The relationship between the U.S. Supreme Court and the Federal Circuit Court of Appeals reminds me of a parent with a recalcitrant teenager. Faced with, say, confusion over patent eligibility – the legal equivalent of a messy room — the Supreme Court tells the Federal Circuit that it won’t tolerate such slovenliness. The appeals court mutters, “You’re not the boss of me,” and slams its door, leaving those empty yet still greasy pizza boxes exactly where they were.
In a case it agreed to hear on Friday, the high court will once again have the chance to discipline the Federal Circuit, this time on the question of federal-court jurisdiction over state-law legal malpractice claims involving patents. The case, Gunn v. Minton, gives the Supreme Court a chance to decide whether the Federal Circuit — in deciding that federal court is the appropriate forum for legal malpractice suits arising from patent cases — misinterpreted the test for federal jurisdiction that the Supreme Court established in its 2005 decision in Grable & Sons v. Darue Engineering.
The background of Gunn v. Minton is a bit twisty, but here’s a condensed version. Minton is a former broker and inventor who developed software that permits investors to trade over a public telecom system. In 1995, he licensed the software to a Nasdaq brokerage before receiving Nasdaq approval for it — and before patenting his technology. More than a year later, Minton applied for a patent, which he was awarded in 2000. He then filed a $100 million infringement suit against Nasdaq. Minton’s case was tossed under the Patent Act’s “on-sale bar,” which holds that a patent is invalid when the invention it covers was sold more than a year before the inventor filed a patent application. Minton subsequently sued the lawyers who represented him in the Nasdaq case, claiming that they committed malpractice when they failed to raise arguments that the on-sale bar doesn’t invalidate his claim because he sold the software for experimental use.
Minton brought the malpractice case in Texas state court. The trial judge dismissed it, finding no evidence that Minton licensed his software on an experimental basis. Minton appealed to the state appellate court in Fort Worth. While that appeal was under way, the Federal Circuit ruled in two cases – Air Measurement v. Akin Gump and Immunocept v. Fulbright – that when a state-law malpractice case arises from a substantive issue of patent law, federal courts have jurisdiction.
Based on that precedent, Minton asked the state appeals court to dismiss his case for lack of subject matter jurisdiction, which would allow him to refile his claims in federal court. The state appeals court refused and instead affirmed the lower court’s finding that Minton had no case. But when Minton appealed to the Texas Supreme Court, the majority of a divided court held that Minton was right: Under the U.S. Supreme Court’s Grable test, as interpreted by the Federal Circuit in Air Measurement and Immunocept, Minton’s malpractice case belonged in federal court.