United States Court of Appeals
for the Federal Circuit
__________________________
LANDMARK SCREENS, LLC,
Plaintiff-Appellant,
v.
MORGAN, LEWIS, & BOCKIUS, LLP,
AND THOMAS D. KOHLER,
Defendants-Appellees.
__________________________
2011-1297
__________________________
Appeal from the United States District Court for the
Northern District of California in case no. 08-CV-2581,
Judge Jeremy Fogel.
__________________________
Decided: April 23, 2012
__________________________
SANFORD JAY ROSEN, Rosen, Bien & Galvan, LLP, of
San Francisco, California, argued for plaintiff-appellant.
With him on the brief was CLARK S. STONE, Haynes and
Boone, LLP, of San Jose, California.
ELLIOT R. PETERS, Keker & Van Nest, of San Fran-
cisco, California, argued for defendants-appellees. With
him on the brief were DANIEL E. JACKSON and STEVEN P.
RAGLAND.
__________________________
LANDMARK SCREENS v. MORGAN LEWIS 2
Before BRYSON, CLEVENGER, and O’MALLEY, Circuit
Judges.
Opinion for the court filed by Circuit Judge CLEVENGER.
Concurring opinion filed by Circuit Judge O’MALLEY.
CLEVENGER, Circuit Judge.
Landmark Screens, LLC (“Landmark”) appeals from
the final decision of the United States District Court for
the Northern District of California dismissing its state
law fraud claim against Morgan, Lewis & Bockius
(“MLB”) and Thomas D. Kohler (“Kohler”). Landmark
Screens, LLC v. Morgan Lewis & Bockius, LLP, No. 5:08-
cv-2581, 2011 WL 482771 (N.D. Cal. Feb. 7, 2011) (hereaf-
ter “Dismissal Order”). Granting summary judgment to
the defendants, the district court dismissed Landmark’s
complaint on the grounds that it was filed out of time
under the relevant California statute of limitations and
that Landmark’s timeliness error was not correctible in
equity. In addition, the court issued a partial summary
judgment order, the effect of which would have been to
limit damages available to Landmark had its complaint
been both timely and successful. Landmark Screens, LLC
v. Morgan, Lewis & Bockius, LLP, No. 5:08-cv-2581, 2010
WL 3629816 (N.D. Cal. Sept. 14, 2010) (hereafter “Dam-
ages Order”). For the reasons set forth below, we reverse
the judgment dismissing the complaint because under
California equitable tolling law, the state law fraud claim
was timely filed in the United States district court.
Further, because the record does not support the district
court’s manner of summarily limiting damages, we vacate
the Damages Order and remand the case for trial on the
fraud claim.
3 LANDMARK SCREENS v. MORGAN LEWIS
I
This case concerns Landmark’s invention of a light-
emitting diode (“LED”) electronic billboard. According to
Landmark, the billboard’s large size, high-quality images,
and brilliance make it particularly effective for display
advertising, and the ability to provide content in digital
format reduces costs and time-to-market for advertisers.
To protect its ability to develop and market its invention,
Landmark retained Kohler to prepare and file a patent
application. At the time, Kohler was a partner at Pennie
& Edmonds LLP (“Pennie”).
On January 9, 2002, Kohler filed U.S. Patent Applica-
tion No. 10/045,096 (“the ’096 application”) on Landmark’s
behalf. The ’096 application included 72 claims covering
different aspects of Landmark’s LED invention. In May
2003, the United States Patent and Trademark Office
(“PTO”) informed Kohler that, in its view, Landmark’s
application contained multiple inventions. The PTO then
asked Landmark to restrict the ’096 application to one of
the following four inventions: (1) claims 26-31 and 56-72,
“drawn to an led [sic] having a threshold operator,” (2)
claims 32-39, “drawn to calibrating a display and map-
ping the digital image,” (3) claims 40-55, “drawn to detect-
ing absence of a second image and inputting a default
image,” and (4) claims 1-25, “drawn to selecting a color
gamut.” On May 5, 2003, Kohler elected to pursue claims
26-31 and 56-72 and withdrew the remaining claims. It
appears undisputed that both Kohler and Landmark
intended that the withdrawn claims would be timely
pursued via one or more divisional applications, which
would presumably benefit from the ’096 application’s
filing date. However, that is not how the story unfolded.
Shortly after this, on July 10, 2003, the PTO pub-
lished the ’096 application. As discussed below, this
LANDMARK SCREENS v. MORGAN LEWIS 4
publication would later create serious problems for Kohler
and Landmark due to the printed publication rule of 35
U.S.C. § 102(b).
On August 13, 2003, Kohler submitted a divisional
application to the PTO, and it was assigned Application
No. 10/640,916 (“the ’916 divisional application”). How-
ever, in filing the ’916 divisional application, Kohler made
two mistakes that left the application incomplete: (1) he
failed to include copies of required drawings and specifica-
tions, and (2) his transmittal letter failed to incorporate
by reference materials filed earlier with the original ’096
application. Kohler also did not use the PTO’s “postcard
receipt” method, which would have enabled prompt notifi-
cation when the PTO noticed deficiencies in the applica-
tion.
It was not until June 22, 2004, that the PTO issued a
Notice of Incomplete Nonprovisional Application, stating
that the ’916 divisional application was missing the
required specification and therefore had not yet been
granted a filing date. By this time, Kohler had left Pennie
and was practicing law at MLB, with Landmark as a
client of the firm. Neither Kohler nor any other MLB
attorney took action for several weeks, and the one-year
anniversary of the ’096 application’s publication passed on
July 10, 2004. As a result, Landmark’s own ’096 applica-
tion became prior art against the ’916 divisional applica-
tion under 35 U.S.C. § 102(b). Unless the PTO could be
convinced to give the ’916 divisional application the
benefit of an earlier filing date, all claims in the ’916
divisional application would be lost.
In mid-July 2004, Kohler discussed the matter with
his partners at MLB and the attorneys representing
Pennie, but none of these attorneys apprised Landmark of
the situation. On August 23, 2004, Kohler filed the
5 LANDMARK SCREENS v. MORGAN LEWIS
papers necessary to complete the ’916 divisional applica-
tion, along with a petition to grant it the original filing
date of August 13, 2003. The PTO dismissed the petition
for “failure to exercise due care, or lack of knowledge of, or
failure to properly apply, the patent statutes or rules of
practice” and granted the ’916 divisional application a
filing date of August 23, 2004, i.e., the date on which
Kohler finally corrected the application.
For the reasons discussed above, this was a devastat-
ing outcome for Landmark. Nevertheless, neither Kohler
nor MLB divulged the true nature or seriousness of the
problem for another six months. Landmark states that
the first time it could have had any inkling that there
were problems with its ’916 divisional application was in
late December 2004, when a Landmark official telephoned
Kohler to get a status report. Kohler told the Landmark
official, without explanation, that the claims in the ’916
divisional application were “lost” but assured Landmark
that the firm was working to salvage the claims. Even
then, Landmark states that Kohler and MLB actively
misled it by falsely telling Landmark that there was a
possibility of fixing the problem. Finally, in November
2005, Landmark fired Kohler and MLB.
On November 30, 2005, Landmark filed suit against
Kohler, Pennie, and MLB in the Superior Court for Santa
Clara, California, alleging legal malpractice, negligence,
and breach of fiduciary duty. In March 2008, Landmark
reached a settlement with Pennie and a partial settle-
ment with Kohler, concerning his actions while he was a
Pennie lawyer, and the California state court dismissed
Landmark’s claims against them. On April 28, 2008,
MLB and Kohler filed a demurrer and asked the court to
dismiss the suit against them.
LANDMARK SCREENS v. MORGAN LEWIS 6
On May 21, 2008, the California state court dismissed
Landmark’s claims against MLB and Kohler as a MLB
lawyer for lack of subject matter jurisdiction. Citing
Immunocept, LLC v. Fulbright & Jaworski, LLP, 504 F.3d
1281 (Fed. Cir. 2007), and Air Measurement Technologies,
Inc. v. Akin Gump Strauss Hauer & Feld, L.L.P., 504 F.3d
1262 (Fed. Cir. 2007), the court reasoned that the federal
courts had exclusive jurisdiction over this case as its
resolution depended on a substantial question of patent
law.
The same day that the California state court dis-
missed the action, Landmark filed a complaint in the
United States District Court for the Northern District of
California, making the same claims as in the state court
action and adding a cause of action for breach of contract
arising out of the same facts. On June 11, 2008, Land-
mark filed an amended complaint that included all previ-
ous claims and added a claim for actual fraud. Over the
next two years the district court dismissed all of Land-
mark’s claims except its fraud claim as barred by Califor-
nia’s one-year statute of limitations governing any action
for legal malpractice. Landmark does not appeal these
rulings.
As to the fraud claim, the parties continued to litigate.
Under California law, the elements of fraud are: “(1) a
misrepresentation (false representation, concealment, or
nondisclosure); (2) knowledge of falsity (or scienter); (3)
intent to defraud, i.e., to induce reliance; (4) justifiable
reliance; and (5) resulting damage.” Robinson Helicopter
Co., Inc. v. Dana Corp., 102 P.3d 268, 274 (Cal. 2004).
Landmark asserted that the following conduct by Kohler
and MLB constituted fraud: concealment of the June 22,
2004, notice from the PTO rejecting the ’916 divisional
application, malpractice committed in filing the ’916
divisional application, and defendants’ improper course of
7 LANDMARK SCREENS v. MORGAN LEWIS
action in seeking correction of its malpractice. Dismissal
Order at 4. Landmark alleged that such fraud damaged it
because, absent the fraud, competent counsel could have
prosecuted a divisional application in time to avoid the
adverse prior art effect of 35 U.S.C. § 102(b). On Septem-
ber 14, 2010, the district court entered partial summary
judgment as to damages on the fraud claim, limiting the
possible recovery that Landmark might obtain at trial
were it to succeed on the merits of its fraud claim. Dam-
ages Order at 10. We will return to the Damages Order
in Part V below.
On February 7, 2011, the district court granted sum-
mary judgment to the defendants. Dismissal Order at 9.
The court ruled that Landmark had notice of its fraud
claim more than three years before filing its federal
lawsuit, and that the claim was therefore barred by the
statute of limitations. Cal. Civ. Proc. Code § 338(d) (West
2011). Landmark timely appealed both summary judg-
ment orders. Because the Dismissal Order encompasses
the Damages Order, we turn to the Dismissal Order first.
II
We must first determine if we have jurisdiction over
this appeal. Pursuant to 28 U.S.C. § 1295(a)(1), we have
exclusive jurisdiction over an appeal from a final district
court decision if the court’s jurisdiction was based at least
in part on 28 U.S.C. § 1338(a), which states that federal
district courts have exclusive jurisdiction over actions
“arising under any Act of Congress relating to patents.”
Here, it appears that the district court based its jurisdic-
tion on 28 U.S.C. § 1338(a).
In Christianson v. Colt Industries Operating Corp.,
486 U.S. 800, 809 (1988), the Supreme Court stated that
section 1338(a) jurisdiction extends to any case “in which
a well-pleaded complaint establishes either that federal
LANDMARK SCREENS v. MORGAN LEWIS 8
patent law creates the cause of action or that the plain-
tiff’s right to relief necessarily depends on resolution of a
substantial question of federal patent law, in that patent
law is a necessary element of one of the well-pleaded
claims.” The first part of the Christianson test is not
implicated because Landmark’s causes of action are
created by state law. As such, we must determine
whether there is a substantial question of patent law
presented due to Landmark’s claims.
In making this determination, we are limited to an
analysis of Landmark’s well-pleaded complaint. See
Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). In
its initial complaint filed in the district court, Landmark
alleged claims of legal malpractice, negligence, breach of
fiduciary duty, and breach of contract. Under California
law, the elements of a legal malpractice claim are: “(1)
breach of the attorney’s duty to use such skill, prudence,
and diligence as other members of the profession com-
monly possess and exercise; (2) a proximate causal con-
nection between the negligent conduct and the resulting
injury; and (3) actual loss or damage resulting from the
negligence.” Thompson v. Halvonik, 43 Cal. Rptr. 2d 142,
145 (Cal. Ct. App. 1995) (citing Budd v. Nixen, 491 P.2d
433, 436 (Cal. 1971)). To prove a proximate causal con-
nection, the plaintiff must show that “the harm or loss
would not have occurred without the attorney’s malprac-
tice.” Viner v. Sweet, 70 P.3d 1046, 1048 (Cal. 2003). This
requires the “case within a case” or “trial within a trial”
determination. See Blanks v. Shaw, 89 Cal. Rptr. 3d 710,
725 (Cal. Ct. App. 2009). Because the underlying ques-
tion here is whether Landmark would have been able to
achieve patent protection for its invention absent the
alleged malpractice, there is a substantial question of
patent law presented that conferred jurisdiction to the
9 LANDMARK SCREENS v. MORGAN LEWIS
district court under 28 U.S.C. § 1338(a) at the time of
filing of the original complaint.
The exercise of jurisdiction here is consistent with
this court’s decision in Davis v. Brouse McDowell, L.P.A.,
596 F.3d 1355, 1362 (Fed. Cir. 2010), in which we held
that the district court had jurisdiction under 28 U.S.C.
§ 1338(a) in a legal malpractice case relating to the prepa-
ration and filing of a U.S. patent. In that case, the plain-
tiff had retained patent counsel for the purpose of
preparing and filing a patent application covering her
invention. In haste to avoid missing a filing deadline,
patent counsel submitted patent applications that the
plaintiff asserted “were deficient in various respects and
that these deficiencies ultimately precluded her from
securing patents on her inventions.” Id. at 1358. Under
the prevailing state law, the plaintiff’s malpractice claim
required her to prove that but for the alleged negligence of
her patent counsel, she would have obtained patents on
her invention. Because the “patentability of Ms. Davis’s
inventions is controlled by U.S. patent law[,] . . . patent
law is a necessary element of the legal malpractice claims
presented in Ms. Davis’s complaint,” and the district court
properly exercised jurisdiction under 28 U.S.C. §1338(a).
Id. at 1362. Under our precedent, the district court
properly exercised jurisdiction over Landmark’s initial
complaint.
The same analysis pertains to Landmark’s fraud
claim. In order for Landmark to prevail on its claim for
damages arising from the alleged fraud, under California
law Landmark would have had to prevail on its “case
within a case” and prove that but for the alleged fraud it
would have obtained patent rights for its invention. As in
Davis, the patentability of Landmark’s invention invokes
patent law sufficiently to sustain district court jurisdic-
tion under 28 U.S.C. §1338(a). Furthermore, at a mini-
LANDMARK SCREENS v. MORGAN LEWIS 10
mum, the district court had supplemental jurisdiction
over the fraud claim pursuant to 28 U.S.C. § 1367(a).
III
This court “reviews the district court’s grant or denial
of summary judgment under the law of the regional
circuit.” Bd. of Trs. of Leland Stanford Junior Univ. v.
Roche Molecular Sys., 583 F.3d 832, 839 (Fed. Cir. 2009),
aff’d, 131 S. Ct. 2188 (2011) (internal quotation marks
omitted) (hereafter “Roche”). The Ninth Circuit, the
relevant regional circuit here, “review[s] the district
court’s grant of summary judgment de novo, determining
whether, viewing all evidence in the light most favorable
to the nonmoving party, there are any genuine issues of
material fact and whether the district court correctly
applied the relevant substantive law.” Kraus v. Presidio
Trust Facilities Div./Residential Mgmt. Branch, 572 F.3d
1039, 1043-44 (9th Cir. 2009) (italics and internal quota-
tion marks omitted).
Additionally, this court “‘defers to the law of the re-
gional circuits on matters of procedural law that do not
implicate issues of patent law,’” such as statute of limita-
tions rulings. Roche, 583 F.3d at 840 (quoting Duro-Last,
Inc. v. Custom Seal, Inc., 321 F.3d 1098, 1106 (Fed. Cir.
2003)). In the Ninth Circuit, a district court’s decision
whether to apply equitable estoppel is reviewed for abuse
of discretion, Hoefler v. Babbitt, 139 F.3d 726, 727 (9th
Cir. 1998), as generally is the decision whether to apply
equitable tolling. See Leong v. Potter, 347 F.3d 1117, 1121
(9th Cir. 2003). However, where the underlying facts on a
claim for equitable tolling are undisputed, the district
court’s decision whether to toll the statute of limitations is
reviewed de novo. Santa Maria v. Pac. Bell, 202 F.3d
1170, 1175 (9th Cir. 2000), overruled on other grounds by
Socop-Gonzalez v. I.N.S., 272 F.3d 1176 (9th Cir. 2001)
11 LANDMARK SCREENS v. MORGAN LEWIS
(en banc). Because the essential facts of Landmark’s
equitable tolling claim are undisputed, we apply the de
novo standard of review, as we do in review of the Dam-
ages Order in Part V below.
IV
Landmark’s fraud claim is governed by the three-year
statute of limitations period set forth in California Code of
Civil Procedure § 338(d), which states that a fraud claim
“is not deemed to have accrued until the discovery, by the
aggrieved party, of the facts constituting the fraud or
mistake.” Since Landmark filed the instant action on
May 21, 2008, the district court considered whether
Landmark had actual or inquiry notice of the facts giving
rise to its fraud claim prior to May 21, 2005. Dismissal
Order at 8. The district court found that Landmark had
actual or inquiry notice of its fraud claim in late March
2005, when Kohler sent Landmark a letter stating that
there had been an error with the ’916 divisional applica-
tion and that all of the claims were potentially lost. Id.
Landmark sought relief from the statute of limita-
tions by way of two equitable doctrines: equitable estoppel
and equitable tolling. Landmark’s estoppel theory fo-
cused on the conduct of Kohler and MLB after the mis-
takes in prosecution of the ’916 divisional application
came to light, when Landmark’s counsel gave assurances
that its mistakes could be cured. According to Landmark,
those assurances led it to rely on counsel to the detriment
of timely pursuit of legal remedies against counsel. Thus,
Landmark argued that the defendants should be equita-
bly estopped from invoking the statute of limitations. The
district court rejected Landmark’s estoppel theory but did
not address Landmark’s equitable tolling argument,
which was based on the California equitable tolling law
discussed in the following paragraph.
LANDMARK SCREENS v. MORGAN LEWIS 12
California law “favors avoiding forfeitures and allow-
ing good faith litigants their day in court.” Addison v.
State, 578 P.2d 941, 941 (Cal. 1978). California and Ninth
Circuit courts will “toll[] the limitation period of a second
action during the pendency of a first action later found to
be defective.” Collier v. City of Pasadena, 191 Cal. Rptr.
681, 684 (Cal. Ct. App. 1983); see Valenzuela v. Kraft, Inc.,
801 F.2d 1170, 1175 (9th Cir. 1986) (tolling the statute
where the plaintiff’s first action was dismissed for lack of
subject matter jurisdiction, causing her second suit to be
untimely filed). Under California law, courts consider
three factors in determining whether equitable tolling
should apply when a litigant timely files a second suit in
another forum based on the same facts: “(1) timely notice
to the defendant in filing the first claim; (2) lack of preju-
dice to the defendant in gathering evidence to defend
against the second claim; and (3) good faith and reason-
able conduct by the plaintiff in filing the second claim.”
Azer v. Connell, 306 F.3d 930, 936 (9th Cir. 2002) (citing
Daviton v. Columbia/HCA Healthcare Corp., 241 F.3d
1131, 1137-38 (9th Cir. 2001) (en banc)).
In Daviton, the Ninth Circuit provided an extensive
review of California’s equitable tolling law. It concluded
that the principal goal of statutes of limitations is to
prevent the assertion of stale claims, and equitable tolling
is a general policy to preserve claims when a party “pos-
sessing several legal remedies . . . reasonably and in good
faith pursues one designed to lessen the extent of his
injuries or damage.” 241 F.3d at 1137 (quoting Addison,
578 P.2d at 943). Elaborating on the three-part California
test, the Ninth Circuit noted that the notice element is
satisfied when the first claim is timely filed and the facts
alleged in the first claim “alert the defendant in the
second claim of the need to begin investigating the facts
which form the second claim.” Id. at 1138 (quoting Col-
13 LANDMARK SCREENS v. MORGAN LEWIS
lier, 191 Cal. Rptr. at 924). The second element is satis-
fied “[s]o long as the two claims are based on essentially
the same set of facts.” Id. (quoting Collier, 191 Cal. Rptr.
at 925-26). When such is the case, “timely investigation
of the first claim should put the defendant in position to
appropriately defend the second. Once he is in that
position the defendant is adequately protected from stale
claims and deteriorated evidence.” Id. As for the third
element, the Ninth Circuit noted that California case law
had not defined this element with the precision of the first
two because the third element can turn on subjective
factors peculiar to any given case. Id.
California law also recognizes limits on its otherwise
somewhat generous inclination to permit equitable tolling
to excuse failure to meet a statute of limitations:
“[t]hough equity will toll the statute of limitations while a
plaintiff, who possesses different legal remedies for the
same harm, reasonably and in good faith pursues one, it
will not toll the statute while a plaintiff who has allegedly
suffered several different wrongs, pursues only one rem-
edy as to one of those wrongs.” Aerojet Gen. Corp. v.
Superior Court, 177 Cal. App. 3d 950, 956 (Cal. Ct. App.
1986) (citing Loehr v. Ventura Cnty. Cmty. Coll. Dist., 147
Cal. App. 3d 1071, 1086 (Cal. Ct. App. 1983)). Aerojet
thus presents a positive test for invocation of equitable
tolling and a negative test for barring equitable tolling.
With this understanding of California law, we conclude
that the district court erred in not tolling the three-year
statute of limitations for fraud claims during the time the
case was pending in the state courts. This conclusion
means that Landmark’s fraud claim was timely filed in
the district court.
Our conclusion is mandated by the factors laid out in
Daviton. As to the first Daviton factor, Landmark gave
timely notice to MLB and Kohler by filing the state court
LANDMARK SCREENS v. MORGAN LEWIS 14
lawsuit in November 2005, less than a year after Kohler
first mentioned any problem with the ’916 divisional
application in late December 2004 and well within the
statutes of limitation for malpractice (one year) and fraud
(three years). The facts alleged in the state court com-
plaint included the allegations of deception by the defen-
dants about the nature of the defendants’ conduct and
adequately provided notice to MLB and Kohler of the
claims brought in the federal action. As to the second
Daviton factor, the appellees have suffered no prejudice in
their ability to gather evidence and prepare a defense
since they were on notice of all key facts underlying
Landmark’s claims from the start of the state court ac-
tion. As to the third Daviton factor, Landmark acted
reasonably and in good faith in filing the federal lawsuit
after the state court dismissed its claims for lack of sub-
ject matter jurisdiction. At the time that Landmark filed
the state court suit, there was ambiguity as to whether
the suit belonged in state or federal court, as this court
had not yet decided Immunocept, 504 F.3d 1281, and Air
Measurement Technologies, 504 F.3d 1262. The Ninth
Circuit has expressly stated that when the law is unclear
whether state or federal court is the proper forum for suit,
a plaintiff “should not be denied a chance to present his
case because he chose the wrong line of precedent.”
Valenzuela, 801 F.2d at 1175.
In their brief to this court, the defendants do not chal-
lenge that Landmark satisfies the three-part test stated
in Daviton. Instead, they argue that Aerojet defeats
Landmark’s claim to equitable tolling. We reject the
contention of Kohler and MLB that the negative rule in
Aerojet bars equitable tolling of Landmark’s fraud claim.
Kohler and MLB view the wrong of malpractice as fun-
damentally different from the wrong of fraud. Thus, they
see Landmark’s pursuit of a remedy for the alleged mal-
15 LANDMARK SCREENS v. MORGAN LEWIS
practice as a bar under Aerojet to a later claim for remedy
from the harm caused by the alleged fraud. Kohler and
MLB misunderstand the gist of Landmark’s grievance.
From the start, Landmark has asserted a single harm to
it, the loss of its patent rights. The defendants have even
admitted as much. In their motion to dismiss the fraud
claim, they stated that “Landmark complains of a single
harm arising from a single course of conduct—loss of
patent rights.” J.A. 1164. For that single harm, Land-
mark has multiple legal remedies. As discussed above,
Landmark reasonably and in good faith pursued a remedy
in the state courts, only to learn that the state courts
lacked jurisdiction over its legal remedy. Landmark thus
qualifies for equitable tolling under California law, and
the negative test of Aerojet does not stand in Landmark’s
way.
Since we hold that the district court should have equi-
tably tolled the statute of limitations on Landmark’s
fraud claim during the time the case was pending in the
state courts, we need not decide whether the district court
abused its discretion in denying Landmark’s request for
the application of equitable estoppel.
V
We now turn to Landmark’s appeal from the Damages
Order. Some background information concerning the
Damages Order, which was not germane to decision of the
equitable tolling claim, should be stated.
Although Kohler and MLB did not prosecute the ’916
divisional application in a timey manner, they did prose-
cute the ’096 application, which was limited to elected
claims 26-31 and 56-72. On October 28, 2003, Landmark
was awarded U.S. Patent No. 6,639,574 (the “’574 patent”)
on the elected claims. Landmark not surprisingly turned
to new patent counsel in October 2005 for an assessment
LANDMARK SCREENS v. MORGAN LEWIS 16
of what could be done to rectify the harm done to the non-
elected claims that had been included in the ill-fated ’916
divisional application. New patent counsel determined
that Landmark could seek reissue of the ’574 patent
under 35 U.S.C. § 251, to broaden the issued claims on
the ground that due to error without deceptive intent, the
patentee in the elected claims of the ’096 application had
claimed less than his right to claim. On November 10,
2009, Landmark was granted reissue patent number
RE40,953 (“the RE’953 patent”), which includes the 23
elected claims that issued as the ’574 patent and new
claims 24-66.
Our precedent provides that the reissue statute may
not be used to grant patent protection for substantially
identical claims that were not properly prosecuted in
divisional applications. See In re Orita, 550 F.2d 1277,
1280-81 (CCPA 1977). Our precedent also recognizes
that the reissue statute is properly invoked when the new
claims in the reissue application are not substantially
identical to previously non-elected claims. See In re
Doyle, 293 F.3d 1355 (Fed. Cir. 2002). When the reissue
claims are broader than the issued claims, the patentee
may assert that the issued claims are, in the language of
section 251, “wholly or partly inoperative or invalid . . . by
reason of the patentee claiming . . . less than he had a
right to claim in the patent.” Id. at 1360.
The district court ruled in the Damages Order that
Landmark’s reissue application did not present substan-
tially identical claims to claims of the failed ’916 divi-
sional application and consequently satisfied the
requirements of section 251. Neither party assigns error
to the district court in this regard. Instead, Landmark
vigorously disputes the district court’s conclusion that
independent reissue claims 43 and 58 (and the reissue
claims that depend from them) are broader than, and thus
17 LANDMARK SCREENS v. MORGAN LEWIS
include, corresponding claims in the ’916 divisional appli-
cation. The district court reasoned that since the scope of
the claims “lost” in the ’916 divisional application is
recovered by the broader scope of the corresponding
reissue claim, Landmark’s right to any damages related
to those reissue claims must be cut off as of the date of the
reissue patent. In order to affirm the Damages Order, we
must be convinced that the district court was correct in
concluding that the specified reissue claims are broader
than their divisional counterparts.
The district court compared the claim language of re-
issue claims 43 and 58 and their counterparts, claims 1
and 42 of the ’916 divisional application. Because each of
claims 1 and 42 contained limitations not present in
claims 43 and 58, the district court concluded that the
broader reissue claim necessarily captured the entirety of
the corresponding divisional claims. However, in its
general analysis of the scope of the corresponding claims,
the district court overlooked the fact that reissue claims
43 and 58 are in some respects actually narrower than
their corresponding divisional claims.
For example, while claim 1 of the ’916 divisional ap-
plication imposes no express selection criteria to be used
in the “selecting a color gamut” step and instead merely
defines the desired result, claim 43 of the RE’953 patent
expressly imposes two selection criteria, i.e., the selecting
must be carried out “according to the specified color and
an operating characteristic.” Similarly, the “selecting”
step in claim 42 of the ’916 divisional application selects
“the color gamut containing said specified color,” but the
“selecting” step in claim 58 of the RE’953 patent selects
“the color gamut for each pixel.” The district court failed
to appreciate that while the pertinent reissue claims may
be broader in some respects than their corresponding
divisional claims, the reissue claims at the same time are
LANDMARK SCREENS v. MORGAN LEWIS 18
in other respects narrower. Because the district court did
not reconcile these opposing scopes, its conclusion that the
reissue claims necessarily encompass the divisional
claims is incorrect. The respective claims recite different
manners of carrying out their respective “selecting” steps.
The district court erred by simply concluding that the ’916
divisional application’s claims contain limitations not
present in the RE’953 patent’s claims and by failing to
analyze these differences in language that may affect the
scope of these claims.
Because the underpinning of the district court’s Dam-
ages Order is flawed, it was error to hold that Landmark
could suffer no harm after the issuance of the RE’953
patent regarding reissue claims 43 and 58 and their
corresponding dependent claims. We therefore vacate the
Damages Order.
VI
For the reasons stated above, the judgment of the dis-
trict court that Landmark’s fraud claim is time-barred is
reversed, and its judgment restricting Landmark’s le-
gally-cognizable harm since issuance of the RE’953 patent
is vacated. The case is remanded for further proceedings
consistent with this opinion.
REVERSED-IN-PART, VACATED-IN-PART, AND
REMANDED
COSTS
Each party shall bear its own costs.
United States Court of Appeals
for the Federal Circuit
__________________________
LANDMARK SCREENS, LLC,
Plaintiff-Appellant,
v.
MORGAN, LEWIS, & BOCKIUS, LLP,
AND THOMAS D. KOHLER,
Defendants-Appellees.
__________________________
2011-1297
__________________________
Appeal from the United States District Court for the
Northern District of California in case no. 08-CV-2581,
Judge Jeremy Fogel.
__________________________
O’MALLEY, Circuit Judge, concurring.
I concur in full in parts I, III, and IV of the majority
opinion. I also concur in the result in part V, but not in
the entirety of its reasoning. Finally, while I must concur
in the result in part II, I write separately because I be-
lieve the case law upon which part II is premised should
be reconsidered by the Court en banc.
I.
I will not repeat or further comment on the careful
analysis in parts I, III, and IV of the majority opinion. I
simply note my agreement with them.
LANDMARK SCREENS v. MORGAN LEWIS 2
II.
I agree with the conclusion in part V that the Dam-
ages Order must be vacated. I also agree that one of the
reasons that order must be vacated is that the trial court
erred in concluding that the reissue claims necessarily
encompass the full scope of the claims in the ’916 divi-
sional application. There are, however, additional rea-
sons why the Damages Order must be vacated.
First, to the extent the Damages Order capped the
damages Landmark could seek at trial, the in limine
ruling was wrong even if the trial court’s analysis of the
scope of the reissue claims was correct. Given the less-
than-linear process that ultimately led to issuance of the
’953 reissue patent and governing law that prohibits
applicants from using the reissue statute to recapture
claims previously lost in improperly prosecuted divisional
applications, the claims in the ’953 reissue patent remain
subject to a validity challenge if and when Landmark
attempts to enforce them in an infringement action. To
the extent that threat diminishes the value of the ’953
reissue patent to Landmark and Landmark can proffer
credible, persuasive and admissible evidence to that
effect, reasonable jurors could predicate a damages award
in favor of Landmark on such evidence.
The Damages Order also must be vacated for a more
fundamental reason. The trial judge assumed that the
motion in limine which gave rise to the Damages Order
was a motion which presented a pure question of law, put
to him to answer rather than to the trier of fact. That
assumption was understandable since, in a patent in-
fringement action, claim scope is an issue for the trial
judge alone. See, e.g., Cybor Corp. v. FAS Techs. Inc., 138
F.3d 1448, 1454 (Fed. Cir. 1998). This is not an infringe-
ment action, however.
3 LANDMARK SCREENS v. MORGAN LEWIS
This is a fraud action, governed by state law, not pat-
ent law or patent practice. It is an action, moreover,
where any ruling on the scope of the claims in the ’953 or
the ’916 divisional application will have no bearing or
substantive effect on the actual scope of those claims. The
question of claim scope impacts only the questions of
causation and the type of recoverable damages Landmark
can claim. As such, they are questions for the trier of fact,
not the trial judge.
While a trial judge always may conclude that no rea-
sonable trier of fact could reach a different conclusion
than he on questions presented in a motion in limine, that
is not what the trial judge did here. Not once did he
address what a reasonable juror might or might not
conclude on the facts presented. Instead, apparently with
the parties’ blessings, he treated the issue as he would be
required to do in a patent infringement trial. That was
error—understandable error—but error nonetheless.
III.
I now turn to part II of the opinion, where the juris-
dictional predicate for our judgment is discussed. While I
agree that our current case law compels this panel to
exercise jurisdiction over this appeal, I believe our Court
should reconsider that case law en banc. I hold this view
for the reasons detailed in my dissent from the denial of
rehearing en banc in Byrne v. Wood, Herron & Evans,
LLP, --- F.3d ---, 2012 U.S. App. LEXIS 6021 (Fed. Cir.
Mar. 22, 2012) (O’Malley, J., dissenting from denial of
petition for rehearing en banc) and in my concurrence in
USPPS, Ltd. v. Avery Dennison Corp., 2011-1525, ---F.3d--
-, (Fed. Cir. 2011) (O’Malley, J., concurring). I incorporate
those discussions by reference here; there is no need to
repeat them.
LANDMARK SCREENS v. MORGAN LEWIS 4
Turning to the particular facts of this case, the mis-
chief our case law in this area has caused is apparent.
The malpractice action arising from the facts the majority
details was filed in California state court in 2005.
JA1139-49. At that point, it was commonly understood
that state law malpractice claims arising out of legal
representation involving federal matters—including
patent matters—were properly lodged in state courts and,
absent diversity among the parties, only state courts. See,
e.g., Adamasu v. Gifford, Krass, Groh, Sprinkle, Anderson
& Citkowski, P.C., 409 F. Supp. 2d 788 (E.D. Mich. 2005)
(remanding a legal malpractice claim alleging negligent
patent prosecution); New Tek Mfg., Inc. v. Beehner, 702
N.W.2d 336 (Neb. 2005) (“New Tek I”) (finding that state
court jurisdiction is proper over a malpractice claim in
which the plaintiff would have to prove, under its properly
construed patent claims, that it would have prevailed in a
patent infringement action). 1 Not one of the three defen-
1 See also IMT, Inc. v. Haynes & Boone, L.L.P.,
1999 WL 58838 (N.D. Tex. Feb. 1, 1999) (remanding a
legal malpractice claim to state court where the plaintiff
alleged that its attorney’s negligence in filing a continua-
tion-in-part patent application instead of a new patent
application raised questions about the patent’s validity
and enforceability); Commonwealth Film Processing, Inc.
v. Moss & Rocovich, P.C., 778 F. Supp. 283 (W.D. Va.
1991) (remanding malpractice action based on an attor-
ney’s alleged lack of patent knowledge); Minatronics Corp.
v. Buchanan Ingersoll P.C., 28 Pa. D. & C.4th 214 (Pa.
Comm. Pl. 1996) (finding no jurisdiction over a claim for
malpractice based on a missed patent application filing
deadline, even though the court would have to determine
whether a patent would have issued); Fotodyne, Inc. v.
Barry, 449 N.W.2d 337 (Wis. Ct. App. Sept. 26, 1989)
(unpublished) (finding that state court jurisdiction is
proper in a malpractice action based on an attorney’s
failure to notify his client that the PTO had rejected his
patent application).
5 LANDMARK SCREENS v. MORGAN LEWIS
dants—all sophisticated lawyers with sophisticated
counsel—challenged the state court’s jurisdiction over this
action at the time it was filed, or for years thereafter.
In 2007, two years after the action was filed in state
court, this court affected a sea change by announcing its
assertion of jurisdiction over these types of state law
claims. See Air Measurement Techs., Inc. v. Akin Gump
Strauss Hauer & Feld, L.L.P., 504 F.3d 1262 (Fed. Cir.
2007); Immunocept, LLC v. Fulbright & Jaworski, LLP,
504 F.3d 1281 (Fed. Cir. 2007). By then, the statute of
limitations governing Landmark’s malpractice claim had
expired. A year after our decision in Air Measurement,
appellees filed a motion to dismiss in state court, which
was granted based on our case law.
California has no savings statute, however, and, by
statute, prohibits application of equitable tolling princi-
ples to malpractice claims, causing Landmark’s malprac-
tice claim to be lost forever. Landmark Screens, LLC v.
Morgan, Lewis & Bockius LLP, 2008 WL 4483817 (N.D.
Cal. Oct. 2, 2008). Thus, although Landmark filed its
federal action on the same day the state court dismissed
it, Landmark could no longer assert a malpractice claim
against Kohler and MLB. Id. In other words, a cause of
action which—given the undisputed facts—was far from
frivolous, which arises under and was governed by state
law, and which all parties agreed for years had been
properly asserted in California state court, was irre-
trievably lost by our disruption of the parties’ well-settled
expectations in this area.
For all the reasons articulated in my dissent from the
denial of rehearing en banc in Byrne and because, as in
this case, our case law in this area treads unduly into
matters which are—and should remain—governed by
LANDMARK SCREENS v. MORGAN LEWIS 6
state law, I encourage our court to address the scope of
our jurisdiction in these matters en banc.