Supreme Court Holds That Patent Legal Malpractice Claims Do Not “Arise Under” The Patent Laws and May Be Heard in State Court

by Orrick, Herrington & Sutcliffe LLP
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On February 20, 2013, the Supreme Court issued a decision addressing the critical question of where plaintiffs can or must sue when their claims implicate patent law but are not traditional patent law claims.  See Gunn v. Minton, 568 U.S. ___ (Feb. 20, 2013).  Specifically, the Supreme Court unanimously held that a claim for legal malpractice against an attorney based upon the attorney’s role in earlier patent litigation or patent prosecution does not “arise under” the patent laws and, therefore, does not have to be litigated in a federal court.  The decision overturns a line of cases from the U.S. Court of Appeals for the Federal Circuit holding that an aggrieved client’s claims for legal malpractice against his or her patent attorney must be brought in federal court under a statute that gives federal courts exclusive authority to hear claims “arising under” the patent laws.  In a sharp departure from prior Federal Circuit decisions, at least with respect to legal malpractice claims, the fact that a claim implicates patent law is no longer sufficient to confer federal courts with exclusive jurisdiction to hear the matter.  Moreover, as discussed below, this case has broad implications for other types of state law legal claims touching on patent law.

In Gunn, the Supreme Court first explained that legal malpractice claims are backward-looking and involve only hypothetical questions of patent law—i.e., what would have happened had the attorneys acted differently.  As a result, even assuming a state law decision could affect real-world patent rights in future cases, its effect still would be “fact-bound and situation-specific.”  The Court also found that state court rulings on patent issues will not undermine the Congressional goal of uniformity in patent law because those rulings will not be binding on federal courts.  Accordingly, the Court implicitly overruled a line of Federal Circuit cases finding that patent legal malpractice claims “arise under” the patent laws.

Although this decision involves a claim for legal malpractice, it potentially affects similar cases where a state law claim implicates a matter of patent law but is not a traditional patent law claim.  That includes cases involving contractual inventorship disputes, patent assignments, patent licenses, and trade disparagement claims.  It may also have an immediate effect in areas where the Federal Circuit has chosen to develop its own case law--antitrust, for example--rather than to apply the law of the regional Circuit where the case originally was filed.  With Gunn, the Supreme Court now makes clear that for “arising under” jurisdiction to exist, the patent question must be “substantial,” in that it at least must apply outside of the fact-specific dispute between the parties at hand.  This is a critical issue plaintiffs will want to consider before filing suit, as a mistake in choice of courts could result in a prolonged dispute about jurisdiction and possible dismissal of the action.   

More broadly, this is also the most recent in a series of decisions by the Supreme Court putting patent law in line with other areas of the law, along with cases such as eBay (permanent injunction standard) and MedImmune (declaratory judgment standard).  Despite Congressional creation of the Federal Circuit to promote uniformity in patent law, the Supreme Court continues to clarify that cases are not deserving of special rules simply because patents are involved.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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