Portus Drops Subject Matter Conflict Claim Against Kenyon; Alleges Firm’s Prosecution Malpractice Shortened Patent Term By 3+Years

Michael E. McCabe, Jr.Competence, IP Malpractice, Patent Prosecution Malpractice0 Comments

For the past year, Portus Singapore Pte. Ltd. (“Portus”), a former client of the now-defunct Kenyon & Kenyon (“Kenyon”) law firm, has been trying to get a claim for legal malpractice to stick against its former IP counsel.   So far, Portus’ efforts have been unsuccessful.  On July 28, 2017, Portus took its third bite at the apple and filed another amended complaint against Kenyon.

The First Complaint

The opening salvo was launched on August 31, 2016, when Portus filed suit in the Southern District of New York against Kenyon and two of its attorneys.  (See Portus first malpractice complaint).

Portus’ complaint alleged that in August 1998, it filed a patent application in Australia.  The “invention” purportedly covered connection to a remote site that occurs in response to a user logging in through a web browser or mobile device to an internet address.  Portus alleged that it has developed “valuable and industry-leading smart home systems using the invention of its patent application, including home IP video surveillance.”

The complaint alleged that after the application entered the U.S. national phase, in 2005, Portus received its first Official Action from the USPTO.  Attorneys from Kenyon were involved in prosecuting the U.S. application.  The complaint alleged that Kenyon “failed to convert the application by filing a continuation of the international application” and that doing so “would have secured” an extended patent term.  Portus claims it was entitled to an additional three and one-half years of patent term.

The complaint alleged that in August 2014, nine years after Kenyon allegedly became aware of the patent term adjustment issue, Kenyon filed a petition to claim the benefit of the international application in order to extend the patent term.  The petition, however, was denied allegedly because Kenyon did not convert the application on patent term adjustment grounds within a “reasonable time.”

The complaint further alleged that in 2008, without Portus’ consent, Kenyon represented Bosch, a leading supplier of smart home systems and IP video surveillance solutions and a competitor of Portus.

The complaint asserts that a Kenyon lawyer defended Bosch in an infringement action against Bosch “in the smart home and IP video surveillance domain” without Portus’ consent.  The complaint also alleges that Kenyon “has prosecuted patents on behalf of Bosch” in the “domain” of smart home and IP video surveillance technology.

The complaint alleged that Bosch was a “potential infringement and licensee target in the patent prosecution” being handled by Kenyon.  In 2015, Portus allegedly provided Kenyon with claim charts and an infringement analysis of a Bosch product and sought Kenyon’s opinion on whether Bosch infringed Portus’ patent claims.

The complaint failed to allege whether Bosch provided any such opinion.  It simply alleges that Kenyon “have never disclosed a potential conflict of interest to Portus.”

The complaint asserted a single count of legal malpractice predicated on the alleged conflict of interest and lost patent term.

The Amended Complaint

Before Kenyon answered, on October 18, 2016, Portus filed an amended complaint for legal malpractice.  (See Portus amended malpractice complaint).

In its amended complaint, Portus repeated its allegation that it owns a “highly valuable smart home and internet protocol (“IP”) video surveillance” patent.  According to Portus, its patent has numerous “infringement targets and licensees.”

The amended complaint again alleged that, in response to the 2005 office action, Kenyon failed to convert the application by filing a continuation of the international application and that “Doing so would have secured patent term adjustment rights that would have enabled Portus to extend the term of the patent” by approximately three and one-half years.

In addition, the amended complaint repeated the allegation that Kenyon had a subject matter conflict of interest based upon its concurrent representation of Bosch in matters relating to smart home and IP video surveillance technology.  It further alleged that Portus asked for an infringement opinion by Kenyon regarding a Bosch system.

Notably, neither the complaint nor the amended complaint alleges that “but for” this alleged concurrent representation, Portus would have gotten a “better” patent or broader claims.  Portus also does not allege that it was required to narrow claims or that it lost any patent rights due to Kenyon’s work on any of Bosch’s patent applications.

The amended complaint further fails to allege what was Kenyon’s response to the opinion request or whether it provided the requested opinion.  However, Portus asserts that “to this date, Defendants have never disclosed a potential conflict of interest to Portus.”

Kenyon’s Motion to Dismiss

On December 9, 2016, Kenyon filed a motion to dismiss the Amended Complaint for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6).  In its motion, Kenyon alleged that the failure to file an earlier petition for term extension was not the proximate cause for any harm to Portus and that Portus’s petition to convert would have been denied even if it had been timely filed (apparently, Kenyon concedes that the conversion petition was untimely).

In particular, Kenyon asserts that Portus “misunderstands the law” and that “If a continuation application to the ’417 Application was, in fact, filed in 2005, no patent term adjustment would be available from the period between the effective filing date of the parent application (that is, the ’417 Application), and the date of the first office action in 2005.  See Mohsenzadeh v. Lee, 790 F.3d 1377, 1382 (Fed. Cir. 2015) (the patent term adjustment statute “does not provide patent term adjustments in continuing applications based on delays in the prosecution of parent applications . . . .”).”  The motion to dismiss further argues that, under 37 C.F.R. § 1.704(c)(12), no patent term adjustment can accrue from or carry over from before the filing date.

The motion to dismiss further argues that Portus’ conflict of interest malpractice claim fails to state a cognizable claim because it fails to plausibly allege that it suffered any cognizable harm due to the alleged conflict regarding Kenyon’s concurrent representation of Portus and Bosch.  The only alleged “harm” suffered was the loss of patent term, but the amended  complaint fails to allege how or why that loss of patent term caused Portus to suffer harm vis-à-vis Bosch.

The Second Amended Complaint

On July 14, 2017, the district court heard oral argument on Kenyon’s motion to dismiss.  Unfortunately, the court’s Order says nothing about its views on the merits of the arguments.  On the contrary, the court simply states that the motion to dismiss is “denied as moot” and that Portus had until July 28. 2017 to file a second amended complaint.

On Friday, July 28, 2017, Portus filed its second amended complaint.  (See Portus second amended malpractice complaint).

The second amended complaint is premised solely on the issue of the alleged loss of patent term.  The lawsuit again alleges that Kenyon should have filed a continuation application under 35 U.S.C. Section 111(a), and not a national stage application:

Because the filing date remained December 17, 1999, the national stage application failed to secure patent term adjustment rights under the AIPA, which requires an application filing date on or after May 29, 2000, in order to secure patent term adjustment rights. In contrast to a national stage application (which keeps the same filing date as the international application under the PCT), a continuation application under 35 U.S.C. § 111(a) for an international patent application uses the date of the § 111(a) application as a new filing date.

The complaint asserts further that because Kenyon had been retained by Portus in 2001, “any continuation application filed by Defendants under § 111(a) would have had a filing date no earlier than 2001, meaning that the application filing date would have secured patent term adjustment rights under the AIPA (i.e., because the application filing date would have been on or after May 29, 2000).”

By failing to file the application as a continuation, the Portus theory goes, Kenyon committed malpractice that cost Portus an additional three and one-half years of patent term.   The second amended complaint asserts that Kenyon provided incompetent legal representation in failing to timely convert its international application into a continuation application.

The second amended complaint seeks unspecified monetary damages.

Notably, Portus no longer alleges that Kenyon engaged in a subject matter conflict of interest based upon its concurrent representation of Bosch in the same technical “domain.”  In light of the Massachusetts Supreme Judicial Court’s opinion in Maling v. Finnegan, Henderson (2015), one can understand why it was prudent for Portus to drop this allegation.

Thus, the sole basis for the malpractice claim is now limited to the loss of patent term for failing to file a § 111(a) continuation application.

Kenyon has until August 18, 2017 to respond to the complaint by way of either an answer or another motion to dismiss.

The action is captioned Portus Singapore Pte Ltd v. Kenyon & Kenyon LLP, Jeffrey S. Ginsberg, and Aaron Grunberger, Case No. 1:16-cv-06865-JGK (S.D.N.Y.)  The matter is pending before Judge John G. Koeltl.

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