by Christopher McHattie & Neeraj Joshi
The McHattie Law Firm, LLC
It goes without saying that proper representation of a client implicitly means not committing malpractice. It also goes without saying that an inventor must invent something eligible for patenting in order to receive a valid patent. Recently, the intersection of legal malpractice and patent eligibility “reared its ugly head” Encyclopedia Britannica Inc. v. Dickstein Shapiro LLP, 1:10-cv-00454, now pending in the U.S. District Court for the District of Columbia.
A patent gives the inventor(s) exclusive right to prevent others from making, using, selling, or offering for sale the invention encompassed by the claims of the patent. A patent claim defines the scope of that exclusivity and is a technical description of those components of the invention to which that exclusivity applies. Patent claims require a fairly specialized reading and are subject to specialized interpretations based upon the words used in the patent itself and the “prior art” (i.e., simply stated, what previously existed is inherently not patentable.) Quite often, the interpretation of patent claims and the breadth of those claims is something uniquely suited to attorneys specializing in patents and also something much more uncertain than anyone early in the process, including the attorney’s, typically acknowledges or understands.
Similarly, legal malpractice claims normally exist when an attorney fails to exhibit and/or execute the standard of care reasonable under the circumstances. Legal clients may file malpractice claims due to a number of causes, including an attorney’s failure to know or apply law, to err in planning, to fail to file documents, to not know deadlines, and to fail to recognize a conflict of interest.
The Encyclopedia Britannica matter really started in 1989. At about that time, Defendant law firm, Dickstein Shapiro, filed a series of patent applications on behalf of Encyclopedia Britannica, ultimately resulting in U.S. Patent Numbers 5,241,671, 7,051,018 and 7,082,437. Thereafter, beginning in 2005, Dickstein Shapiro filed a series of patent infringement actions based on the foregoing patents on behalf of Encyclopedia Britannica. In 2009, a Texas Federal Court ruled the underlying patents invalid due to a previously unnoticed defect in prosecution. Encyclopedia Britannica then turned around and sued Dickstein Shapiro for legal malpractice relating to the defect and alleged mishandling of the subject patents.
Just two weeks ago, on August 26, 2015, the Hon. Royce C. Lamberth, United States District Judge for the United States District Court for the District of Columbia issued an opinion in favor of Dickstein Shapiro. Dickstein Shapiro dodged the malpractice bullet by arguing that Encyclopedia Britannica must first prove the merits of its underlying patent claims in order to demonstrate that the alleged malpractice caused it injury. This is known in the industry as the “case-within-a-case” doctrine. The logic of the “case-within-a-case” doctrine simply means that if the patents were invalid in the first place, then any other tangential malpractice defect could not have caused injury. Here, a technical failing during the patent prosecution process could not have caused the injury because the patents were inherently invalid, and as such, Dickstein Shapiro’s “later” error could not have injured something which never validly existed in the first place.
Judge Lamberth wrote that the underlying Encyclopedia Britannica patents concerned a “computerized encyclopedia containing both textual articles and graphical images (e.g., photographs and charts).” The patents in issue contained “method” claims and “system” claims. The system claims were directed to a “computer-readable medium containing software that [could] perform the steps of the claimed method.”
In order for an invention to be eligible for patenting, it must be capable of surviving scrutiny under Section 101 of the Patent Act. Recently, the Supreme Court in Alice Corporation Party Ltd. v. CLS Bank International, reaffirmed that “[l]aws of nature, natural phenomena, and abstract ideas” are not patentable. The Supreme Court articulated a two-part test for determining whether an invention would survive Section 101. First, the court must decide whether the invention is directed to a patent-ineligible concept. Second, if the invention is indeed directed to a patent-ineligible concept, the court must determine whether the claims possess “something extra,” an “inventive concept;” that is, an additional element which transforms the abstract idea into a patent-eligible invention.
In the case in issue, Encyclopedia Britannica urged Judge Lamberth to consider Dickstein Shapiro’s conduct in light of the law which existed in 2009, the year of the Texas Federal Court’s ruling. But Judge Lamberth reiterated the importance of adhering to the “case within a case principle” and focused the analysis not on the conduct of the attorneys, but on whether Encyclopedia Britannica’s patents were valid in the first place. Judge Lamberth found the claims to have failed the first step of the Alice inquiry, ruling that “[t]he abstract ideas set forth in [these patents were] comparable to the concept of collecting, storing, and retrieving data found patent-ineligible in several recent cases.” Next, Judge Lamberth found that “[s]imply describing computer functions [did] not provide the required ‘inventive concept’” and that the “generic computer components [were] insufficient to transform an abstract idea into patent-eligible subject matter,” thus ruling the claims to have failed step two, as well.
In finding the claims ineligible, Judge Lamberth ruled that Encyclopedia Britannica could not prove its “case within a case.” Therefore, it logically followed that because invalidity preceded any alleged malpractice, there was no damage caused by the malpractice. As such, Encyclopedia Britannica could not show recoverable damages, nor demonstrate injury as a result of the alleged malpractice of Dickstein Shapiro. As a result, Judge Lamberth dismissed Encyclopedia Britannica’s malpractice lawsuit.
The Encyclopedia Britannica Inc. v. Dickstein Shapiro decision and overall circumstance provides us with several pearls of wisdom. First, before filing a patent malpractice claim, it is vital to be able to demonstrate that malpractice is not preceded by an invalid patent. While attorneys must provide proper representation, if the underlying action (here the patent itself) was a “loser” regardless of any alleged malpractice, then filing a malpractice claim may simply be a sore loser’s move. Second, satisfying the Alice two-step test can be difficult…but it is possible.
There are times “when patents aren’t worth the paper they are written on.” Common sense is a good “outside” gauge of that old saw and this one, “if something seems too good to be true, it probably is.” It’s important to get great advice from attorneys who have your best interests at heart, who understand what’s patentable, what’s not patentable and what’s in that grey area of “we may be able to get you a patent, but we make no guarantees ‘it’s worth the paper it’s written on.’” And finally, if a patent attorney tells you that, believe him or her – claims interpretation is difficult at best times. Unfortunately for Encyclopedia Britannica, Alice reared her ugly “two prong” eligibility test head, the patent wasn’t “worth the paper it was written on” and whatever came after that based on believing that that patent validly encompassed and created exclusive rights in far reaching concepts was, “too good to be true.”
