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October Term, 2012

February 20, 2013

Today the Supreme Court issued one decision, described below, of interest to the business community.

Federal Jurisdiction—Legal-Malpractice Claims Involving Patent Disputes

Gunn v. Minton, No. 11-1118

Under 28 U.S.C. § 1338(a), federal courts have exclusive jurisdiction over any suit arising under federal patent law. Today, in a unanimous opinion authored by Chief Justice Roberts, the Supreme Court held in Gunn v. Minton, No. 11-1118, that this jurisdiction does not extend to state-law claims for legal malpractice that raise questions of patent law. The decision reverses a decision of the Texas Supreme Court, and also abrogates contrary holdings by the Federal Circuit in Air Measurement Technologies, Inc. v. Akin Gump Strauss Hauer & Feld, L.L.P., 504 F.3d 1262 (Fed. Cir. 2007), and Immunocept, L.L.C. v. Fulbright & Jaworski, L.L.P., 504 F.3d 1281 (Fed. Cir. 2007).

The case arose from a legal-malpractice action in Texas state court that Minton had filed against his lawyers based on their handling of his earlier patent-infringement action. Minton alleged that the lawyers had caused him to lose the earlier action—and committed malpractice—by failing to assert on a timely basis the “experimental use” exception to the bar on issuance of patents for items that have been “on sale” for more than a year before the filing of the patent application. The trial court granted summary judgment to the lawyers. But Minton persuaded the Texas Supreme Court that federal courts had exclusive jurisdiction over his claims under 28 U.S.C. § 1338(a) because his suit involved issues of federal patent law, thus requiring that the judgment against him be vacated (so that he could then re-file in federal court).

The Supreme Court reversed, holding that 28 U.S.C. § 1338(a) did not deprive the Texas courts of jurisdiction over Minton’s legal-malpractice suit. The Supreme Court explained that the suit did not satisfy the four-part test, articulated in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U. S. 308, 313-314 (2005), for determining when a state-law claim “arises under” federal law—as required for there to be any federal-court jurisdiction, much less exclusive jurisdiction under § 1338(a).

The Supreme Court concluded that the first two Grable factors were met: The federal patent-law issue underlying Minton’s malpractice suit was “‘necessarily raise[d]’” and “‘actually disputed.’” Slip op. at 7 (quoting Grable, 545 U.S. at 314). But, the Court concluded, the federal issue was not “substantial in the relevant sense.” Id. at 8 (citing id.). The Court explained that determining whether an issue is “substantial” requires considering “the importance of the issue to the federal system as a whole,” not merely to the parties themselves. Id.  Here, the federal question posed was hypothetical (what if Minton’s lawyers had timely raised the experimental-use argument?), and the resolution of the malpractice case would have no effect on the validity of Minton’s patent as determined in the earlier patent-infringement action. Moreover, a state court’s resolution of hypothetical patent issues in a legal-malpractice case would not undermine the uniformity of federal patent law because it would have no precedential effect on federal courts in deciding real patent cases. Finally, the Court rejected the argument that federal courts’ greater familiarity with patent issues was sufficient to trigger federal jurisdiction when what was at stake was only the risk that a state court might wrongly decide a state-law claim based on a misapprehension of patent law.

For essentially the same reasons, the Court held that the fourth Grable factor—the “balance between federal and state judicial responsibilities” (545 U.S. at 314)—also weighed against a finding of jurisdiction. The Court observed that there was no reason to suppose that Congress intended to bar states from fulfilling their “great” and “special responsibility” to regulate the conduct of lawyers when it vested federal courts with exclusive jurisdiction over patent cases. Slip op. at 12.

Any questions about this case should be directed to Kevin Ranlett (+1 202 263 3217) or Richard Katskee (+1 202 263 3222) in our Washington office.

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