On January 16, 2013, the Supreme Court of the United States heard oral arguments in Gunn.1 The heart of the matter is whether the state-based malpractice action may be heard in state court or whether it must be heard in federal court because it "arises under" federal question jurisdiction. Our previous reports have examined the history of the case as it has moved through the Texas courts to the Supreme Court, including Petitioner's and Respondent's briefs and associated amicus curiae briefs.2
This update addresses the topics that the Justices raised during oral argument. The Court visited several subjects of interest, including the balance between federal and state responsibilities and two of the four Grable factors - "substantiality" and the federal interest.3 Two noteworthy areas of discussion include the examination of the federal and state balance as a consideration for determining which court system tries patent malpractice cases and the impact upon patent practitioners.
Federal versus state courts
Justice Scalia inquired about the binding effect of federal decisions on state-based laws and state decisions on federally-based laws. Petitioners responded that there is no binding effect of a state court interpreting a legal malpractice claim that includes a patent issue on laws and regulations for patent prosecution before the Patent and Trademark Office or in federal courts for patent litigation. Petitioners also responded that a federal court's decision determining malpractice law would not bind a Texas court's interpretation of Texas malpractice law. Petitioners argued there are no federal issues that need to be resolved in the case; the patent questions are fact issues.4
Respondent argued that the decision of state courts regarding patent law will have an influence on the federal courts and agencies. Issue preclusion will bind the parties in the state court proceedings even if the dispute comes up subsequently in a federal forum.5 Respondent argued that issue preclusion emerges because of the case-within-a-case analysis structure of the malpractice claim. Because the federal issue is determined under a state court's interpretation of what federal laws and practices are, the state courts naturally will develop a body of state-based common law that interprets the federal patent rules and regulations. Federal courts and agencies do not have the authority to review this state common law. This state-based common law ultimately impacts the decision of a federal court or agency because the attorney is collaterally estopped from presenting the issue again in a federal court after the state court has interpreted the federal issue using the state's common law.6 Respondent offered the following as an example of the impact that a state court can have on a federal agency: that the prior state-based findings in this very case were submitted to the PTO as part of Respondent's duty of disclosure for maintaining the prosecution of a continuation patent application related to the patent in the underlying patent infringement case.7
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