Supreme Court Case involving: patents, licensing, malpractice
Background: Vernon Minton developed a computer program intended to make securities trading easier, known as TEXCEN, and then leased the system to a securities brokerage in 1995. In 2000, he obtained a patent for his invention and then, represented by Jerry Gunn, he filed a patent-infringement lawsuit against NASDAQ and others.
NASDAQ moved for and was granted summary judgment. The “on sale” bar in patent law (35 U.S.C. Section 102(b)) states that an inventor is barred from obtaining a patent if there is a sale of the invention more than one year before the date of the patent application. Minton tried to argue that his lease fell within the “experimental use” exception to the on-sale bar. However, the court waived the argument holding that he had failed to raise the experimental-use exception earlier.
Minton sued his attorney, Jerry Gunn, for malpractice in Texas state court. He alleged that his loss of the patent-infringement lawsuit and the invalidation of his patent were Gunn’s fault as he’d failed to timely raise the experimental-use argument. Gunn moved for and was granted summary judgment by the Texas state court. He was able to demonstrate that the lease of the system was not for an experimental use and so the experimental-use argument would have failed even if timely raised.
Minton appealed the summary judgment with a new argument, the state court didn’t have jurisdiction over his case because the malpractice suit involved federal patent law and thus needed to be tried in federal court. A divided Texas Supreme Court agreed with Minton.
Opinion Summary: The court unanimously agreed to reverse the Texas Supreme Court’s ruling and held that the original summary judgment in favor of Gunn should stand. The opinion stressed that the malpractice judgment had no effect on the validity or interpretation of the actual patent thus didn’t actually affect federal patent law. Justice Roberts explained, “There is no doubt that resolution of a patent issue in the context of a state legal malpractice action can be vitally important to the particular parties in that case. But something more, demonstrating that the question is significant to the federal system as a whole, is needed. That is missing here.”
For further review.
Implications: The ruling enforces a tradition of state regulation of attorney competence even regarding matters related to patent law. States generally are the defining authority on the standards for qualifications and misconduct by attorneys.