United States Court of Appeals for the Federal Circuit
2006-1432
IMMUNOCEPT, LLC, PATRICE ANNE LEE,
and JAMES REESE MATSON,
Plaintiffs-Appellants,
v.
FULBRIGHT & JAWORSKI, LLP,
Defendant-Appellee.
Jon R. Stark, Chao Hadidi Stark & Barker LLP, of Menlo Park, California, argued
for plaintiffs-appellants. With him on the brief was Bernard H. Chao. Of counsel on the
brief were Michael P. Lynn, Jeremy A. Fielding, and Aaron Miller, Lynn Tillotson &
Pinker, LLP, of Dallas, Texas.
David M. Gunn, Beck Redden & Secrest, L.L.P., of Houston, Texas, argued for
defendant-appellee. With him on the brief were David J. Beck, Russell S. Post, and
Constance H. Pfeiffer.
Appealed from: United States District Court for the Western District of Texas
Judge Sam Sparks
United States Court of Appeals for the Federal Circuit
2006-1432
IMMUNOCEPT, LLC, PATRICE ANNE LEE,
and JAMES REESE MATSON,
Plaintiffs-Appellants,
v.
FULBRIGHT & JAWORSKI, LLP,
Defendant-Appellee.
__________________________
DECIDED: October 15, 2007
__________________________
Before MICHEL, Chief Judge, LOURIE and RADER, Circuit Judges.
MICHEL, Chief Judge.
This is a legal malpractice case based on alleged errors in patent prosecution.
Immunocept, L.L.C., Patrice Anne Lee, and James Reese Matson (collectively
“Immunocept”) appeal the decision of the United States District Court for the Western
District of Texas granting summary judgment in favor of Fulbright & Jaworski, L.L.P.
(“Fulbright”) based on the following independent grounds: (1) the malpractice claim is
barred by the statute of limitations and (2) the claim for damages is too speculative to
be recovered under state law. Immunocept v. Fulbright & Jaworksi, LLP, No. A-05-CA-
334, slip op. (W.D. Tex. Mar. 24, 2006) (“MSJ Order”). After Immunocept filed its
opening brief, we ordered the parties to address whether there is “arising under”
jurisdiction over the malpractice claim under 28 U.S.C. § 1338. Because the claim
scope determination involved in the malpractice claim presents a substantial question of
patent law, we conclude that jurisdiction is proper under § 1338. We further conclude
that Immunocept’s malpractice claim is barred by the statute of limitations and,
accordingly, affirm the district court’s decision.
I
Lee, Matson, and Robert Wilton Pryor (not a party in this suit) developed large
pore hemofiltration (“LPHF”) technology for the treatment of sepsis, shock, acute renal
failure, multiple organ system failure, and systemic inflammatory response syndrome-
related diseases. The filtration technology treats these conditions and diseases by
continuously removing blood from the body, filtering excessive toxins, and continuously
returning the filtered blood to the body. Compl. ¶ 10. The inventors hired Fulbright to
secure patent protection for the LPHF technology. On November 5, 1996, U.S. Patent
No. 5,571,418 (“’418 patent”), entitled, “Hemofiltration of toxic mediator-related
disease,” issued with Lee, Matson, and Pryor as the named inventors. The inventors
assigned their intellectual property rights to Immunocept L.L.C.
Immunocept subsequently hired patent attorney Thomas Felger, partner at Baker
Botts L.L.P., to prosecute additional applications based on the LPHF technology.
Felger reviewed the ’418 patent and met with Immunocept in 1999 to discuss, inter alia,
independent claim 1, 1 i.e., the claim at issue in the malpractice suit. Felger also
reviewed the file history of the ’418 patent as late as February 2002.
1
Claim 1 recites:
A method of treating a pathophysiological state caused by a toxic
mediator-related disease consisting of hemofiltering blood with a filter,
2006-1432 2
Immunocept sought financial partners to proceed with “the necessary clinical
trials and commercialization of their invention.” Compl. ¶ 14. In January 2002,
Immunocept entered into preliminary investment negotiations with Therakos, Inc., a
subsidiary of Johnson & Johnson (“J&J”), to commercialize the invention. J&J
discussed claim scope issues with Felger.
During the course of due diligence, J&J’s patent attorneys discovered that the
’418 patent suffered from a fatal flaw, namely the transition phrase “consisting of” in
claim 1. 2 J&J’s patent attorneys did not think that the claimed invention would provide
adequate protection from competing methods. Compl. ¶ 17. Therefore, on April 5,
2002, Therakos terminated discussions with Immunocept.
After Immunocept discussed the claim scope issue with Fulbright, the parties
entered into a tolling agreement that ran from March 4, 2004 to April 20, 2005. The
parties agree that the critical date for the statute of limitations analysis is March 9, 2002.
On May 6, 2005, Immunocept sued Fulbright in the Western District of Texas for
legal malpractice under Texas state law, alleging § 1338 as the sole jurisdictional basis.
Fulbright moved for summary judgment, arguing that the malpractice claim is barred by
the statute of limitations and that damages are too speculative as a matter of law. On
March 24, 2006, the district court granted summary judgment in favor of Fulbright on
both independent grounds.
wherein said filter has a molecular weight exclusion limit of 100,000 to
150,000 Daltons and allows for passage of molecules with a molecular
weight of about 70,000 Daltons in the presence of whole blood.
2
The application giving rise to the ’418 patent was amended on January 12,
1996, by inserting the phrase “consisting of” in claim 1. See Kirk Expert Report ¶ 4.
2006-1432 3
Immunocept filed a motion to alter or amend the judgment pursuant to Rule 59 of
the Federal Rules of Civil Procedure on April 7, 2006. The district court denied this
motion on May 4, 2006. This timely appeal followed. On August 8, 2006, we ordered
the parties to brief the § 1338 jurisdictional basis for the case. Both parties filed
responsive briefs, agreeing that § 1338 jurisdiction is proper. To the extent that there is
§ 1338 jurisdiction over the malpractice claim, we have exclusive appellate jurisdiction
under 28 U.S.C. § 1295(a)(1).
II
We have inherent jurisdiction to determine our jurisdiction over an appeal and
thus address this issue sua sponte. Haines v. Merit Sys. Prot. Bd., 44 F.3d 998, 999
(Fed. Cir. 1995); see also In re Alappat, 33 F.3d 1526, 1530 (Fed. Cir. 1994) (en banc).
Under 28 U.S.C. § 1295(a)(1), we have exclusive jurisdiction over “an appeal from a
final decision of a district court of the United States . . . if the jurisdiction of that court
was based, in whole or in part, on section 1338.” Section 1338, in turn, provides district
courts with exclusive jurisdiction over patent cases. See 28 U.S.C. § 1338(a) (“The
district courts shall have original jurisdiction of any civil action arising under any Act of
Congress relating to patents, plant variety protection, copyrights and trademarks. Such
jurisdiction shall be exclusive of the courts of the states in patent, plant variety
protection and copyright cases.”).
Under Christianson v. Colt Industries Operating Corp., § 1338 jurisdiction
extends to any case “in which a well-pleaded complaint establishes either that federal
patent law creates the cause of action or that the plaintiff’s right to relief necessarily
depends on resolution of a substantial question of federal patent law, in that patent law
2006-1432 4
is a necessary element of one of the well-pleaded claims.” 486 U.S. 800, 809 (1988).
The Supreme Court later rephrased the Christianson two-part test as a determination of
whether “a state-law claim necessarily raise[s] a stated federal issue, actually disputed
and substantial, which a federal forum may entertain without disturbing any
congressionally approved balance of federal and state judicial responsibilities.” Grable
& Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314 (2005). Because
legal malpractice is a state law claim, we must determine whether it satisfies the second
part of Christianson in view of the federalism concerns of Grable. We conclude that it
does.
Immunocept’s well-pleaded complaint alleges, as the only cause of action,
attorney malpractice, which under Texas state law requires proof of duty, breach,
causation, and damages. See Peeler v. Hughes & Luce, 909 S.W.2d 494, 496 (Tex.
1995) (stating the elements of a malpractice cause of action). Immunocept alleges as
the sole source of attorney error a claim drafting mistake 3 that provided inadequate
patent protection and could allow competitors to copy the claimed methods without
infringing the ’418 patent by simply adding another element. Compl. ¶¶ 17-18. Thus,
the alleged attorney error narrowed the scope of the patent.
Because it is the sole basis of negligence, the claim drafting error is a necessary
element of the malpractice cause of action. As such, there is no way Immunocept can
3
Unlike Appellant’s brief, the Complaint does not identify “consisting of” as
the nature of the drafting mistake. See Vehicle Techs. Corp. v. Titan Wheel Int’l, 212
F.3d 1377, 1382 (Fed. Cir. 2000) (“The phrase ‘consisting of’ is a term of art in patent
law signifying restriction and exclusion, while, in contrast, the term ‘comprising’ indicates
an open-ended construction.”) (citation omitted). Therefore, we consider the alleged
error in claim drafting in its broadest context, since our appellate jurisdiction is
determined by “reference to the well-pleaded complaint, not the well-tried case.”
Christianson, 486 U.S. at 814.
2006-1432 5
prevail without addressing claim scope. The parties, however, dispute whether there
was a drafting mistake. Therefore, if determining claim scope involves a substantial
question of federal law that passes the federalism muster of Grable, there is § 1338
jurisdiction over the malpractice claim under both Christianson and Grable.
We have held that where patent infringement is a necessary element of a legal
malpractice claim stemming from prior litigation, there is § 1338 jurisdiction. Air
Measurement Techs., Inc. v. Akin Gump, No. 2007-1035, __ F.3d __ (Fed. Cir. 2007);
see also U.S. Valves, Inc. v. Dray, 212 F.3d 1368, 1372 (Fed. Cir. 2000) (holding that a
breach of contract claim requiring proof of patent infringement confers § 1338
jurisdiction); Additive Controls & Measurement Sys., Inc. v. Flowdata, Inc., 986 F.2d
476, 477-78 (Fed. Cir. 1993) (holding that there is § 1338 jurisdiction over a business
disparagement claim that requires proof of patent non-infringement). We have also held
that there is § 1338 jurisdiction over state claims that involve a comparison of patent
applications and the proof of invalidity. See Univ. of W. Va. v. VanVoorhies, 278 F.3d
1288, 1295 (Fed. Cir. 2002) (holding § 1338 jurisdiction is proper where breach of duty
to assign a patent requires resolution of whether the disputed patent application is a
continuation-in-part of a prior application); Hunter Douglas, Inc. v. Harmonic Design,
Inc., 153 F.3d 1318, 1329 (Fed. Cir. 1998) (holding that a state law claim of injurious
falsehood presents a substantial question of patent law where plaintiff has to show
invalidity of the patent), overruled in part on other grounds by Midwest Indus., Inc. v.
Karavan Trailers, Inc., 175 F.3d 1356, 1358-59, 1361 (Fed. Cir. 1999) (en banc in
relevant part).
2006-1432 6
Because patent claim scope defines the scope of patent protection, see Johnson
& Johnston Assocs. v. R.E. Serv. Co., 285 F.3d 1046, 1052 (Fed. Cir. 2002) (en banc),
we surely consider claim scope to be a substantial question of patent law. As a
determination of patent infringement serves as the basis of § 1338 jurisdiction over
related state law claims, so does a determination of claim scope. After all, claim scope
determination is the first step of a patent infringement analysis. See Lacks Indus., Inc.
v. McKechnie Vehicle Components USA, Inc., 322 F.3d 1335, 1341 (Fed. Cir. 2003)
(describing the two steps of an infringement determination).
Claim scope determination is a question of law that can be complex in that it may
involve many claim construction doctrines. Litigants will benefit from federal judges who
are used to handling these complicated rules. See Grable, 545 U.S. at 315.
Additionally, Congress’ intent to remove non-uniformity in the patent law, as evidenced
by its enactment of the Federal Courts Improvement Act of 1982, Pub. L. No. 97-164,
96 Stat. 25, is further indicium that § 1338 jurisdiction is proper here. See also Grable,
545 U.S. at 315; Christianson, 486 U.S. at 809. Having satisfied ourselves of
jurisdiction, we now turn to the merits of the summary judgment decision.
III
We give plenary review to a district court’s grant of summary judgment, applying
the same standard as the district court. Vanmoor v. Wal-Mart Stores, Inc., 201 F.3d
1363, 1365 (Fed. Cir. 2000). “Summary judgment is appropriate when there is no
genuine issue as to any material fact and the moving party is entitled to judgment as a
matter of law.” Id. (citation omitted).
2006-1432 7
The district court granted summary judgment in favor of Fulbright on the ground
that the malpractice claim is barred by the two-year statute of limitations, as measured
by the imputation of the knowledge of Attorney Thomas Felger to Immunocept. MSJ
Order at 5. The two-year period starts to run when a “client discovers or should have
discovered through the exercise of reasonable care and diligence the facts establishing
the elements of a cause of action.” Apex Towing Co. v. Tolin, 41 S.W.3d 118, 121 (Tex.
2001) (applying the discovery rule to legal malpractice cases).
The parties agree that the critical date for the statute of limitations analysis is
March 9, 2002. The crux of the malpractice case is the narrowing effect of “consisting
of” on the scope of the claims in the ’418 patent. Immunocept argues it was not on
notice of the basis of its malpractice case until J&J pointed out flaws in the claim scope
in April 2002. However, the undisputed evidence speaks otherwise.
Immunocept’s expert, patent attorney Alan MacPherson, testified that the
transition “consisting of” drastically limits the scope of a patent, that nothing in the file
history would change the limited meaning of the phrase, and that patent attorneys would
know what the limitation meant. As further indicia of the restrictive nature of this claim
language, Immunocept submitted as evidence a guide on writing patent applications
which states that “consisting of” is the most restrictive transitional phrase because it
excludes non-recited elements. 4 MacPherson testified that anyone would know of the
restrictive language simply by reading the claims on the face of the patent. However,
Felger did more than read the patent. He analyzed the claim scope, reviewed the file
history, and reviewed prior art references cited by the Examiner to reject pending claims
4
Thus, a competitor could design around a claim with this transitional
phrase by adding any step or element not recited in the claim.
2006-1432 8
in the application that gave rise to the ’418 patent, no later than February 2002 (i.e.,
prior to the critical date).
Instead of proffering evidence that Felger was not aware of the limited scope of
the patent, Immunocept asserts that Felger did not reasonably know about the
malpractice claim because it hired him to secure additional patents on the LPHF
technology, not to investigate the malpractice claim. The relevant inquiry is not whether
Felger was hired to investigate malpractice, but whether he knew or should have known
facts later establishing a malpractice claim (i.e., the narrowed claim scope). See PPG
Indus. v. JMB/Houston Ctrs. Ltd. P’ship, 146 S.W.3d 79, 93-94 (Tex. 2004) (observing
that the focus of the discovery rule is on the wrongfully caused injury even if the
claimant does not know “the specific cause of the injury; the party responsible for it; the
full extent of it; or the chances of avoiding it”).
Even Felger’s testimony weakens Immunocept’s argument. For example, Felger
testified that one of his assignments was to draft “claims that were broader than the
[100,000 to 150,000 Daltons] range on the filter” in claim 1 of the ’418 patent, see supra
note 1, and that his goal was “to develop a picket fence around the ’418 patent.”
However, Felger would not know the range of molecular weights covered by claim 1
without at least considering “consisting of.” In other words, using Felger’s vernacular,
he would have to ascertain the size (i.e., scope) of the ’418 patent in order to determine
the size of the picket fence to build around it.
There is practically no way Felger could have determined the scope of claim 1
disregarding the phrase “consisting of,” which, according to Immunocept’s evidence, is
2006-1432 9
so drastic and glaring that any patent attorney would be aware of its restrictive nature. 5
Drawing all justifiable inferences in favor of Immunocept, Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986), we conclude that, based on the blatantly restrictive
transitional phrase and Felger’s review of the patent, file history, prior art, and claim
scope, Felger should have reasonably known that “consisting of” drastically narrowed
the scope of the claims in the ’418 patent no later than February 2002, thereby starting
the statute of limitations clock.
IV
Our analysis does not end here, for Felger’s reasonable knowledge supports a
statute of limitations bar only if his knowledge can be imputed to Immunocept.
“Knowledge or notice to an attorney acquired during the existence of the relationship of
attorney and client, and while acting within the scope of his authority, is imputed to the
client.” Gulf Atl. Life Ins. Co. v. Hurlbut, 749 S.W.2d 96, 98 (Tex. App. 1985) (citations
omitted). Immunocept argues that there can be no imputation of Felger’s knowledge to
it because given the scope of Felger’s employment (i.e., to draft additional patent
applications), he did not have a duty to communicate this knowledge to Immunocept.
However, the imputation analysis involves determining whether an attorney was acting
within the scope of his authority or employment when he discovered or reasonably
should have discovered the critical information. Noticeably absent from the imputation
rule is a requirement that the attorney have a duty to disclose information to the client.
5
It appears as though Immunocept seeks to use “consisting of” as both a
sword (arguing that reasonable attorneys would have known of the limiting nature of the
phrase) and a shield (arguing Felger would not have reasonably known).
2006-1432 10
More importantly, Immunocept did not argue below in its opposition to the motion
for summary judgment, or in its motion to alter or amend the judgment, 6 that imputation
requires a finding of a duty to communicate information to a client. As such, under Fifth
Circuit caselaw, which we apply to this appeal, Immunocept has waived this argument
before us. Keelan v. Majesco Software, Inc., 407 F.3d 332, 339 (5th Cir. 2005) (“If a
party fails to assert a legal reason why summary judgment should not be granted, that
ground is waived and cannot be considered or raised on appeal.”) (internal citation
omitted). We do not address the merits of this argument, nor do we opine on whether
Felger had a duty to disclose the information to Immunocept. Instead, we examine the
scope of Felger’s authority.
Here, Felger was authorized to examine the ’418 patent, its file history, and
related prior art to analyze the scope of the claims. These are the same patent, same
file history, same claim, and same scope analysis 7 that are the basis for the legal
malpractice suit. This is not a case where a client hired an attorney for work in an area
of law far removed from patent law (e.g., civil rights law) and the attorney discovered
patent prosecution information relevant to a legal malpractice case. In stark contrast,
this is a case where a client hired a patent prosecution attorney to examine a patent that
6
Although Immunocept argued that the district court’s conclusion that
Felger should have discovered the malpractice and had a duty to communicate that
information to it is the equivalent of a grant of summary judgment of malpractice against
Felger, Immunocept did not argue that imputation of knowledge requires an analysis of
the duty to disclose any reasonably discovered information to a client. We also note for
the record that in the MSJ Order, the district court, contrary to Immunocept’s argument,
did not discuss Felger’s duty to disclose information. Instead, the district court limited
the imputation analysis to the scope of Felger’s authority.
7
Although Felger provides evidence that he focused on the molecular
weight range of the filters in claim 1, his analysis necessarily involved examining the
transitional phrase, which is the same claim scope issue as in the malpractice suit.
2006-1432 11
later became the subject of a legal malpractice suit. Felger’s billing record for services
rendered through February 28, 2002 (i.e., prior to the critical date) is further evidence
that Felger acted within the scope of his authority when he reasonably should have
discovered the facts about the narrowed claim scope.
Patent review to determine size of molecules covered in patent;
interpreting claims in issued patent; continuing to review of [sic] the file
history for U.S. Patent 5,571,418; telephone discussion with Mr. David
Radunsky concerning the file history and possible questions by Johnson &
Johnson concerning the scope of the claims in U.S. Patent 5,571,418;
reviewing prior art references cited by the examiner to reject the pending
claims; continuing to study the file history in preparation for telephone
conference with Johnson & Johnson concerning the scope of the claims in
U.S. Patent 5,571,418 and other Immunocept patents/pending
applications; telephone conference with Immunocept and Johnson &
Johnson representatives concerning Immunocept intellectual property
portfolio.
This record is evidence that Felger’s employment included some participation in the
negotiation of the investment deal with J&J, i.e., the same deal that allegedly went awry
based on flaws in the claim drafting.
Therefore, we conclude that Felger acted within the scope of his authority when
he reasonably should have discovered the facts that later served as the basis of
Immunocept’s malpractice claim. As such, imputation of Felger’s knowledge to
Immunocept is proper. Because this reasonably discoverable knowledge occurred prior
to the critical date, Immunocept’s malpractice claim is barred by the statute of
limitations. Therefore, we need not and do not address whether Immunocept’s
damages are speculative under Texas state law.
V
We review the district court’s denial of Immunocept’s Rule 59 motion for abuse of
discretion, Midland W. Corp. v. Fed. Deposit Ins. Corp., 911 F.2d 1141, 1145 (5th Cir.
2006-1432 12
1990), using the law of the regional circuit, Univ. of W. Va., 342 F.3d at 1294 (stating
that denial of a Rule 59 motion “is a purely procedural question not unique to patent
law”). See Fed. R. Civ. P. 59. Because Immunocept’s Rule 59 motion is based in part
on a reiteration of its arguments regarding the statute of limitations, which we deem a
bar to the present malpractice case, we conclude that the district court did not abuse its
discretion in denying the motion.
VI
For all the foregoing reasons, we hold that where, as here, determination of claim
scope is a necessary, substantial, and contested element of a malpractice claim
stemming from patent prosecution, there is “arising under” jurisdiction under § 1338.
We further hold that the legal malpractice claim is barred by the Texas statute of
limitations. Accordingly, the decision of the district court is
AFFIRMED.
2006-1432 13