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Seed Company Ltd. v. Westerman

United States Court of Appeals, District of Columbia Circuit

August 12, 2016

Seed Company Limited and Shigeru Tamai, Appellants
Ann G. Westerman, as the personal representative of the estate of William F. Westerman, et al., Appellees

          Argued April 11, 2016

         Appeal from the United States District Court for the District of Columbia (No. 1:08-cv-00355)

          Paul T. Meiklejohn argued the cause for appellants. With him on the briefs was Creighton R. Magid.

          Lance A. Robinson argued the cause for Westerman appellees. With him on the briefs were Mark London and Christopher Mead.

          John P. Glaws IV argued the cause for Kratz appellees. With him on the brief was Paul J. Maloney.

          Before: Henderson, Kavanaugh and Srinivasan, Circuit Judges.


          Srinivasan Circuit Judge

         This case involves a legal malpractice action arising out of an unsuccessful application for a patent. Seed Company Limited, a Japanese company, is led by Shigeru Tamai. Tamai invented a dispenser of correctional tape enabling users to correct printed documents by rolling white tape over errors. Seed and Tamai hired legal counsel in connection with their patent applications. The effort to obtain a U.S. patent ultimately failed because of counsel's noncompliance with Patent Office regulations when filing a motion related to the application. As a result of the error, another inventor obtained the patent for the same invention.

         Seed and Tamai sued their attorneys, alleging that they had committed malpractice when they submitted filings for the patent application without complying with the Patent Office regulations. The district court first rejected the defendants' argument that the suit was barred by the statute of limitations. But the court then granted summary judgment in their favor, ruling that they had exercised reasonable professional judgment in concluding (erroneously) that their filings complied with the Patent Office's rules.

         We reverse and remand. We conclude that the statute of limitations had elapsed with respect to the malpractice claims against one group of defendants-those who ceased working on behalf of Seed and Tamai when the law firm engaged in the representation split into two firms. With regard to the remaining defendants-those who continued to represent Seed and Tamai after the breakup of the firm-we find that the statute of limitations poses no bar to the malpractice action. On the merits of the claims against those defendants, we reverse the grant of summary judgment in their favor and remand the case for trial.


         Seed filed three relevant patent applications listing Tamai as the inventor: one in Japan, one through the international Patent Cooperation Treaty (PCT), and one in the United States. The PCT creates an international system for filing patents. After filing through the PCT, an inventor can submit related national applications in various member countries.

         The dates of the applications were as follows. On July 31, 1991, Seed filed its Japanese application. The PCT application followed, on July 24, 1992. In March 1993, Seed and Tamai retained legal counsel to pursue a U.S. patent. On March 29, 1993, counsel filed a translation of the PCT application as Seed's first U.S. application. On February 15, 1994, they filed another U.S. application as a continuation-in-part of the first.

         On May 9, 1997, the U.S. Patent Office determined that another inventor, Christopher J. Stevens, had already patented the same invention. The Board of Patent Appeals and Interferences thus began interference proceedings to determine whether Stevens or Tamai had first invented the device. Whoever could show an earlier patent application filing date for the same invention (known as a "constructive reduction to practice, " 37 C.F.R. § 1.637(f)(3) (1997)) would have priority and receive the sole patent on the invention.

         Stevens and Tamai each filed a "motion for benefit, " a request to credit a U.S. application with the benefit of an earlier filing date based on a prior patent application for the same invention in a different jurisdiction. Stevens relied on the filing date of his prior United Kingdom patent application. Tamai did not oppose Stevens's motion, and the Board granted him an effective filing date of February 10, 1993. Tamai relied on the earlier filing dates of Seed's Japanese and PCT patent applications.

         The Patent Office had promulgated regulations governing motions for benefit. When a motion for benefit relied on a foreign patent application filed in a language other than English, the moving party was required to follow additional regulations requiring submission of a translation of the foreign application and an affidavit certifying the accuracy of the translation. 37 C.F.R. § 1.647 (1997). Both of Seed's earlier patent applications (in Japan and through the PCT) had been written in Japanese. Seed's counsel filed a translation of the Japanese application, but they failed to file a translation of the PCT application.

         Because of the failure to include a translation of the PCT application, the Board denied Tamai's motion for benefit with respect to that application. The Board also denied Tamai's motion for reconsideration. Although the Patent Board denied the motion for benefit regarding the PCT application, it granted the motion with regard to the earlier Japanese application. Because the Japanese application (filed on July 31, 1991) predated Stevens's United Kingdom application (filed on February 10, 1993), the Board granted Tamai priority.

         Stevens appealed to the Federal Circuit, arguing that the Board could not give Tamai the benefit of the Japanese application without also crediting the PCT application. Stevens relied on a statute specifying that the Board can give a patent application the benefit of an earlier application only if filed within one year of the prior one. See 35 U.S.C. § 119(a). Tamai's Japanese application fell outside that window because it predated his U.S. application by more than one year. The PCT application in theory could create a chain linking the Japanese application to the U.S. application without violating the one-year rule because the PCT application was filed less than one year before the U.S. application and less than one year after the Japanese application. But the PCT application had been filed without the required translation. Without the PCT application, Stevens argued, the Japanese application alone was too old.

         The Federal Circuit agreed with Stevens and held that the Japanese application could not establish an earlier filing date without the benefit of the PCT application. Stevens v. Tamai, 366 F.3d 1325, 1331 (Fed. Cir. 2004). And the court, like the Board, held that Tamai could not benefit from the PCT application's filing date because he had failed to file a translation of the PCT application. Id. at 1332. The court therefore remanded to the Board to enter judgment in favor of Stevens, id. at 1335, which the Board did.

         Meanwhile, between the time of the initial Board decision in 2002 and the Federal Circuit appeal in 2004, the law firm with which Seed and Tamai's U.S. counsel had been associated had split into two separate firms. Until October 1, 2003, the attorneys representing Seed and Tamai had been doing business as part of one firm. On that date, some of those lawyers left the firm to form Westerman, Hattori, Daniels, and Adrian LLP. We will refer to them as the Westerman defendants. The remaining lawyers founded Kratz, Quintos & Hanson LLP. We will call them the Kratz defendants. Seed and Tamai (whom we will refer to collectively as "Seed" from this point forward) took their business to the new Westerman firm, which continued to represent them during the Federal Circuit appeal.

         In December 2006, Seed obtained counsel to pursue a malpractice suit against the Westerman and Kratz defendants. The defendants and Seed entered into tolling agreements effective May 3, 2007 (for the Westerman defendants), and May 10, 2007 (for the Kratz defendants). On February 28, 2008, ...

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