E-Pass Technologies, Inc. v. Moses & Singer, LLP
117 Cal. Rptr. 3d 516
| Cal. Ct. App. | 2010Background
- E-Pass Technologies owns United States Patent No. 5,276,311 (the '311 patent) on a method/device for storing information from multiple cards in an electronic multi-function card.
- Beginning in 2000, E-Pass, represented by defendants here, filed four federal patent infringement actions against PDA manufacturers/users.
- In 2009, E-Pass filed a California legal malpractice action alleging negligent misrepresentation, breach of fiduciary duty, and negligence based on the defendants' representation in federal litigation.
- The trial court sustained a demurrer arguing the California action fell within exclusive federal jurisdiction under 28 U.S.C. §1338.
- The Court of Appeal reversed, ruling the malpractice action is not subject to exclusive federal jurisdiction and remanded for further proceedings.
- The ruling focused on whether the malpractice claim requires resolution of substantial questions of patent law to determine the claim or damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1338 exclusive federal jurisdiction applies to the malpractice action. | E-Pass: jurisdiction should be state; the claim attacks attorney conduct, not patent validity. | Defendants: §1338 governs claims arising from patent law issues in the underlying litigation. | Not subject to exclusive federal jurisdiction; state court may hear. |
| Whether the malpractice claim requires resolution of substantial patent-law questions. | E-Pass: allegations show lack of foundational evidence; not dependent on patent law. | Defendants: proof will involve patent-law issues in evaluating claims/damages. | No substantial patent-law questions required; damages/tat may be determined under state law. |
| Whether the relief hinges on the outcome of the underlying patent litigation. | Damages stem from counsel's negligence regardless of patent outcome. | Damages may depend on patent-law resolution. | Malpractice claim adjudicated under state law; not contingent on patent validity. |
Key Cases Cited
- Christianson v. Colt Industries Operating Corp., 486 U.S. 800 (1988) (embedded federal issues; test for arising-under jurisdiction)
- Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005) (no single test; consider interrelation of federal/state jurisdiction; substantial question)
- Lockwood v. Sheppard, Mullin, Richter & Hampton, 173 Cal.App.4th 675 (2009) (patent-law questions may be incidental; focus on professional negligence)
- Landmark Screens, LLC v. Morgan, Lewis & Bockius, LLP, 183 Cal.App.4th 238 (2010) (exclusive federal jurisdiction where patent rights are central to relief)
- Singh v. Duane Morris LLP, 538 F.3d 334 (2008) (patent-law issues not always substantial; may be tangential)