United States: Does Exclusive Federal Jurisdiction Over Patent Cases Extend To Claims Of Legal Malpractice In Patent Cases?

Last Updated: May 14 2013
Article by Judith R. Blakeway

Legal malpractice claims are tort claims over which state courts have jurisdiction. But federal courts have exclusive jurisdiction over cases "arising under any act of Congress relating to patents."  So where does a state law claim alleging legal malpractice in the handling of a patent case belong? In state court or federal court? The Supreme Court recently decided that question in Gunn v. Minton, 133 S.Ct. 1059 (2013). 

In that case, Minton hired Gunn to represent him in a federal patent infringement suit. The district court declared Minton's patent invalid under the "on sale" bar because he had leased his patented system more than one year prior to the date of his patent application. An inventor is not entitled to a patent if "the invention was...on sale, more than one year prior to the date of the application." Minton then filed a motion for reconsideration urging for the first time that the lease was part of ongoing testing and therefore fell within the "experimental use" exception to the "on sale" bar. When the district court denied that motion, he appealed to the Court of Appeals for the Federal Circuit. That court affirmed, holding Minton's experimental use argument waived. 

Minton then sued Gunn for malpractice in state court in Texas. Gunn argued that the lease was not an experimental use and, therefore, Minton's patent infringement claims would have failed even if the experimental use argument had been timely raised. The court granted summary judgment to Gunn. 

On appeal, Minton argued that the state court—where Minton had originally brought his malpractice claim—lacked subject matter jurisdiction because the suit fell within the exclusive jurisdiction of federal courts over cases arising under patent law. The court of appeals rejected his argument and affirmed the trial court. The Supreme Court of Texas reversed, concluding that Minton's claim involved a substantial federal issue because the success of Minton's malpractice claim depended upon the viability of the experimental use exception as a defense to the on sale bar. 355 S.W.3d at 644. The United States Supreme Court reversed.

The Supreme Court explained that a case can arise under federal law in two ways. First, a case arises under federal law when the federal law creates the cause of action asserted. Second, federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress. Applying these factors, the Court concluded that state legal malpractice claims based on underlying patent matters rarely, if ever, arise under federal patent law.

First, the court acknowledged that resolution of a federal patent question was necessary to Minton's case: to prevail on his legal malpractice claim, Minton had to show that he would have prevailed in his federal patent infringement case if only his lawyers had timely made an experimental use argument on his behalf. That necessarily required application of patent law to the facts of Minton's case.

Second, the federal issue was also "actually disputed": Minton argued that the experimental use exception properly applied saved his patent from the on sale bar; the lawyers argued it did not. 

Minton's case foundered on the third requirement, however, because the federal issue in the case was not substantial, i.e., important to the federal system as a whole. No matter how the state courts resolved Minton's hypothetical "case within a case," it would not change the real world result of the prior federal patent litigation. Minton's patent would remain invalid. Nor would the state court decision have any preclusive effect. The possibility that the state court could incorrectly resolve a state claim, was not, by itself, enough to trigger the federal court's exclusive patent jurisdiction, even if the potential error resulted from a misunderstanding of patent law. Accordingly, the judgment of the Supreme Court of Texas was reversed.

Henceforth, claims of legal malpractice in patent cases must be brought in state court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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