By
Kevin E. Noonan —

A
patent issue exerted its Circe-like effect on the Supreme Court again today in Gunn v. Minton, a decision overruling
the Texas Supreme Court on the question of whether the existence of a patent
issue in a legal malpractice action implicated Federal District Court
jurisdiction under 28 U.S.C. § 1338(a) (also known as "arising under"
jurisdiction).  And even when the Court
is not reviewing Federal Circuit decisions directly, this case shows that it
can take the occasion to overturn one or two of the appellate court's decisions
along the way.

The
matter below involved purported malpractice in the handling of a patent
infringement lawsuit on behalf of Mr. Minton by lawyers Gunn et al.  The patent in suit was found invalid due to an "on-sale" bar under
35 U.S.C. § 102(b) that arose from a lease of the claimed invention ("a
computer program and telecommunications network designed to facilitate
securities trading") to a securities brokerage more than one year before
the patent's earliest priority date.  In
a motion for reconsideration of the District Court's invalidity determination,
Mr. Minton raised ("for the first time," according to the Supreme
Court's opinion) the assertion that the lease to the brokerage was part of on
going testing of the invention and thus fell within the "experimental use"
exception to public use and on-sale bars under § 102(b).  The District Court ruled that this attempt to
avoid the on-sale bar had been waived by Mr. Minton; the Federal Circuit
affirmed.

Mr.
Minton responded to these reverses by suing his lawyers in Texas state court
for malpractice, alleging that the experimental use exception should have been
raised during the original trial and that his patent would not have been
invalidated if the lawyers had done so.  His lawyers successfully defended this claim by contending the lease was
not part of continuing testing of the
invention, and thus that the experimental use exception did not apply.  On appeal, Mr. Minton argued that the Texas
state court did not have jurisdiction because his claim "arose under"
the Federal patent laws and that Federal district court thus had exclusive
jurisdiction.  The Texas appellate court
agreed and affirmed the trial court judgment in the lawyers' favor, but the
Texas Supreme Court reversed.  The basis
for the Texas Supreme Court's decision rested on two Federal Circuit decisions,
Air Measurement Technologies, Inc. v.
Akin Gump Strauss Hauer & Feld, L.L.P., 504
F. 3d 1262 (2007), and Immunocept,
LLC v. Fulbright & Jaworski, LLP, 504
F. 3d 1281 (2007), because "[a]djudication of Minton's claim in
federal court was consistent with the appropriate balance between federal and
state judicial responsibilities," and because "the federal
government and patent litigants have an interest in the uniform application of
patent law by courts well-versed in that subject matter."

The
Supreme Court reversed, in a unanimous opinion written by Chief Justice
Roberts.  The Chief Justice distinguished
two ways in which a lawsuit can "arise under" Federal law:  either the
cause of action is created by a Federal statute, citing American Well Works Co. v. Layne & Bowler Co., 241
U.S. 257, 260
(1916); or because the cause of action belongs to a "special and small category"
of cases, the contours of which are not only "not a blank canvas" for
the Court to use but one that "looks like [] Jackson Pollock got to [it] first."  However, the Chief was able to identify
recent jurisprudence from the Court that attempted to bring order to these
circumstances, Grable & Sons Metal
Products, Inc. v. Darue Engineering & Mfg., 545
U.S. 308, 314
(2005).  The Grable case set forth a four factor test for deciding that Federal
jurisdiction was proper in cases where the cause of action arose under state
law.  These are 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, and all four prongs must be satisfied.

In
this case, the Court recognized that the first two prongs of the Grable test were satisfied.  Resolution
of the federal patent question (specifically, whether the lease was entitled to
the experimental use exception) was necessary to satisfy one of the
requirements of a malpractice cause of action under Texas state law ("Under
Texas law, a plaintiff alleging legal malpractice must establish four elements:  (1) that the defendant attorney owed the plaintiff a duty; (2) that the
attorney breached that duty; (3) that the breach was the proximate cause of the
plaintiff 's injury; and (4) that damages occurred.").  The federal issue, of whether the
experimental use exception applied to the lease and thus immunized Mr. Minton
from the on-sale bar, was "actually disputed" and thus satisfied the
second prong.

The
Court's opinion then states that "Minton's argument founders on Grable's
next requirement," that the federal issue was "substantial."  The Texas Supreme Court erred in applying
this prong because the standard is not whether the issue is substantial to the
parties, according to Chief Justice Roberts ("that will always be
true when the state claim 'necessarily raise[s]' a disputed federal issue, as Grable
separately requires").  Rather, to
satisfy this prong of the Grable test
the federal issue must be of substantial importance to "the federal system
as a whole."  This type of
substantiality is illustrated in the Chief's opinion by the Grable case itself, which involved the
proper procedure for IRS seizure and sale of property to satisfy delinquent
taxes, and Smith v. Kansas City Title
& Trust Co., 255
U.S. 180 (1921) (the "classic example" according to Grable) having to do with the question
of whether a state bank could purchase bonds that plaintiffs contended the U.S.
government had not constitutionally issued.

"Here,
the federal issue carries no such significance," and the Court found that
Minton failed to satisfy this prong of the Grable
test.  The federal question is a "hypothetical"
one in the malpractice context:  if
Mr. Minton's lawyers had properly raised the experimental use exception would
his patent have been invalidated?  Whether the state court finds in Mr. Minton's or his lawyers' favor on
this question will not affect the "real world" effect of the failure
to do so; Minton's patent will remain invalidated.  And "allowing state courts to resolve
these cases [will not] undermine 'the development of a uniform body of [patent]
law' per Bonito Boats, Inc. v. Thunder
Craft Boats, Inc., 489
U.S. 141, 162
(1989), because actual patent cases are tried exclusively in Federal district
court and whatever decision the Texas state court may come to in this case will
not have any bearing on Federal patent case law.  After all, the opinion notes, it is likely
that the state courts will adapt their decisions to "pertinent federal
precedents" because it is those precedents that would have been followed
had Mr. Minton's attorneys raised the experimental use exception during the
underlying patent litigation.  Even if
some unique or novel patent law questions arise within the "case within a
case" needed to decide the malpractice question, "they will at some
point be decided by a federal court in the context of an actual patent case,
with review in the Federal Circuit" and thus ultimately be "resolved
within the federal system."  Finally
in this regard, the opinion voices skepticism regarding Mr. Minton's
apprehension of a res judicata effect
on future patent prosecution of related (continuation) application(s), finding
no support for the proposition that state court decisions would have such an
effect on the PTO.  Returning to an
earlier theme, the opinion notes that any such preclusive effect would be
limited to these (actually, this) parties and thus suffer the same infirmities
noted above in failing to satisfy the third prong.

Mr.
Minton's case fails to satisfy the fourth prong as well, having to do with "the
appropriate 'balance of federal and state judicial responsibilities'" under
Grable.  For malpractice cases, this balance is struck
in favor of the states, who "have 'a special responsibility for
maintaining standards among members of the licensed professions,'" citing Ohralik v. Ohio State Bar Assn., 436
U.S. 447, 460
(1978).

In
closing, the opinion notes the principle that Federal jurisdiction over
patent matters has long be recognized to be exclusive but that "not [] all
questions in which a patent may be the subject-matter of the controversy,"
citing New Marshall Engine Co. v. Marshall
Engine Co., 223
U.S. 473, 478
(1912).  Because there is no "serious
federal interest in claiming the advantages thought to be inherent in a federal
forum," Texas state courts are not precluded by § 1338(a) from hearing Mr.
Minton's malpractice complaint against his lawyers.

Thus,
Mr. Minton has had his day in court and has lost his malpractice claim.  And two more Federal Circuit precedents have
been overturned, sub silentio but no
less finally, by the Court's decision on Wednesday.

Gunn v. Minton (2013)
Opinion
by Chief Justice Roberts