MVS Filewrapper® Blog: U.S. Supreme Court Addresses Jurisdiction In Patent Related Case

In an unanimous decision in Gunn v. Minton, the United States Supreme Court clarified:  (1) 28 U.S.C. § 1338(a) does not necessarily deprive state courts of subject matter jurisdiction for cases dealing with patent law, such as a legal malpractice claim asserted against an attorney representing someone in patent litigation; and (2) a state-based malpractice claim asserted a patent attorney does not necessarily evoke federal subject matter jurisdiction. 

Gunn represented Minton in a patent infringement suit.  During that suit Minton’s patent was held invalid as violating the “on sale” bar in 35 U.S.C. § 102(b) for leasing the subject matter of the patent more than one year prior to the date of the patent application.  Minton argued, in a motion for reconsideration, that the lease was part of testing and fit within the experimental use exception to the on sale bar.  The district court denied the motion and the Court of Appeals for the Federal Circuit affirmed the district court’s ruling.  Subsequently, Minton sued his attorneys for legal malpractice claiming that they failed to timely raise the experimental use argument, which resulted in the improper invalidation of his patent and loss of the patent infringement lawsuit.  This malpractice lawsuit was brought in Texas state court.  The attorneys that represented Minton in the patent infringement suit argued that regardless of the timing of the experimental use argument, it would have failed.  The Texas trial court agreed.  Minton appealed the ruling to the Texas Supreme Court.  On appeal Minton argued that the Texas court did not have proper subject matter jurisdiction because this claim properly fits under federal question jurisdiction pursuant to 28 U.S.C. § 1338(a), which provides exclusive federal jurisdiction thereby depriving state courts of jurisdiction.  The Texas Supreme Court ruled in favor of Minton’s argument and Gunn appealed the holding to the United States Supreme Court.

The United States Supreme Court held that § 1338(a) does not deprive state courts of subject matter jurisdiction over the malpractice claim because federal law did not create the cause of action.  Section 1338(a) only deprives state court jurisdiction where the cause of action is created by federal law.  Specifically, § 1338(a) states, “No state Court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents . . . .”  This cause of action, however, does not arise under the Patent Act; rather it is a state legal malpractice claim based on previous litigation arising under the Patent Act.  To determine whether federal jurisdiction would be proper at all the United States Supreme Court relied on its precedent Grable & Sons Metal and Prods., Inc. v. Darue Eng’g & Mfg. to determine whether a federal issue is actually disputed.  Grable provides four prongs that must each be met for federal jurisdiction to be proper over a state law claim.  The federal issue must be:  (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.  Slip. op. at p. 6 (citing Grable, 545 U.S. 308, 314 (2005)).  The Supreme Court held that Minton met the first two prongs, but failed on the third and fourth.  The Supreme Court’s analysis of the third prong determined that it did not matter how the state court handled the hypothetical questions related to the timing of the experimental use argument because either way it would not change the result of the actual patent litigation.  With respect to the fourth prong, the Court held that permitting state courts to engage in “a hypothetical patent issue” for the purpose of resolving a state legal malpractice claim does not disrupt the balance between state and federal responsibilities.  Id. at p. 12.  Moreover, the Court noted that states “have ‘a special responsibility for maintaining standards among members of the licensed professions.’”  Id. (quotation omitted).  The Court's conclusion was that no federal subject matter jurisdiction existed under 28 U.S.C. § 1338(a) and that state jurisdiction would be proper to handle this claim.  Therefore, the Texas Supreme Court's ruling was reversed.

Clinical trials necessary to determine invention works for intended purpose

In a recent decision, the Federal Circuit affirmed a district court's ruling in favor of AstraZeneca, holding that the generic drug manufacturers Apotex and Impax Laboratories infringed patents for the popular heartburn medication Prilosec® (generic form omeprazole) in filing abbreviated new drug applications (ANDAs).  The Federal Circuit previously addressed these patents in the context of other defendants in a decision blogged about here.

The major issue in this appeal was whether the clinical trials of omeprazole constituted an invalidating public use under § 102(b).  The district court held the clinical trials were experimental use, and the formulation was not ready for patenting at the time of the trials.  Accordingly, the district court held the public use bar of § 102(b) did not apply.  The Federal Circuit affirmed the district court's holding on the basis that the invention was not ready for patenting at the time, as the clinical trials were necessary for the inventors to know that the invention would work for its intended purpose, a necessary predicate to a finding of public use.

The court also addressed a potpourri of other issues, including anticipation, obviousness and the permissible extension of a patent term due to prolonged delay for FDA testing and approval.  The Federal Circuit affirmed the district court's finding on these issues, ending a decade long series of litigation over the popular heartburn medication.

More on In re Omeprazole Patent Litig. after the jump.

[More]

On-sale bar cannot be avoided by experimentation conducted by patentee's customer

In a decision Thursday, the Federal Circuit provided additional guidance on the on-sale bar of § 102(b).  In the case, the patentee developed a series of prototypes that were then sold to its customer, who then experimented with the prototypes and requested modifications to the prototypes.  The prototypes were also accompanied by offers to sell production models of the prototypes.  The court was clear in that the experimental use exception only concerns the actions of the inventors and their agents, not another party doing experimental testing for a particular purpose.  As a result, despite the fact that the customer was experimenting with the prototypes, that experimentation could not negate the on-sale bar of § 102(b).

Two of the panel's three judges also filed a concurring opinion.  In that opinion, Judges Prost and Dyk "point out the confusion" in Federal Circuit law when it comes to the interaction between experimental use and the on-sale bar.  While this case is not the proper vehicle, it's safe to add this issue to the list of near-future en banc issues for the court.

More detail of Atlanta Attachment Co. v. Leggett & Platt, Inc. after the jump.

[More]

BlogCFC was created by Raymond Camden. This blog is running version 5.8.001.