Lange et al v. Litman et al
Filing
44
MEMORANDUM OPINION AND ORDER. 1. Defendants' Motion for Summary Judgment (Doc. No. 28 ) is GRANTED in its entirety. 2. Defendants are entitled to judgment with respect to all four counts of Plaintiffs' Complaint (Doc. No. 1 ).(Written Opinion). Signed by Judge Donovan W. Frank on 6/28/2012. (BJS)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Michael R. Lange, and
Sky Robotics, Inc.,
Civil No. 11-2387 (DWF/JSM)
Plaintiffs,
v.
MEMORANDUM
OPINION AND ORDER
Mark A. Litman, and Mark A.
Litman & Associates, P.A.,
Defendants.
_______________________________________________________________________
Paul A. Sortland, Esq., Sortland Law Office, counsel for Plaintiffs.
Charles E. Lundberg, Esq., Patrick J. Sauter, Esq., and Jeffrey R. Mulder, Esq., Bassford
Remele, P.A., counsel for Defendants.
_______________________________________________________________________
INTRODUCTION
This matter is before the Court on Defendants’ Motion for Summary Judgment.
(Doc. No. 28). For the reasons set forth below, the Court grants Defendants’ motion.
BACKGROUND
I.
Counterweight Application
On December 29, 2003, Plaintiff Michael R. Lange (“Lange”) executed a patent
license agreement (the “License Agreement”) on behalf of Plaintiff Sky Robotics, Inc.
(“Sky Robotics”) 1 with GP Companies, Inc. (“GP”). (Doc. No. 31, Mulder Decl. ¶ 9,
Ex. 8.) Pursuant to the License Agreement, GP would make, sell, and market automated
window washing machines that utilized some of Sky Robotics’ patents in exchange for
royalty fees. (Id.) After executing the License Agreement, Lange worked with Dallas
Simonette (“Simonette”), an independent contractor working for GP, to develop a
prototype of an automated window washing machine for commercial sale. (See Mulder
Decl. ¶ 11, Ex. 10 (“Simonette Dep.”) at 23:25-25:25.) Unlike Lange’s previous designs,
this machine used a counterweight to maintain contact between the machine and the
building (the “Counterweight Machine”). (Mulder Decl. ¶ 12, Ex. 11.)
After Lange and Simonette developed a prototype of the Counterweight Machine,
GP elected to pursue patent protection for the machine. (Mulder Decl. ¶ 2, Ex. 1 (“Lange
Dep. I”) at 221:6-222:1.) In July 2004, GP retained Defendants Mark A. Litman
(“Litman”) and Mark A. Litman & Associates, P.A. to prosecute a patent application for
the Counterweight Machine. (Doc. No. 34, Bartz Aff. ¶ 11; Mulder Decl. ¶ 10, Ex. 9
(“Litman Dep.”) at 134:24-135:4.) Lange and Simonette assigned Litman power of
attorney to prosecute the patent application and to transact all business with the United
States Patent and Trademark Office (“USPTO”) related to the patent application. (See
Doc. 33, Lange Aff. ¶ 21.)
1
Lange is the Chief Executive Officer of Sky Robotics. (Doc. No. 31, Mulder
Decl. ¶ 2, Ex. 1 (“Lange Dep. I”) at 24:14-15.)
2
On November 5, 2004, Litman filed Patent Application Number 10/982,505 (the
“Counterweight Application”) with the USPTO. (Mulder Decl. ¶ 12, Ex. 11.) The
Counterweight Application named both Simonette and Lange as inventors. (Id.) Litman
listed Simonette as the first inventor and Lange as the second inventor. (Id.) Lange
contends that he asked Litman to list him as first inventor on the Counterweight
Application; the record indicates, however, that no such change was made. (See Lange
Dep. I at 178:25-179:14.)
II.
International Patent Rights for the Counterweight Machine
In accordance with foreign patent law, GP and Plaintiffs had one year from the
date of filing the Counterweight Application (until November 5, 2005) to file for
international patent rights associated with the Counterweight Machine. (See Bartz Aff.
¶¶ 32-34.) Litman sent written notices of the international patent rights filing deadline to
GP and Simonette on August 5, 2005 and September 15, 2005, and to GP on October 17,
2005. (See Mulder Decl. ¶¶ 13-16, Exs. 12-15.) GP declined to seek international patent
protection. (Litman Dep. at 94:4-17.)
Litman did not send written notice of the filing deadline to Plaintiffs. (Lange Aff.
¶ 34.) Plaintiffs contend that they would have sought international patent rights for the
Counterweight Machine in 63 countries 2 if Defendants had provided them with notice of
this deadline. (See Mulder Decl. ¶ 17, Ex. 16 at 10.) Plaintiffs rely on Richard O. Bartz’s
2
Plaintiffs have not specifically identified each of the 63 countries. (See Lange
Dep. I at 249:16-254:13.)
3
(“Bartz”) expert affidavit for their contention that there was a “reasonable opportunity” to
secure international patent rights based upon the Counterweight Application. (Bartz Aff.
¶ 39.) Because the deadline has expired, Lange is now precluded from securing
international rights for the Counterweight Machine. (See Lange Aff. ¶ 36.)
III.
Simonette Fan Application
On July 13, 2007, Litman filed Provisional Patent Application
Number 60/959,409, and on July 14, 2008, he filed Patent Application Number
12/218,347 (the “Simonette Fan Application”) on behalf of Simonette and IPC Eagle, 3
for an automated window washing machine (the “Simonette Fan Machine”). (Mulder
Decl. ¶ 20, Ex. 19; Bartz Aff. ¶ 58.) Unlike the Counterweight Machine, the Simonette
Fan Machine utilized a “fan” or “thruster” to maintain contact between the washing
machine and the building. (Litman Dep. at 21:20-22:1-5.) The Simonette Fan
Application was ultimately rejected by the USPTO because of conflicts with prior art.
(See Mulder Decl. ¶ 25, Ex. 24 (“Bartz Dep.”) at 14:15-21, 30:18-21.)
The Simonette Fan Application did not include Lange as an inventor. (Mulder
Decl. ¶ 20, Ex. 19.) After learning about the Simonette Fan Application, Lange claimed
inventorship and requested that he be named as an inventor on the application. (Mulder
Decl. ¶ 21, Ex. 20.) Lange asserts that the Simonette Fan Machine was his idea, and that
he described the idea to Litman on a number of occasions. (Lange Aff. ¶¶ 60-64.) Lange
3
Defendants assert that at the time of the Simonette Fan Application filing, IPC
Eagle was a stand-alone entity from GP, and Simonette was an independent contractor for
IPC Eagle. (Mulder Decl. ¶¶ 18-19, Exs. 17-18.)
4
contends that he requested that Litman file a second patent application or a
continuation-in-part to the Counterweight Application to include the fan as an addition to
the invention. (Id. ¶ 49.) Lange further claims that the Simonette Fan Application used
many of the same drawings as those included in the Counterweight Application. (Id.
¶ 57.) The record before the Court indicates that Litman has not attempted to add Lange
as a joint inventor to the Simonette Fan Application. (See Bartz Aff. ¶ 45.)
On December 12, 2007, Lange revoked Litman’s power of attorney and granted
power of attorney to Richard O. Bartz (“Bartz”) and R. John Bartz to complete the
prosecution of the Counterweight Application on his behalf. (Lange Aff. ¶ 51.) After
January 1, 2008, Lange and Sky Robotics changed one of the claims contained in the
Counterweight Application from a “counterweight” to a “counterforce.” (Mulder Decl.
¶ 23, Ex. 22 ¶ 9.) On February 23, 2010, the USPTO issued a patent (Patent Number
7,665,173) incorporating this change to the Counterweight Application. (Mulder Decl.
¶ 24, Ex. 23.)
Bartz has also submitted a patent application (Patent Application Number
12/660,246) (the “Lange Fan Application”) on Lange’s behalf, which describes itself as a
continuation of the Simonette Fan Application and a continuation in part of the
Counterweight Application. (Mulder Decl. ¶ 26, Ex. 25; see Bartz Aff. ¶¶ 52-53.) The
Lange Fan Application seeks patent protection for an automated window washing
machine (the “Lange Fan Machine”) that utilizes a fan to maintain contact between the
machine and the building. (Mulder Decl. ¶ 26, Ex. 25; see Bartz Aff. ¶¶ 52-53.)
Plaintiffs’ application claims priority from the date on which the Simonette Fan
5
Application was initially filed. (See Mulder Decl. ¶ 26, Ex. 25; Bartz Aff. ¶¶ 53-58.)
The Lange Fan Application is currently pending before the USPTO. (See Bartz Dep.
at 13:8-14:14.)
IV.
Procedural History
Plaintiffs initially filed a lawsuit arising from the dispute at issue in state court in
October 2010. (See Doc. No. 30 at 10.) On September 30, 2011, Hennepin County
District Judge William R. Howard dismissed the state court action due to lack of subject
matter jurisdiction. (Mulder Decl. ¶ 28, Ex. 27 at 4.)
On August 19, 2011, Plaintiffs filed their Complaint in the federal action now
before this Court. (Doc. No. 1, Compl.) Plaintiffs have asserted the following four
claims against Defendants: (1) negligence; (2) negligence—conflict of interest;
(3) breach of contract; and (4) breach of fiduciary duty. (Id. ¶¶ 85-105.)
Defendants now move for summary judgment on all counts. (Doc. No. 28.)
DISCUSSION
I.
Summary Judgment Standard
Summary judgment is proper if there are no disputed issues of material fact and
the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). The
Court must view the evidence and the inferences that may be reasonably drawn from the
evidence in the light most favorable to the nonmoving party. Enter. Bank v. Magna Bank
of Mo., 92 F.3d 743, 747 (8th Cir. 1996). However, as the Supreme Court has stated,
“[s]ummary judgment procedure is properly regarded not as a disfavored procedural
shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed
6
‘to secure the just, speedy, and inexpensive determination of every action.’” Celotex
Corp. v. Catrett, 477 U.S. 317, 327 (1986) (quoting Fed. R. Civ. P. 1).
The moving party bears the burden of showing that there is no genuine issue of
material fact and that it is entitled to judgment as a matter of law. Enter. Bank, 92 F.3d at
747. The nonmoving party must demonstrate the existence of specific facts in the record
that create a genuine issue for trial. Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th
Cir. 1995). A party opposing a properly supported motion for summary judgment “may
not rest upon the mere allegations or denials of his pleading, but must set forth specific
facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 256 (1986).
II.
Negligence Claims
At the heart of this case is Plaintiffs’ claim that Defendants committed legal
malpractice because Defendants breached their duties to provide proper and reasonable
counsel to Plaintiffs and to avoid conflicts of interest. Specifically, Plaintiffs assert that
Defendants committed three acts of negligence: (1) failing to list Lange as the first
inventor on the Counterweight Application; (2) failing to provide notice to Plaintiffs of
the deadline to file for international patent rights associated with the Counterweight
Application and to file for international patent rights; and (3) failing to list Lange as an
inventor or Sky Robotics as an assignee on the Simonette Fan Application. (Compl.)
Plaintiffs contend that, because of Defendants’ negligence, Plaintiffs have suffered
significant economic damages and substantial harm. (Id.)
7
Under Minnesota law, a claimant alleging legal malpractice must prove: (1) an
attorney-client relationship existed; (2) acts by the attorney amounted to negligence or
breach of contract; (3) the attorney’s acts were the proximate cause of the claimant’s
damages; and (4) but for the attorney’s acts, the claimant would have obtained a more
favorable result in the transaction than the result obtained. Jerry’s Enters., Inc. v. Larkin,
Hoffman, Daly & Lindgren, Ltd., 711 N.W.2d 811, 816, 819 (Minn. 2006) (quoting Blue
Water Corp. v. O’Toole, 336 N.W.2d 279, 281 (Minn. 1983)). Failure to provide
sufficient evidence of any one element is fatal to the claim. Noske v. Friedberg, 670
N.W.2d 740, 743 (Minn. 2003).
For the purposes of the present motion, and viewing the evidence in the light most
favorable to Plaintiffs, the Court assumes, without deciding, that an attorney-client
relationship existed between Defendants and Plaintiffs.4
4
Defendants adamantly deny the existence of any attorney-client relationship
between the parties. (Mulder Decl. ¶ 27, Ex. 26.) Plaintiffs, however, assert that an
implied attorney-client relationship existed between Plaintiffs and Defendants based upon
the following: (1) Lange assigned Litman power of attorney to prosecute the
Counterweight Application (Lange Aff. ¶ 21); (2) Litman filed the Counterweight
Application in which he listed Lange and Simonette as inventors (Mulder Decl. ¶ 12,
Ex. 11); (3) Litman signed a response to a USPTO action, “Simonette, et al […] By Their
Representatives, Mark A. Litman & Associates, P.A.” (Litman Dep. at 68:24-69:25);
(4) Litman sent a facsimile transmission to Lange on October 25, 2004 with the heading
“Attorney Client Advice and Opinion” (Sortland Aff. ¶ 7, Ex. E); (5) Litman sent a
facsimile transmission to Lange and Simonette on November 3, 2004 regarding the
Counterweight Machine amended figures (Sortland Aff. ¶ 9, Ex. G); (6) Litman sent
Lange and Simonette an e-mail dated November 1, 2004 regarding a draft of the
Counterweight Application (Sortland Aff. ¶ 8, Ex. F); (7) Litman sent Lange an e-mail
dated November 12, 2004 regarding legal advice for additional window cleaning machine
technology (Sortland Aff. ¶ 12, Ex. J); (8) Litman sent a May 14, 2007 letter directed to
Lange but addressed to GP regarding a response to the restriction requirement and an
(Footnote Continued on Next Page)
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A.
Order of Inventors on Counterweight Application
Plaintiffs claim that Defendants acted negligently by failing to list Lange as the
first-named inventor on the Counterweight Application, despite Lange’s requests that he
be listed first. Specifically, Plaintiffs assert that, as a result of Defendants’ failure to
correct the application to reflect Lange as the first inventor, Lange is not recognized as
the inventor 5 “and may suffer additional economic harm in the future as a result of that
lack of recognition.” (Doc. No. 36 at 26.)
Under Minnesota law, speculative, remote, or conjectural damages are not
recoverable. Lassen v. First Bank, 514 N.W.2d 831, 839 (Minn. Ct. App. 1994); see also
Olson v. Rugloski, 277 N.W.2d 385, 388 (Minn. 1979) (determining that lost profits are
recoverable if they are proven with “reasonable, although not absolute, certainty”). Here,
Plaintiffs have failed to identify any specific, actual damages resulting from Defendants’
conduct. Notably, Lange admitted during his deposition that the order in which the
inventors are listed on the Counterweight Application does not affect Plaintiffs’
(Footnote Continued From Previous Page)
invoice for Defendants’ legal services (Sortland Aff. ¶ 25, Ex. W); and (9) Litman sent an
e-mail on November 27, 2007 seeking payment of legal fees from Lange (Sortland Aff.
¶ 31, Ex. CC). Despite the correspondence between Lange and Litman, no retainer
agreement or engagement letter between the parties exists in the record, and it appears
unlikely that an attorney-client relationship was ever formed between Plaintiffs and
Defendants. (See Litman Dep. at 134:8-135:4; Lange Dep. I at 209:16-18.)
5
Lange claims that the order of inventors on the Counterweight Application
damaged him because, “[w]hen I say I have a patent and someone looks at it and they see
someone else’s name on it they don’t think it’s your patent and they don’t believe you
have a patent unless they have to really dig in to see you’re a second inventor.” (Lange
Dep. I at 180:8-12.)
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ownership rights. (Lange Dep. I at 185:10-13.) Even Plaintiffs’ own expert, Bartz,
observed that it “[d]oesn’t make any difference what the order [of inventors] is, rights are
the same.” 6 (Bartz Dep. at 32:1-2.)
Plaintiffs have failed to provide any factual support for their claim that they have
been harmed as a result of the order of inventors on the Counterweight Application.
Plaintiffs cannot, as a matter of law, satisfy their burden that Defendants’ actions with
respect to the listed order of inventors caused them actual and quantifiable damages. See
Raske v. Gavin, 438 N.W.2d 704, 706 (Minn. Ct. App. 1989) (affirming summary
judgment for alleged negligent attorney because plaintiff could not show specific facts
demonstrating the result would have been different if different legal advice had been
given). The record evidence demonstrates that no injury to Plaintiffs resulted from the
order of inventors listed on the Counterweight Application and that any damages in that
regard are purely speculative. Therefore, Plaintiffs’ negligence claims based on
Defendants’ failure to name Lange as first inventor cannot survive summary judgment.
B.
Notice of Deadline to Seek International Patent Rights
Plaintiffs claim that Defendants negligently failed to notify them of the deadline to
file for international patent rights associated with the Counterweight Machine. Plaintiffs
contend that, but for Litman’s failure to notify them of the deadline, they would not have
6
It also appears that Lange made no further attempt to seek a change in the order of
inventors before the patent was issued, despite having retained Bartz as counsel. (See
Lange Dep. I at 187:2-4; Mulder Decl. ¶ 23, Ex. 22 ¶ 11.)
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lost the opportunity to secure those international rights and would have filed for
international patent rights in 63 countries. (See Bartz Aff. ¶¶ 16, 34-40.)
In particular, Plaintiffs assert that, given the building growth occurring overseas
(where most of Plaintiffs’ sales would have taken place), Defendants’ conduct has caused
Plaintiffs to incur substantial damages. (Mulder Decl. ¶ 32, Ex. 31.) Plaintiffs estimate
that the damages measured by lost profits in overseas sales to be well in excess of
$5,000,000. 7 (Id. at 2.) Plaintiffs further claim that, as a result of ongoing litigation
related to the Counterweight Machine, manufacturers are reluctant to begin producing the
machine. (Lange Aff. ¶ 41.) In addition, Plaintiffs assert that Sky Robotics’ business
value has diminished as a result of Defendants’ actions. (Doc. No. 36 at 37.)
As previously stated, to succeed on a legal malpractice claim, Plaintiffs must
provide sufficient evidence that they would have achieved a better result in the
underlying transaction had Defendants’ conduct not occurred. See Jerry’s Enters., Inc.,
711 N.W.2d at 816; see also Blue Water Corp., 336 N.W.2d at 282-84 (reversing
judgment against attorney because there was insufficient evidence that the result in the
underlying transaction would have been any different absent his negligence). Plaintiffs
have not provided any evidence that, but for Defendants’ conduct, they would have
obtained patent rights in 63 countries. Not only have Plaintiffs failed to specifically
identify the countries for which they seek patent protection for the Counterweight
7
Plaintiffs’ damages expert, Douglas McDonald (“McDonald”), CPA, calculates
damages for the period from November 4, 2004 to 2016 to be $5,695,953. (Mulder Decl.
¶ 33, Ex. 32, App’x B.)
11
Application (see Lange Dep. I at 249:16-250:1), but they have not demonstrated that the
cost of obtaining international patent rights for the Counterweight application in all 63
countries would not have been prohibitively expensive. 8 Thus, any damages in this
regard are remote and purely speculative.
Plaintiffs have failed to offer specific facts to show that, but for Defendants’
conduct, Plaintiffs would have achieved a better result (by way of additional,
international patent protection). Consequently, to the extent Plaintiffs’ negligence claims
result from Defendants’ failure to inform Plaintiffs of their ability to pursue international
patent rights, the claims cannot survive summary judgment.
C.
Ownership of Simonette Fan Application
Finally, Plaintiffs claim that Defendants negligently failed to include Lange as an
inventor on the Simonette Fan Application and failed to assign the Simonette Fan
Application to Sky Robotics based upon the License Agreement. In addition, Plaintiffs
claim that, but for Defendants’ negligence, Plaintiffs would have realized current and
potential future profits in connection with the Simonette Fan Machine and would have
been recognized as having developed the subject matter of the Simonette Fan
Application. (Doc. No. 36 at 30.)
8
Plaintiffs may or may not have obtained any international patent rights, the value
of which is debatable. Plaintiffs’ own damages expert, McDonald, calculates that it
would cost $467,000 to obtain patent rights in 63 countries. (Mulder Decl. ¶ 17, Ex. 16
at 10, App’x B.)
12
It is undisputed that no patent has issued with respect to the Simonette Fan
Application and that the Simonette Fan Application has been finally rejected by the
USPTO based upon prior art. (See Mulder Decl. ¶ 23, Ex. 22 ¶ 3; Bartz Dep. at
14:15-21.) Because no patent has issued with respect to the Simonette Fan Application,
Plaintiffs cannot demonstrate that they have been damaged as a result of any failure by
Defendants’ to name Lange as an inventor. 9
In light of the above, and because no genuine issue of material fact exists, the
Court finds that Defendants are entitled to summary judgment as to Count 1 (negligence)
and Count 2 (negligence—conflict of interest) of Plaintiffs’ Complaint.
III.
Breach of Contract and Fiduciary Duty Claims
Plaintiffs also assert claims of breach of contract and breach of fiduciary duty.
Plaintiffs concede that, if their negligence claims fail, their other related claims must also
fail. (Doc. No. 36 at 40.) Because Plaintiffs’ breach of contract and breach of fiduciary
duty claims are derivative of their legal malpractice claims, Plaintiffs’ failure to establish
but for causation is fatal to Count 3 (breach of contract) and Count 4 (breach of fiduciary
duty) as well. Padco, Inc. v. Kinney & Lange, 444 N.W.2d 889, 891 (Minn. Ct. App.
1989) (noting that a negligence count alleges the same elements required for a claim of a
breach of fiduciary duty).
9
Moreover, Lange has filed an additional application making similar patent claims
to those contained in the Simonette Fan Application. (Mulder Decl. ¶ 26, Ex. 25.) The
application claims priority from the date the Simonette Fan Application was initially
filed. As such, if the USPTO determines that the inventions are patentable, it will issue a
patent to the extent Plaintiffs are entitled to protection.
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IV.
Emotional Distress Claim
While not articulated as a separate count of their Complaint, Plaintiffs allege
emotional distress damages for the first time in their supplemental interrogatory answers.
(Mulder Decl. ¶ 32, Ex. 31 at 2.) Plaintiffs claim that they are entitled to at least
$1,000,000 in damages for emotional distress as a result of Defendants’ alleged “willful,
wanton, and malicious conduct.” (Id.)
A plaintiff seeking emotional distress damages must prove: (1) the conduct was
extreme and outrageous; and (2) the emotional distress was severe. Hubbard v. United
Press Int’l, 330 N.W.2d 428, 438-39 (Minn. 1983). Conduct is “extreme and
outrageous” when it is “so atrocious that it passes the boundaries of decency and is
utterly intolerable to the civilized community.” Langeslag v. KYMN Inc., 664 N.W.2d
860, 865 (Minn. 2003). In addition, the distress inflicted must be so severe that “no
reasonable man could endure it.” Hubbard, 330 N.W.2d at 439.
Plaintiffs cannot satisfy these requirements. Plaintiffs have not alleged any facts
that would meet the “extreme and outrageous” standard, nor have they provided any
factual support for a claim of severe emotional distress. 10 For this reason, any claim for
emotional distress damages must also fail.
ORDER
Based upon the foregoing, and the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
10
Plaintiffs cannot establish a claim for emotional distress. As such, affording
(Footnote Continued on Next Page)
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1.
Defendants’ Motion for Summary Judgment (Doc. No. [28]) is GRANTED
in its entirety.
2.
Defendants are entitled to judgment with respect to all four counts of
Plaintiffs’ Complaint (Doc. No. [1]).
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: June 28, 2012
s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge
(Footnote Continued From Previous Page)
Plaintiffs an opportunity to amend their complaint to add such a claim would be futile.
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