went on to note that malpractice cases will “rarely, if ever, arise under federal patent law" because their resolution will not substantially impact the patent laws. The Nath case here was fairly easy to decide because the court found only one patent law issue necessary for decision — whether the patent could have issued earlier and with broader claims.  As in Gunn, the appellate court here found that issue not of substantial importance to the patent system and that relegating cases such as this to Federal Court would “disrupt the federal-state balance.” The case ends with an order to the district court to remand the case back to California state court where the plaintiff will get another shot at proving malpractice.

Hearing for Director Michelle Lee Nomination Posted: 15 Jan 2015 06:25 AM PST It has now been 24 months since the USPTO has been led by a Senate confirmed director and, for the past year Michelle Lee has been in the limbo position as being de facto head of the USPTO without actually being named director or acting director.  In October 2014, President Obama finally nominated Lee to take over as Director of the USPTO and Undersecretary of Commerce.  Although a first confirmation hearing was held in 2014, Senators agreed to delay a confirmation vote until after the Republicans took over this term. Acting quickly, new Republican chair of the Senate Judiciary Committee Chuck Grassley has acted quickly to schedule a new hearing for January 21 (with Senator Cornyn scheduled to preside). Barring some unforeseen complications, I expect that Lee will be confirmed as director forthwith despite the new Republican control of the Senate.  The hearing will also focus on Daniel Marti who has been nominated as the White House Intellectual Property Enforcement Coordinator — the so called IP Enforcement Czar.  That role began with Victoria Espinel in 2009 and focuses primarily on international counterfeiting and copyright enforcement. As I wrote in December: It is Time to Confirm Michelle Lee.

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