Akin Gump Loses $72.6 Million in Patent Malpractice

On May 7, 2009, Akin Gump Strauss Hauer & Feld LLP lost a patent malpractice suit in the United States Federal District Court for the Western District of Texas, when the jury concluded deliberations and presented the court with its a Verdict Form, which awarded the plaintiff’s $72,611,397.83.  In a report in Law Blog of the Wall Street Journal on May 8, 2009, Akin Gump was quoted as saying that no jury verdict had been issued yet, and if one were issued an appeal would be taken because the evidence would not support such a jury verdict.  Clearly, a jury verdict had been issued, so I guess that means we now move into phases 2 and 3, which undoubtedly will be a stream of post-trial motions, ultimately ending up in an appeal.

While there were a total of five patents referenced in the complaint, only three were submitted to the jury for consideration of whether malpractice occurred.  The three patents where malpractice was found in are U.S. Patent Nos. 5,157,378, 5,689,234 and 5,910,771. According to the complaint filed, which was originally filed in State court and then removed to Federal Court, the plaintiffs alleged the following:

• Plaintiffs’ hired Gary Hamilton, then a partner with Akin Gump, to prepare and prosecute various patent applications relating to a personal safety system for use by firemen and other emergency personnel engaged in hazardous substance control.  Among other things, the device contains an alarm that alerts others if the wearer ceases to move for a defined period, and since 2000 the National Fire Protection Agency has mandated use of this type of device by all firefighters.  [see complaint Fact paragraphs 1]
• After patents were issued to the plaintiffs it became necessary to bring infringement actions against competitors.  During the course of these patent litigations evidence was discovered showing the Attorney Hamilton did not file the initial patent application within one year of the device being offered for sale, in violation of 35 U.S.C. 102(b).  Moreover, Attorney Hamilton failed to disclose two prior patents and other facts, of which he was aware, which lead the defendants in the patent litigations to assert inequitable conduct. [see complaint Fact paragraphs 5 and 6]
• The patent application relating to U.S. Patent No. 5,910,771, could have been filed as early as 1990, but was not filed until 1997, which shortened the patent term. [see complaint Fact paragraph 7]
• In one particular settlement, additional payments received as damages were limited to sales of the device through 2008.  The patent term was incorrectly calculated and should have been for sales of the device through 2010. [see complaint Fact paragraph 8].
• Because of the actions of the defendents in this case, the plaintiffs were forced to settle the aforementioned patent litigations for sums demonstrably and significantly less than their fair value. [see complaint Fact paragraph 12].

The Plaintiffs’ Statement of Claims filed on January 15, 2009, tells the same story as does the complaint. Not surprisingly, Akin Gump’s Statement of Claims and Defenses, also filed on January 15, 2009, tells a different story.  In relevant part of this pre-trial statement states:

Defandant Akin Gump maintains that it met all applicable standards of care for attorneys, denies it committed any malpractice or breached legal duties owed to its clients and denies that Plaintiffs suffered any damages.

Akin Gump also maintains: (1) Plaintiffs did not invent the device beacuse other persons had already developed and built substantially similar devices; (2) Plaintiffs never succeeded in developing a working prototype but were merely the first to file the patent paperwork; (3) it was Plaintiff’s own actions, errors and misrepresentations that made their infringement lawsuits less valuable; (4) Akin Gump did not begin its representation until four years after the original patent was filed, so if any mistakes were made that devalued the patents, those mistakes were made by other lawyers and law firms long before Akin Gump entered the picture; and (5) to the extent any correctable errors existed during Akin Gump’s representation, the lawyers who represented Plaintiffs after Akin Gump were in the same or better position to correct any such errors.  Many of these attorneys continue to represent Plaintiff’s in this lawsuit.

Obviously, if you read the Jury Verdict Form, it is apparent that the jury did not believe Akin Gump’s rendition of the facts.  According to the verdict reached by the jury, Akin Gump did not demonstrate that the claims to the patents were invalid, nor did they prove that others invented prior to the plaintiffs, nor did they prove that there was inequitable conduct.  What the jury did find, however, was that there were errors made that cost the plaintiffs quite a bit of money, 100% of the blame was placed on Akin Gump.

I did not attend the trial, so I am just trying to piece together what happened, so I am not saying that any of this is the truth, but this is an accurate representation of the events in the Western District of Texas.  I will, however, say that a couple things raised by Akin Gump in their statement of the case do not make a lot of sense to me.  For example, what difference does it make that  the plaintiffs never made a working prototype?  I am sure Akin Gump and their attorneys know that there is no requirement that a working prototype be created in order to obtain a patent, unless of course you are claiming a perpetual motion machine.  Only in the situation where you are claiming a perpectual motion machine must a working prototype be presented to the Patent Office.  Perhaps what they were trying to say is that the plaintiffs were never in possession of the invention and that they could not describe it in a way that would allow others to make and use the invention.  I don’t see that argument, so it is confusing why they would focus on a prototype, which is clearly irrelevant under the patent laws.

I also have never been a fan of saying saying there was no mistake, but if there was then it was someone else who is to blame.  The way this line of logic typically goes in a law school type discussion is in reference to a criminal defendant who says something like:

I didn’t do it, but if I did it I didn’t mean to do it, but if I did it and meant to do it then it was someone elses’s fault, but if I did it, meant to do it, it wasn’t someone else’s fault, then I was insane.

The final point raised by Akin Gump has that kind of quality to it.  They basically say that if we did committ errors then someone else should have fixed it.  I know you need to keep your options open in pleading and throughout discover and leading up to trial, but as you approach trial I just don’t think that there is any mileage in continuing the “but if” type arguments.  Juries need a story, and I think it makes people wonder when you continue to argue in the alternative.  It just sends the wrong message.