Protostorm, LLC et al v. Antonelli, Terry, Stout & Kraus, LLP et al

Filing 667

MEMORANDUM & ORDER: For the reasons set forth in the attached, the motions to set aside the jury verdict pursuant to Rule 50(b) filed by defendants ATS&K, Brundidge, and Bailey [Dkts. 626, 627, 645] are denied. Notwithstanding Rule 6.3 of the Joint Local Civil Rules of the Southern and Eastern Districts of New York, the Court will not entertain any motion for reconsideration of this Memorandum & Order. See Somlyo v. J. Lu-Rob Enterprises, Inc., 932 F.2d 1043, 1048 (2d Cir. 1991) (district courts have inherent discretion to depart from Local Rules). Ordered by Judge Pamela K. Chen on 6/5/2015. (Pelaez, Jenny)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−x
PROTOSTORM, LLC and PETER FAULISI,
Plaintiffs,
−against−
ANTONELLI, TERRY, STOUT & KRAUS, LLP,
FREDERICK D. BAILEY, CARL I.
BRUNDIDGE, and ALAN E. SCHIAVELLI,

MEMORANDUM & ORDER
08−CV−931 (PKC) (JO)

Defendants.
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−x
PAMELA K. CHEN, United States District Judge:
Plaintiffs Protostorm, LLC (“Protostorm”) and Peter Faulisi (“Faulisi”) filed the present
action on March 4, 2008, alleging that defendant Antonelli, Terry, Stout & Krauss, LLP
(“ATS&K”) and individual defendants Frederick D. Bailey (“Bailey”), Carl I. Brundidge
(“Brundidge”), and Alan E. Schiavelli (“Schaivelli”) committed legal malpractice in connection
with Protostorm’s patent application. (Dkt. 1.) A jury trial was held between July and August
2014, and a verdict was rendered on August 15, 2014 for Protostorm against ATS&K, Bailey,
and Brundidge. (Dkts. 532, 534 at 28−33 (“Verdict Sheet”).) On February 6, 2015, an Amended
Judgment in Protostorm’s favor was issued against ATS&K in the amount of $6,696,000 in
compensatory damages, $900,000 in punitive damages, and $1,050,720.60 in prejudgment
interest, and against Brundidge in the amount of $100,000 in punitive damages. (Dkt. 639.) The
Court, however, stayed enforcement of the judgment until the resolution of the instant motions.
(Dkts. 612, 619.)
Pending before the Court are motions to set aside the jury verdict pursuant to Federal
Rule of Civil Procedure 50(b) filed by ATS&K, Brundidge, and Bailey (collectively,

“Defendants”). (Dkts. 626, 627, 645). 1 For the reasons set forth below, Defendants’ Rule 50(b)
motions are denied.
BACKGROUND
The Court assumes the parties’ familiarity with the background of this case. See, e.g.,
Protostorm, LLC v. Antonelli, Terry, Stout & Kraus, LLP, 834 F. Supp. 2d 141 (E.D.N.Y. 2011).
Only those facts necessary for disposition of the instant motions will be set forth herein as part of
the Discussion section.
I.

Trial, Verdict, and Judgment
Trial in this matter began on July 28, 2014. (See Dkts. 507−11, 513, 516, 518, 524−28,

530, 532.) On August 15, 2014, the jury returned a verdict for Protostorm against ATS&K,
Brundidge, and Bailey for legal malpractice. (Verdict Sheet at 1−2.) 2 The jury, however, did
not find that Plaintiffs had established by a preponderance of the evidence that an attorney−client
relationship existed between ATS&K and Faulisi, or that an attorney−client relationship
persisted between Protostorm and Schiavelli of ATS&K after September 2001.

(Id.)

Accordingly, Faulisi and Schiavelli are not parties to the instant post−trial motions.
The jury awarded Protostorm $6,975,000 in compensatory damages, apportioning 75% of
the fault to ATS&K, 15% to Brundidge, 6% to Bailey, and 4% to Protostorm. (Id. at 5.) The
jury also awarded Protostorm punitive damages in the amount of $900,000 against ATS&K and
$100,000 against Brundidge. (Id. at 5−6.)
1

ATS&K’s and Bailey’s initial motions moved alternatively for a new trial, pursuant to Federal
Rule of Civil Procedure 59. (See Dkts. 627−7 (“ATS&K Mem.”) at 37, 626−1 ¶ 6). ATS&K
and Bailey have since withdrawn their Rule 59 motions and proceed only under Rule 50. (Dkts
653-6 (“ATS&K Reply”) at 25 n.21, 655.) Protostorm’s cross−motion seeking to correct the
judgment, pursuant to Federal Rule of Civil Procedure 60(a) (Dkt. 648), was denied by the Court
by docket order dated April 6, 2015.
2

The Court refers to the internal pagination of each document rather than the pagination
assigned by the ECF system.
2

Following post−trial briefing on the allocation of damages, the Court assigned all
compensatory damages to ATS&K for the acts of its attorneys, including Schiavelli, Brundidge,
and Bailey, and reduced the amount of compensatory damages based on the jury’s findings that
Protostorm was 4% at fault.

(Dkts. 565 at 9−10, 610 at 3.) The Court accordingly entered

judgment for Protostorm against ATS&K in the amount of $6,696,000 in compensatory damages
and $900,000 in punitive damages, and against Brundidge in the amount of $100,000 in punitive
damages. (Dkt. 611.) ATS&K was also assessed $1,050,720.60 in pre-judgment interest as part
of the final judgment. (Dkt. 639.)
II.

Defendants’ Rule 50(b) Motions
ATS&K’s Rule 50(b) motion asserts that Protostorm failed to establish at trial proximate

cause because its invention was unpatentable under 35 U.S.C. §§ 101 and 103. (ATS&K Mem.
at 10, 24.) ATS&K further asserts that Protostorm failed to prove damages or show that ATS&K
had a duty to draft the hypothetical claims prepared by Protostorm’s expert, Irving Rappaport
(“Rappaport”). (Id. at 18, 26.) In addition, ATS&K contends that the evidence was insufficient
to show that an attorney-client relationship persisted between ATS&K and Protostorm after
March 4, 2005 (three years before Protostorm commenced this action) and that the action was
thus timely, and that an award of punitive damages was justified. (Id. at 31, 35.)
Brundidge’s Rule 50(b) motion challenges the sufficiency of the evidence with respect to
the tolling of the statute of limitations as to him through August 25, 2006, the date he was added
as a defendant in the Second Amended Complaint. (Dkt. 645−1 (“Brundidge Mem.”) at 6.)
Brundidge also contends that the record does not support his individual liability for malpractice
because Protostorm failed to make a showing that Brundidge was individually responsible for
prosecuting the patent application and that his representation continued to the national phase of
patent prosecution after September 2001. (Id. at 12, 13.) Brundidge further asserts that any
3

breach of duty to Protostorm did not cause ascertainable damages. (Id. at 15, 17.) Finally,
Brundidge argues that there was no basis for the jury’s award of punitive damages against him
individually. (Id. at 19.) Throughout his motion papers, Brundidge claims that the jury made
factual findings based on the collective actions of ATS&K’s lawyers, not Brundidge
individually. (E.g., id. at 7 n.2, 10, 11 n.3; Dkt. 654 (“Brundidge Reply”) at 1.)
Bailey joins in ATS&K’s Rule 50(b) motion in its entirety (Dkt. 626−1 ¶ 6) and also in
the portion of Brundidge’s motion that relates to the statute of limitations defense (id. ¶ 7).
DISCUSSION
III.

Legal Standard
Federal Rule of Civil Procedure 50 sets forth the procedural requirements for challenging

the sufficiency of the evidence in a civil jury trial and establishes two stages for such challenges:
prior to submission of the case to the jury under Rule 50(a), and after the verdict and entry of
judgment under Rule 50(b). Unitherm Food Sys., Inc. v. Swift−Eckrich, Inc., 546 U.S. 394,
399−400 (2006). Under Rule 50(b), if a jury returns a verdict for which there is not a legally
sufficient evidentiary basis, the Court may either order a new trial or direct the entry of judgment
as a matter of law. Fed. R. Civ. P. 50(b); Welch v. United Parcel Serv., Inc., 871 F. Supp. 2d
164, 172 (E.D.N.Y. 2012).
A Rule 50 motion “‘may only be granted if there exists such a complete absence of
evidence supporting the verdict that the jury’s findings could only have been the result of sheer
surmise and conjecture, or the evidence in favor of the movant is so overwhelming that
reasonable and fair−minded [persons] could not arrive at a verdict against [it].’” Kinneary v.
City of New York, 601 F.3d 151, 155 (2d Cir. 2010) (quoting Brady v. Wal–Mart Stores, Inc.,
531 F.3d 127, 133 (2d Cir. 2008)) (alterations in original). The issue on a Rule 50 motion is
whether “‘the evidence is such that, without weighing the credibility of the witnesses or
4

otherwise considering the weight of the evidence, there can be but one conclusion as to the
verdict that reasonable [persons] could have reached.’” This is Me, Inc. v. Taylor, 157 F.3d 139,
142 (2d Cir. 1998) (quoting Cruz v. Local Union No. 3, Int’l Bhd. of Elec. Workers, 34 F.3d
1148, 1154–55 (2d Cir. 1994)) (alterations in original); see Caruolo v. John Crane, Inc., 226
F.3d 46, 51 (2d Cir. 2000) (the court may not decide a Rule 50 motion by evaluating the
credibility of witnesses or the relative weight of the evidence). “Weakness of the evidence does
not justify judgment as a matter of law; as in the case of a grant of summary judgment, the
evidence must be such that ‘a reasonable juror would have been compelled to accept the view of
the moving party.’” This is Me, 157 F.3d at 142 (quoting Piesco v. Koch, 12 F.3d 332, 343 (2d
Cir. 1993)).
When ruling on a Rule 50(b) motion, “[a] court ‘must give deference to all credibility
determinations and reasonable inferences of the jury[.]’” Caruolo, 226 F.3d at 51 (quoting
Galdieri−Ambrosini v. Nat’l Realty & Dev. Corp., 136 F.3d 276, 289 (2d Cir. 1998)); see also
Concerned Area Residents for the Env’t v. Southview Farm, 34 F.3d 114, 117 (2d Cir. 1994) (the
court must “‘consider the evidence in the light most favorable to the [non moving party] and . . .
give that party the benefit of all reasonable inferences that the jury might have drawn in [its]
favor from the evidence’”) (quoting Smith v. Lightning Bolt Prods., Inc., 861 F.2d 363, 367 (2d
Cir. 1988)) (alterations in original). As the Supreme Court has explained, “although the court
should review the record as a whole, it must disregard all evidence favorable to the moving party
that the jury is not required to believe.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S.
133, 151 (2000); Meloff v. New York Life Ins. Co., 240 F.3d 138, 145 (2d Cir. 2001). Thus, a
movant seeking to set aside a jury verdict faces “a high bar,” Lavin–McEleney v. Marist College,
239 F.3d 476, 479 (2d Cir. 2001), and such motions “should be granted cautiously and

5

sparingly” Welch, 871 F. Supp. at 173 (quoting 9A Charles A. Wright & Arthur R. Miller,
Federal Practice and Procedure § 2524, at 252 (1995)); see Japan Airlines Co. Ltd. v. Port Auth.
of New York & New Jersey, 178 F.3d 103, 112 (2d Cir. 1999).
IV.

Whether Defendants’ Rule 50(b) Arguments Were Properly Preserved
Rule 50(a) provides that a motion for judgment as a matter of law made before the case is

submitted to the jury “shall specify . . . the facts that entitle the movant to the judgment.” Fed. R.
Civ. P. 50(a)(2). A post−trial Rule 50(b) motion is properly made only if a Rule 50(a) motion
has been made before submission of the case to the jury. Bracey v. Bd. of Ed. of City of
Bridgeport, 368 F.3d 108, 117 (2d Cir. 2004). Because a motion pursuant to Rule 50(b) “is in
reality a renewal of a motion” pursuant to Rule 50(a), Lambert v. Genesee Hosp., 10 F.3d 46,
53–54 (2d Cir. 1993) (citation omitted), the grounds on which a party may rely in a Rule 50(b)
motion are “limited to those grounds that were specifically raised in the prior [Rule 50(a)
motion].” Galdieri–Ambrosini, 136 F.3d at 286; see Exxon Shipping Co. v. Baker, 554 U.S. 471,
485 n.5 (2008) (“A motion under Rule 50(b) is not allowed unless the movant sought relief on
similar grounds under Rule 50(a) before the case was submitted to the jury.”). “[T]he movant is
not permitted to add new grounds after trial” in a Rule 50(b) motion. Galdieri–Ambrosini, 136
F.3d at 286. Arguments not raised in a preceding Rule 50(a) application are not properly
preserved for review in a subsequent Rule 50(b) motion. See Lore v. City of Syracuse, 670 F.3d
127, 152 (2d Cir. 2012); Holmes v. United States, 85 F.3d 956, 963 (2d Cir. 1996). “[T]he
burden is upon the non−moving party to raise the issue; otherwise it is waived.” United States ex
rel. Maris Equipment Co. v. Morganti, Inc., 163 F.Supp.2d 174, 181 (E.D.N.Y. 2001).
Thus, before determining whether Defendants are entitled to judgment as a matter of law
under Rule 50(b), the Court must first consider whether they preserved the bases of their Rule
50(b) motions by making a sufficiently specific Rule 50(a) motion prior to submission of the
6

case to the jury. See Hamptons Locations, Inc. v. Rubens, 640 F. Supp. 2d 208, 211 (E.D.N.Y.
2009). “Although Rule 50(a) does not define how specific the motion must be, the purpose of
requiring the moving party to articulate the ground on which [judgment as a matter of law] is
sought is to give the other party an opportunity to cure the defects in proof that might otherwise
preclude him from taking the case to the jury.” Galdieri–Ambrosini, 136 F.3d at 286 (citations
and internal quotation marks omitted). The specificity requirement serves the further important
purpose of informing the trial court of the precise issues it must decide in ruling on the motion.
See, e.g., Gordon v. County of Rockland, 110 F.3d 886, 887 n.2 (2d Cir. 1997). Accordingly, to
preserve an argument for a Rule 50(b) motion, the preceding Rule 50(a) motion “must at least
identify the specific element that the defendant contends is insufficiently supported.” Galdieri–
Ambrosini, 136 F.3d at 286; id. at 287 (“[t]he ultimate question is whether the [Rule 50(a)]
motion, either of itself or in the context of the ensuing colloquy, was sufficiently specific to alert
the opposing party to the supposed deficiencies in [their] proof”); see Retractable Techs., Inc. v.
Becton, Dickinson & Co., 653 F.3d 1296, 1308 (Fed. Cir. 2011) (district court and non−moving
party were sufficiently alerted to issues raised in movant’s post−trial motion because pre−verdict
“motion identified both the legal grounds for the motion as well as the underlying references for
each ground”). “[T]his procedural requirement may not be waived as a mere technicality[.]”
Cruz, 34 F.3d at 1155.
The Second Circuit, however, recognizes an exception to the specificity requirement,
permitting the district court to grant a Rule 50(b) motion even absent a properly−made Rule
50(a) motion if necessary to prevent “manifest injustice” or to correct “purely legal error.”
Malmsteen v. Berdon, LLP, 369 Fed. App’x 248, 249 (2d Cir. 2010) (citing Fabri v. United Tech.
Int’l, Inc., 387 F.3d 109, 119 (2d Cir. 2004)); Barkley v. United Homes, LLC, 04 CV 875, 2012

7

WL 2357295, at *4 (E.D.N.Y. June 20, 2012) (A court “may reach a forfeited issue only if
ignoring the issue would ‘result in manifest injustice’ or if the issue involved is ‘purely legal
error.’”) (quoting AIG Global Secs. Lending Corp. v. Banc of Am. Secs., LLC, 386 Fed. App’x 5,
6 (2d Cir. 2010)). What constitutes “manifest injustice” turns on the specifics of each case.
Welch, 871 F. Supp. 2d at178. “Of course, a defendant may not merely argue that the procedural
bar should be waived because they should win on the underlying motion.” Id. “Such an
argument would, of course, obviate the need for the procedural requirement in the first place.”
Health Alliance Network, Inc. v. Continental Cas. Co., 245 F.R.D. 121, 124 (S.D.N.Y. 2007).
“However, ‘where the argument presents a question of law and there is no need for additional
fact−finding,’ and manifest injustice may arise, then exercise of this discretion is warranted.”
Welch, 871 F. Supp. 2d at 178 (quoting Malmsteen, 369 Fed. App’x. at 251).
Here, Defendants’ trial counsel 3 made oral motions under Rule 50(a) on several grounds
at the close of Plaintiffs’ case-in-chief and again before closing argument. (Tr. 1277, 2824.) 4
Defendants contended that the evidence failed to demonstrate that they were responsible for
drafting the final patent application. (Tr. 1277−79, 1280, 2824.) Defendants further asserted
that they were entitled to judgment as a matter of law on their statute of limitations defense
because there was no evidence that Defendants concealed malpractice or that Protostorm had a
reasonable expectation of representation after 2001.

(Tr. 1279, 2824−25.)

Additionally,

Defendants claimed that there was no showing of malicious or willful intent to warrant an award
3

At trial, ATS&K, Bailey, and Brundidge collectively were represented by the L’Abbate,
Balkan, Colavita & Contini firm (“Defendants’ trial counsel”). On August 26, 2014, following
the verdict, Defendants’ trial counsel filed a letter stating that because attribution of fault would
impact all defendants, the L’Abbate firm had an “inherent conflict” and thereafter would only
represent ATS&K, and that the other defendants would retain individual counsel. (Dkt. 536 at
1.) Bailey and Brundidge each have retained separate counsel for post−trial motions.
4

Citations to “Tr.” refer to the trial transcript.
8

of punitive damages. (Tr. 1280.) Finally, Defendants asserted that Protostorm’s proof on
patentability was deficient because prior art anticipated the Protostorm invention. (Tr. 2824.)
Defendants’ post−trial Rule 50(b) motions similarly assert that: (1) Protostorm failed to
establish that Defendants had a duty to draft or prosecute the patent application or that the
attorney-client relationship continued after 2001 (ATS&K Mem. Point IV; Brundidge Mem. at
12−14); (2) the action is time−barred by the statute of limitations for lack of continued
representation or concealment (ATS&K Mem. Point V; Brundidge Mem. at 5−10); (3) the jury
award of punitive damages was against the weight of the evidence and should be vacated
(ATS&K Mem. at Point VI; Brundidge Mem. at 19); and (4) Protostorm failed to meet its burden
on anticipation under 35 U.S.C. § 102 (ATS&K Mem. at 25 n.13). Since these three points were
sufficiently encompassed in Defendants’ Rule 50(a) motions, they are properly preserved for
review as part of Defendants’ Rule 50(b) motions.
Conversely, the Court finds that Defendants are procedurally barred from raising their
remaining arguments, namely, that: (1) Protostorm cannot show patentability under 35 U.S.C.
§§ 101 and 103, which is necessary to establish proximate cause (ATS&K Mem. at Points I and
III; Brundidge Mem. at 16−17); and (2) Protostorm failed to prove damages (ATS&K Mem. at
Point II; Brundidge Mem. at 17−19).
A. Defendants Failed to Preserve Proximate Cause Patentability Arguments Under
Sections 101 and 103
ATS&K’s Rule 50(b) motion contends that Protostorm did not carry its burden to show
proximate cause because it offered insufficient proof on two requirements for patentability.
Under Point I of its motion, ATS&K asserts that as a matter of law, the hypothetical claims
drafted by Protostorm’s expert, Irving Rappaport, were directed to an unpatentable abstract
concept under Section 101, as recently discussed by the Supreme Court in Alice Corp. Pty, Ltd.
9

v. CLS Bank International, 134 S.Ct. 2347 (2014).

(ATS&K Mem. at 10−18.) 5

Second,

ATS&K contends that Protostorm did not satisfy its burden of establishing nonobviousness
under Section 103. (ATS&K Mem. at 24−25; ATS&K Reply at 19−21.) 6 Bailey’s Rule 50(b)
motion adopts both of ATS&K’s unpatentability arguments (Dkt. 626-1 ¶6), and Brundidge’s
motion briefly argues that Protostorm’s claims are unpatentable abstract ideas (Brundidge Mem.
at 3, 17). Defendants’ oral Rule 50(a) motion, however, did not specifically raise Sections 101
or 103.
Although Defendants’ oral Rule 50(a) motions at trial challenged the patentability of the
Protostorm invention, the grounds stated by their trial counsel were altogether different from the
Section 101 and 103 arguments raised in the Rule 50(b) motion. At the close of Plaintiffs’ case,
Defendants argued that Plaintiffs had failed to prove patentability because (1) Rappaport’s expert
report did not include a prior art analysis; and (2) the hypothetical claims drafted by Rappaport
would have been considered “new matter” that would have lost priority with the United States
Patent and Trademark Office (“PTO”). (Tr. 1280−81.) 7 Upon renewal of the 50(a) motion
before closing arguments, Defendants added two additional grounds with respect to patentability:

5

Section 101 provides that “[w]hoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any new and useful improvement thereof,
may obtain a patent therefor, subject to the conditions and requirements of this title.” 35 U.S.C.
§ 101.
6

Section 103 provides that a patent “may not be obtained . . . if the differences between the
claimed invention and the prior art are such that the claimed invention as a whole would have
been obvious before the effective filing date of the claimed invention to a person having ordinary
skill in the art to which the claimed invention pertains.” 35 U.S.C § 103.
7

Defendants’ trial counsel, however, did not explain whether “losing priority” with the PTO
would necessarily result in no patent being issued for the Protostorm invention based on
Rappaport’s hypothetical claims. (Tr. 1280.)
10

(1) Rappaport’s hypothetical claims were not supported by Protostorm’s Patent Cooperation
Treaty (“PCT”) application; and (2) prior art anticipated the Protostorm invention. (Tr. 2824.)
With the exception of Defendants’ arguments on anticipation, these arguments are not the
same ones that Defendants now raise in their Rule 50(b) motion, nor did Defendants Rule 50(a)
motions sufficiently apprise Plaintiffs of these arguments. First, nowhere in Defendants’ Rule
50(a) motions did they argue that a directed verdict was appropriate because Protostorm’s
invention was an “unpatentable abstract concept.” Second, to the extent Defendants challenged a
particular element of patentability in their Rule 50(a) motions, they focused on anticipation and
not obviousness.

It is well−established that “anticipation” and “obviousness” are separate

conditions of patentability, requiring different tests and different elements of proof. Minkin v.
Gibbons, P.C., 680 F.3d 1341, 1351 (Fed. Cir. 2012); see also Duro–Last, Inc. v. Custom Seal,
Inc., 321 F.3d 1098, 1107 (Fed. Cir. 2003) (“obviousness and anticipation are related, but are
legally distinct and separate challenges to a patent’s validity”). 8 Thus, Defendants’ failure to
raise obviousness in their Rule 50(a) motion, focusing instead on anticipation, is fatal to their
post-trial obviousness claim. See Union Carbide Chems. & Plastics Tech. Corp. v. Shell Oil Co.,
308 F.3d 1167, 1188 (Fed.Cir. 2002) (pre−verdict Rule 50 motion regarding anticipation by prior
public knowledge did not support post−verdict motion on obviousness).
Furthermore, raising patentability as a general issue is not enough to satisfy Rule 50’s
requirement that the specific grounds for a Rule 50(b) motion be articulated in a Rule 50(a)
motion. (See ATS&K Mem. at 8.) Patentability is a multi-faceted inquiry, with the various

8

While Second Circuit precedent controls the application of Rule 50 to this case, Federal Circuit
law is instructive regarding patent law issues. See Sjolund v. Musland, 847 F.2d 1573, 1576
(Fed. Cir. 1988); Panduit Corp. v. All States Plastics Mfg. Co., 744 F.2d 1564, 223 (Fed. Cir.
1984).
11

grounds for patent validity requiring separate analyses. 9 For instance, the Supreme Court has
recognized that “[t]he § 101 patent−eligibility inquiry is only a threshold test,” after which the
claimed invention must also satisfy other tests, including that the invention be novel, see § 102,
nonobvious, see § 103, and fully and particularly described, see § 112. Bilski v. Kappos, 561
U.S. 593, 602 (2010). Given the distinct nature of the various challenges to patentability, a Rule
50(a) motion directed towards patentability broadly does not provide sufficient notice for
purposes of Rule 50(b). See i4i Limited Partnership v. Microsoft Corp., 598 F.3d 831, 845 (Fed.
Cir. 2010) (pre-verdict Rule 50 motion on anticipation was insufficient to preserve right to postverdict motion on obviousness or on another prior art), aff’d, 131 S.Ct. 2238 (2011); Junker v.
Eddings, 396 F.3d 1359, 1364 (Fed. Cir. 2005) (Rule 50(a) motion “was not sufficiently detailed
in describing the facts and [] features” on which the movant based its claim of invalidity); Duro–
Last, 321 F.3d at 1107–08(improper for district court to rule on patent unenforceability and
invalidity defenses raised in Rule 50(b) that differed from those raised in prior Rule 50(a)
motion).
Accordingly, the Court holds that Defendants’ Rule 50(a) motions, which were directed
at patentability broadly and at different non−patentability grounds than those raised post-trial,
did not supply a sufficient predicate for Defendants’ present Rule 50(b) motions. Furthermore,

9

To receive patent protection, a claimed invention must, among other things, fall within one of
the express categories of patentable subject matter (§ 101) and be novel (§ 102) and nonobvious
(§ 103). See Microsoft Corp. v. i4i Ltd. P’ship, 131 S. Ct. 2238, 2242 (2011). Additionally, the
claimed invention must fulfill a host of technical requirements, including the requirements that a
patent be supported by a sufficiently detailed written description (§ 112) and have a priority
filing date (§§ 119, 120). See also 35 U.S.C. § 102(b) and (d) (establishing statutory one−year
bars to patentability); § 111(a)(2)(C) (requiring submission of an oath by the applicant); §
111(a)(3) (requiring submission of a fee with the application); § 116 (requiring joint inventors to
apply for a patent jointly).
12

as discussed below, there is no basis for finding that Defendants did not forfeit the arguments
they failed to raise in their Rule 50(a) motions.
1. Defendants Forfeited Their Section 101 Non−Patentability Argument
Defendants’ Section 101 non−patentability argument is premised on the Supreme Court’s
decision in Alice Corp. Pty, Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014), and its
progeny. (ATS&K Mem. at 10−18; Brundidge Mem. at 3, 17.) ATS&K contends that it should
be permitted to make a Rule 50(b) motion based on Alice because: (1) Protostorm was on notice
of the principles established in Alice; (2) significant case law applying Alice was only decided
after the trial in this case; (3) Alice presents a purely legal issue; and (4) allowing Protostorm to
recover based on an unpatentable concept would result in manifest injustice.
In Alice, the Supreme Court held that a computer−implemented method of mitigating
“settlement risk” between contracting parties in foreign−currency transactions did not constitute
a patentable invention, but rather amounted to an unpatentable abstract idea. 134 S. Ct. at
2351−52, 2359−60. More specifically, the Court ruled that “the claims at issue are drawn to the
abstract idea of intermediated settlement, and that merely requiring generic computer
implementation fails to transform that idea into a patent-eligible invention.” Id. at 2352.
In reaching this conclusion, the Supreme Court applied the two−step analysis established
in Mayo Collaborative Services v. Prometheus Laboratories, Inc. (“Mayo”), 132 S. Ct. 1289
(2012), which assists courts in “distinguishing patents that claim laws of nature, natural
phenomena, and abstract ideas from those that claim patent−eligible applications of those
concepts.” Alice, 134 S. Ct. at 2355. The first step in the Mayo/Alice test is to determine
“whether the claims at issue are directed to one of those patent−ineligible concepts”, i.e., law of
nature, natural phenomena, abstract idea. Id. Courts look to the elements of each claim both

13

individually and in “‘an ordered combination’ to determine whether the additional elements
‘transform the nature of the claim’ into a patent−eligible application.” Id. (quoting Mayo, 132 S.
Ct. at 1297–98). Assuming that the claims are directed at a patent−ineligible concept, step two is
“a search for an inventive concept—i.e., an element or combination of elements that is sufficient
to ensure that the patent in practice amounts to significantly more than a patent upon the
[ineligible concept] itself.” Id. (internal quotation marks and alterations omitted).
At step one, the Alice Court concluded that the patent’s claims “were drawn to the
abstract idea of intermediated settlement,” i.e., using a third party to reduce settlement risk. Id.
at 2355−56. The Court further found that this concept was “a fundamental economic practice
long prevalent in our system of commerce.” Id. at 2356 (internal quotation marks omitted). The
Court accordingly proceeded to step two, looking for some inventive concept beyond the abstract
idea that would transform it into a patentable invention. Id. at 2357. The Court noted that this
step requires more than an abstract idea with the words “apply it” added on. Id. at 2358. In
Alice, the additional element beyond the abstract idea was the computer program that applied the
abstract idea.

But the Court noted that “wholly generic computer implementation is not

generally the sort of additional feature that provides any practical assurance that the process is
more than a drafting effort designed to monopolize the [abstract idea] itself.” Id. (internal
quotation marks omitted). Analyzing the steps claimed in the patent, the Court concluded that
the computer application involved nothing more than “well−understood, routine, conventional
activities previously known to the industry.”

Id. at 2359 (internal quotation marks and

alterations omitted). The Court reached the same conclusion when it analyzed the patent’s steps
as an ordered combination. Id. (“Viewed as a whole, petitioner’s method claims simply recite

14

the concept of intermediated settlement as performed by a generic computer.”). Thus, under
applying the Mayo test, the Court held that the patent at issue in Alice was invalid.
Here, Defendants contend that “[t]he ‘Protostorm Invention’ is directed at the abstract
concept of selecting advertising based on a customer’s interaction with an advertiser’s content”,
which is an unpatentable marketing concept under post-Alice case law. (ATS&K Mem. at
13−16; see also Brundidge Mem. at 3, 17.) ATS&K further contends that the Protostorm
invention does not satisfy the second step of the Mayo/Alice analysis because the hypothetical
claims drafted by Rappaport “merely describe[] conventional computer interactions of the type
numerous courts have held are insufficient to supply an inventive concept,” and “the application
of a long−established business concept in an internet gaming context . . . supplies no inventive
concept.” (ATS&K Mem. at 16-17.) ATS&K relies in particular on Ultramercial, Inc. v. Hulu,
LLC, 772 F.3d 709, 712 (Fed. Cir. 2014), in which the Federal Circuit determined that a patent
claiming a method for offering consumers free media over the internet in exchange for viewing
an advertisement was directed at “the abstract idea of showing an advertisement before
delivering content.”. At the second step of the Mayo/Alice analysis, the court held that certain
limitations in the claims “such as updating an activity log, requiring a request from the consumer
to view the ad, restrictions on public access, and use of the Internet” did not transform the
abstract idea into patent−eligible subject matter because the “claimed sequence of steps
comprises only ‘conventional steps, specified at a high level of generality,’ which is insufficient
to supply an ‘inventive concept.’” Id. at 716 (quoting Mayo, 132 S. Ct. at 1294, 1297, 1300). 10

10

Among the cases on which ATS&K relies are Tuxis Techs., LLC v. Amazon.com, Inc., 13 CV
1771, 2014 WL 4382446, at *1 (D. Del. Sept. 3, 2014) (idea of “upselling” or “offering
something to a customer based on his or her interest in something else” was abstract, and the
patent was not sufficiently limited to prevent its claims from covering the full abstract idea
itself); Open Text S.A. v. Alfresco Software Ltd., 13 CV 04843, 2014 WL 4684429, at *4 (N.D.
15

ATS&K acknowledges that Defendants “did not press an argument under Alice and its
progeny until after trial.” (ATS&K Mem. at 9.) None of the Defendants offers any explanation
for why they did not raise the Alice argument at any point prior to or during the trial, given that
Alice was decided a month before trial commenced. Furthermore, Alice did not, as ATS&K
would have the Court believe, announce a previously−unknown framework for analyzing patent
eligibility under Section 101. 11 The Supreme Court’s analysis in Alice builds on prior Supreme
Court precedent, including Bilski, 561 U.S. at 609, in which the Court held that a method for
hedging the risk of changing energy prices was too abstract a concept to be patentable, and
Mayo, 132 S. Ct. at 1293, in which the Court decided that a patent claim to a method of medical
diagnosis was directed at “natural law” and that a step that merely said “apply it” was, without
“significantly more,” ineligible for a patent.

Alice, 134 S. Ct. at 2355-57; see also DDR

Holdings, LLC v. Hotels.com, L.P. (“DDR”), 773 F.3d 1245, 1255 (Fed. Cir. 2014) (Mayo sets
forth the analytical framework under Section 101 for determining whether a patent claim is
ineligible subject matter). As noted above, the Supreme Court applied the analysis set forth in
Mayo to reach its conclusion in Alice. Since Bilski and Mayo were decided in 2010 and 2012,
respectively, and Alice was decided a month before trial, there was no reason that Defendants
Cal. Sept. 19, 2014) (“very simple computer−driven method to engage in the commonplace and
time−honored practice of interacting with customers to promote marketing and sales” was
directed at an abstract idea and did not contain significant limitations); and Morsa v. Facebook,
Inc., 14 CV 161, 2014 WL 7641155, at *9 (C.D. Cal. Dec. 23, 2014) (claims drawn to the
abstract idea of “displaying advertisements to consumers based on their demographic
information” that did not contain an “inventive concept” were patent−ineligible). (ATS&K
Mem. at 1 n.1, 13−17.)
11

Indeed, the Supreme Court noted in Mayo that “[t]he Court has long held that [Section 101]
contains an important implicit exception. [L]aws of nature, natural phenomena, and abstract
ideas are not patentable.” Mayo, 132 S.Ct. at 1293 (internal quotation marks omitted) (citing
cases dating back to 1841). On this issue, Defendants inconsistently argue that Alice essentially
announced a new rule regarding the unpatentability of abstract ideas and yet Plaintiffs were
sufficiently on notice of this concept before trial because it was based on principles previously
established in decisions such as Mayo.
16

could not have raised its Section 101 argument before the case was submitted to the jury. The
fact that decisions applying Alice were issued after the conclusion of trial (see ATS&K Mem. at
9) does not excuse Defendants’ failure to present the argument prior to or during the trial that
Protostorm’s claims were directed at patent−ineligible, abstract subject matter. If anything, the
fact that arguments based on Alice were raised in other pending cases only underscores the point
that Defendants could, and should, have raised its Alice argument before or during trial. 12
Nor can Defendants seriously contend that Protostorm was on notice to the now-asserted
deficiencies in its proof regarding patent eligibility under Section 101. (Id. at 8−9). ATS&K has
not pointed to any instances in the trial record in which Defendants’ counsel raised Section 101.
Protostorm’s counsel’s brief acknowledgement during a trial sidebar that Defendants disputed
whether Protostorm would have been granted a patent under Section 101 in the Pretrial Order
(see id. at 9 (quoting Tr. 1911) 13) is insufficient to satisfy Defendants’ obligation to provide
Protostorm notice of their Section 101 challenge in a sufficiently specific pre−verdict Rule 50(a)
motion. See, e.g., Bracey, 268 F.3d at 117 (holding that district courts may not excuse the Rule
50(a) requirement); Cruz, 34 F.3d at 1155 (barring certain claims on Rule 50(b) motion where
moving party failed to specifically preserve those issues in a prior motion for directed verdict);
Lambert, 10 F.3d at 53–54 (noting that “the specificity requirement is obligatory” when
examining the correlation between Rule 50(a) and 50(b) motions). Furthermore, the fact that
Plaintiffs might have been aware of a potential Alice issue before trial does not absolve
12

There is a glaring contradiction in ATS&K’s position—on the one hand, they seek to be
excused for not timely raising Alice because case law applying Alice had not been decided at the
time of trial in this case, while at the same time arguing, as discussed infra, that no patent would
have issued on the Protostorm invention because the PTO, when examining the patent between
2001 and 2006, should have applied the Alice test.
13

Notably, this comment was made in the course of an objection by Protostorm that ATS&K’s
expert was seeking to raise new issues outside the scope of his expert report.
17

Defendants of their responsibility to raise the issue and thereby put Plaintiffs on notice of
Defendants’ intent to rely on this defense.
ATS&K next argues that because patent eligibility is a pure question of law, it may be
raised for the first time in a Rule 50(b) motion. ATS&K asserts that because the question of
patent eligibility can be answered by reference to the language of the hypothetical claims alone,
there were no additional facts that Protostorm could have presented at trial to remedy
deficiencies in its proof on causation and patent eligibility, and therefore Protostorm is not
prejudiced by the Court addressing the issue at this late stage. (ATS&K Mem. at 9−10.) The
Court disagrees.
Preliminarily, it bears emphasis that in this legal malpractice action, the issue of patent
eligibility is only relevant to the element of proximate cause, which is generally decided by the
finder of fact under New York Law. See Derdiarian v. Felix Contracting Corp., 414 N.E.2d
666, 668 (N.Y. 1980). In ruling on the parties’ motions for summary judgment, the Court
previously held that there existed triable issues of fact regarding proximate cause based on
competing expert opinions “as to whether the [Protostorm patent] application would have led to a
valid, and valuable, patent[.]” Protostorm, 834 F. Supp. 2d at 159.
While the question of whether a claim is directed at patent−eligible subject matter is one
of law, that determination will often entail the resolution of underlying factual questions. VS
Techs, LLC v. Twitter, Inc., 11 CV 43, 2012 WL 1481508, at *4 (E.D. Va. Apr. 27, 2012)
(addressing Section 101 and noting that although the ultimate question of validity of patent is a
question of law, “there may be underlying factual questions that the jury must answer”) (citing
Arrhythmia Research Tech., Inc. v. Corazonix Corp., 958 F.2d 1053, 1055–56 (Fed. Cir. 1992));
see also Microsoft Corp, 131 S. Ct. at 2242−43 (“While the ultimate question of patent validity

18

is one of law, the same factual questions underlying the PTO’s original examination of a patent
application will also bear on an invalidity defense in an infringement action.”) (internal marks
and citations omitted); Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Canada (U.S.), 687
F.3d 1266, 1273−74 (Fed. Cir. 2012) (“it will ordinarily be desirable—and often necessary—to
resolve claim construction disputes prior to a § 101 analysis, for the determination of patent
eligibility requires a full understanding of the basic character of the claimed subject matter”).
Courts accordingly have declined to decide the issue of patent eligibility as a matter of law (i.e.,
prior to fact−finding or claim construction) when the issue depends upon the resolution of a
factual dispute. See Card Verification Solutions, LLC v. Citigroup Inc., 13 CV 6339, 2014 WL
4922524, at *5 (N.D. Ill. Sept. 29, 2014); Genetic Techs. Ltd. v. Glaxosmithkline, LLC, 12 CV
299, 2014 U.S. Dist. LEXIS 156473, at *2−4 (M.D.N.C. Aug. 22, 2014); see also VS Techs,
2012 WL 1481508, at *4. Cf. Data Distrib. Techs., LLC v. Brer Affiliates, Inc., 12 CV4878,
2014 WL 4162765, at *5−6 (D.N.J. Aug. 19, 2014) (citing cases and noting that courts have
adjudicated patent eligibility prior to claim construction where there are no factual disputes, there
was no reasonable construction that would bring claims within patentable subject matter, or the
construction most favorable to the patentee are still patent−ineligible).
Here, the parties disputed, through dueling expert testimony, how Protostorm’s claims
should have been formulated in its patent application and how those claims might have evolved
during the patent examination process, which sometimes involves the submission of additional or
revised information to the PTO. Because the jury returned a verdict in Protostorm’s favor, the
Court assumes that at least one valid and enforceable patent would have been issued based on the
hypothetical claims drafted by Protostorm’s expert, Rappaport. Thus, the question at this stage
of the proceedings is whether the Court can decide, as a matter of law based on the evidence

19

adduced at trial, that none of Protostorm’s hypothetical claims would survive the Mayo/Alice
patentability test, i.e., whether each of these claims is directed at an abstract idea and lacks an
inventive concept. Alice, 134 S. Ct. at 2355.
The Court declines to decide, as a matter of law, whether Protostorm’s hypothetical
claims are directed to an unpatentable marketing concept of targeted, in−game dynamic
advertising (see ATS&K Mem. at 13), because even accepting this contention, the Court cannot
determine whether these claims lack an inventive concept without additional development of the
record. Courts have recognized that inventive concept analysis is the “heart of every post−Alice
dispute.” In re TLI Commc’ns LLC Patent Litig., 14 MD 2534, 2015 WL 627858, at *10 (E.D.
Va. Feb. 6, 2015).

In the context of patent infringement cases, several courts have found that

the question whether claims contain an inventive concept cannot be resolved at the motion to
dismiss stage without claim construction and a more developed factual record.

See Card

Verification Solutions, 2014 WL 4922524, at *5; Genetic Techs, 2014 U.S. Dist. LEXIS 156473,
at *2−4; Data Distrib. Techs., 2014 WL 4162765, at *12−13. The Federal Circuit also has
recognized that not all claims in software−based patents will necessarily be directed to an
abstract idea. Ultramercial, 772 F.3d at 715.
Here, because Defendants did not pursue an Alice non−patentability argument with
respect to proximate cause, they neither presented any evidence on inventiveness nor sought a
finding from the jury on this issue. The trial record is devoid of expert testimony on whether
Protostorm’s hypothetical claims included a sufficiently inventive concept at the time a patent
was sought to render the claim unpatentable. Similarly, the jury was never instructed to consider
whether the patent claims were sufficiently inventive at the time such that a patent would likely
issue.

Indeed, ATS&K implicitly acknowledges that there is a factual predicate to the

20

inventiveness inquiry by citing prior art evidence in support of its Rule 50(b) argument that
Protostorm’s invention does not supply an inventive concept. (See ATS&K Mem. at 17 (arguing
that the Protostorm invention merely incorporates advertising in an internet gaming context).)
At the very least, the trial record does not contain sufficient evidence on the issue of
whether features of the Protostorm invention added sufficient limitations to supply an inventive
concept. In DDR the Federal Circuit declined to invalidate a computer−implemented invention
for keeping users on a host website by retrieving data from other websites and displaying
dynamically constructed web pages with the same “look and feel” as the host site. 773 F.3d at
1248−49. The court noted that rather than “merely recit[ing] the performance of a business
practice known from the pre−Internet world along with the requirement to perform it on the
internet,” the solution was rooted in computer technology “to overcome a problem specifically
arising in the realm of computer networks” that users were transported away from a host site
upon the click of an advertisement for a third−party product displayed on a host’s website. Id. at
1257. The court distinguished the case from Ultramercial on the basis that the patent claims at
issue in DDR, rather than “broadly and generically claim[ing] ‘use of the Internet’ to perform an
abstract business practice (with insignificant added activity)”, “specif[ied] how interactions with
the Internet [were to be] manipulated to yield a desired result . . . that overr[ode] the routine and
conventional sequence of events ordinarily triggered by the click of a hyperlink.” Id. at 1258. In
addition, the court found that the claims included additional features to ensure that the claims
were more than a drafting effort to monopolize an abstract idea because they recite a specific
way to achieve the result. Id. at 1529.
Here, Plaintiffs introduced evidence strongly suggesting that the features of the
Protostorm invention were similar to those of the invention in DDR, and did more than simply tie

21

an abstract marketing idea to a general purpose computer or the internet. The Protostorm
invention created a “secure and private online game environment” that recreated sponsor
websites, required game players to analyze sponsor websites to advance in the game play, and set
in place an apparatus for dynamically tracking activity and delivering targeted sponsor content in
real time. As set forth in Rappaport’s hypothetical claims, the Protostorm invention claimed “an
interactive computer game system incorporating sponsor−paid commercial advertising and
marketing content” directly within the game play.

(Pl. Ex. 79 at 3.) 14

The invention is

comprised in part of a “host” computer system that tracks the interaction of game player with
sponsor advertising content (id. at 3; Tr. 942−44), is capable of dynamically selecting additional
advertising to be provided in real−time to the player based on interactions with sponsor content
(Tr. 945), and can track and report the effectiveness of ads to sponsors (Tr. 954). The invention
claimed a method for dynamically updating database tables for each user to track user activity,
provide additional advertising, and report activity to sponsors. (Pl. Ex. 79 at 4; Tr. 228, 945.)
The system could also track the game player as he or she visited sites outside of the game until
the player returned to the game or logged off the game. (Tr. 235−36.) In addition, the invention
claimed an internal communications network by which gamers could chat with each other about
the game play. (Pl. Ex. 79 at 5; Tr. 232.)
The game itself consists of “simulated web pages of the different [advertising] sponsors”
and asks players to interact directly with sponsor content by searching for clues embedded in that
content and solving tasks. (Pl. Ex. 79 at 4; Tr. 227, 944−45.) As Faulisi explained at trial, an
object of the game was to uncover hidden messages in mock−ups of sponsor’s live websites, and

14

Citations to “Pl. Ex.” in this Memorandum & Order refer to Plaintiffs’ trial exhibits introduced
by Plaintiffs, as attached to the Declaration of Robert S. Goodman submitted by Protostorm in
opposition to Defendants’ Rule 50(b) motions. (Dkt. 650 & Exs.)
22

use utilities and tools to find clues and “clean up” the site. (Tr. 227, 234−35.) After cleaning a
site, the player received coupons or free gifts from sponsors. (Tr. 228.) According to Faulisi,
this method of using sponsor content directly in the game play was a way of holding user’s
attention on sponsor content. (Tr. 221, 225, 236.) Faulisi testified that at the time he and
Shakespeare conceived of the invention, banner and static advertisements were prevalent in
internet gaming, but had low click−through rates and were further problematic in that clicking on
those advertisements would transport users away from the host site. (Tr. 219−21, 229, 231−32.)
Thus, beyond simply limiting the idea to a technological environment and merely “applying it,”
the Protostorm claims include additional features that arguably specify how interactions with the
internet are manipulated and recite a specific way to achieve a desired result. These features—
the in-game aspects, creation of mock versions of live sponsor sites, and built-in gamer
interaction with sponsor messages—may well render the Protostorm claims far more similar to
the patentable claims at issue in DDR than the unpatentable ones in Ultramercial.
However, the trial record is insufficient for the Court to resolve this issue. There remain
unresolved factual disputes as to whether the computer interactions described in the Protostorm
claims were considered “well−understood, routine, conventional activity” at the time the claims
would have been examined by the PTO between 2001 and 2006. Just as expert testimony was
necessary for the jury to determine whether a valid and valuable patent would have issued, expert
testimony on the inventiveness of Protostorm’s patent claims at the time of the PTO’s
examination is also necessary in determining whether these claims were patentable.

Byrne v.

Wood, Herron & Evans, LLP, 450 F. App’x 956, 962 (Fed. Cir. 2011), cert. granted, judgment
vacated on other grounds, 133 S. Ct. 1454 (2013) (“In the context of a malpractice suit in which
a plaintiff alleges that, but for the attorney’s negligence, he would have obtained broader patent

23

claims, a plaintiff must show that broader patent claims ‘would have been held patentable on
examination in the [United States Patent and Trademark Office] . . . , in accordance with the
criteria of patentability applied during examination.’” (quoting Davis v. Brouse McDowell,
L.P.A., 596 F.3d 1355, 1364 (Fed. Cir. 2010)). Accordingly, the Court finds that the resolution
of the patent eligibility issue requires additional facts or expert testimony that is absent from the
trial record, and that Protostorm would be prejudiced by not having had the opportunity to
adduce additional evidence in response to Defendants’ belated patent eligibility argument. Since
the patent eligibility causation issue is not a purely legal matter, Defendants’ failure to raise it in
a pre−trial motion prevents it from raising it in this Rule 50(b) motion. 15

15

In any event, were the Court to find that Defendants did not forfeit their patent eligibility
argument, applying the Alice inquiry to the time of the patent examination, i.e., 2001 to 2006, is
problematic. Although ATS&K contends that the analysis in Alice would have applied during
that time frame (ATS&K Mem. at 2 n.2, 17−18 (citing to cases noting that as opposed to
legislative changes in law for which clear intent to apply the change retroactively is required,
judicial interpretations of federal law must be given retroactive effect), the Court reiterates its
view from the December 23, 2014 Order that patentability is assessed with the criteria applied
during examination. (Dkt. 619 at 3 n.3.) Indeed, the Federal Circuit has recognized that prior to
Mayo and Alice, “a computer−implemented invention was considered patent−eligible so long as
it produced a ‘useful, concrete and tangible result.’” DDR, 773 F.3d at 1255 (quoting State St.
Bank & Trust Co. v. Signature Fin. Grp., Inc., 149 F.3d 1368, 1373 (Fed. Cir. 1998)). Unlike a
patent infringement case, in which an alleged infringer may challenge the patent as now
ineligible under Alice, in this malpractice case, Protostorm claimed that but for Defendants’
malpractice, the Protostorm invention would have been examined by a PTO patent examiner at
between 2001 and 2006, and that one patent would have issued by June 2006—well before Bliski,
Mayo, Alice, and their progeny were decided. Thus, the only question is whether the patent
application would have resulted in an issued patent in the 2001 to 2006 time period so that the
patent could have been monetized through licenses during the relevant time. Even if the patent
could have been invalidated in a later infringement action under Alice, which was decided in
June 2014, Protostorm would still be entitled to any royalty income earned until then. As
Protostorm’s opposition correctly observes, money earned, and contractual rights to continue
earning, under licenses are not terminated by the possibility of a future challenge to invalidate
the Protostorm patent. In fact, ATS&K recognizes that “[a]t an absolute minimum, Alice and its
progeny make clear that Protostorm would not have been able to obtain licensing revenues after
2014[.]” (ATS&K Mem. at 18, n.10.)
24

2. ATS&K and Bailey Forfeited Their Section 103 Non−Patentability Argument
As noted above, Defendants’ oral Rule 50(a) motions failed to specifically raise, and
therefore preserve, ATS&K’s and Bailey’s Rule 50(b) argument that Protostorm did not satisfy
its

burden

of

establishing

patentability

because

Rappaport’s

testimony

concerning

nonobviousness under Section 103 was “conclusory and without detail.” (ATS&K Mem. at
24−25; see ATS&K Reply at 19−21; Tr. 1280, 2824.) 16 Although ATS&K contends that its
Rule renewed 50(a) motion raised the issue, ATS&K’s motion, in fact, only argued that prior art
anticipated the hypothetical claims. (See ATS&K Reply at 19 n.18.) As ATS&K must concede,
anticipation and obviousness are distinct issues that require separate analyses (ATS&K Reply at
19), and raising one issue in a pre−verdict Rule 50 motion is insufficient to preserve the other for
a post−trial motion, see Minkin , 680 F.3d at 1351; Duro–Last, 321 F.3d at 1107. Defendants
thus point to no portion of the trial transcript in which Defendants addressed obviousness.
Having failed to raise the issue at trial, Defendants are precluded from doing so in a Rule 50(b)
motion.
To the extent ATS&K contends that its argument is not waived because obviousness is a
question of law (see ATS&K Reply at 21), that argument is meritless. Obviousness is “based on
factual underpinnings,” i4i Ltd. P’ship, 598 F.3d at 845, that the jury was not asked to make in

ATS&K’s attempt to establish manifest injustice is equally unavailing. ATS&K briefly
contends that it would be “manifest injustice” to permit Protostorm to recover when its alleged
invention is not patentable. (ATS&K Mem. at 10, n.8). However, “a defendant may not merely
argue that the procedural bar should be waived because they should win on the underlying
motion.” Welch, 871 F. Supp. 2d at 178.
16

Section 103 provides that a patent “may not be obtained . . . if the differences between the
claimed invention and the prior art are such that the claimed invention as a whole would have
been obvious before the effective filing date of the claimed invention to a person having ordinary
skill in the art to which the claimed invention pertains.” 35 U.S.C § 103.
25

this case. Whether an invention would have been obvious under Section 103(a) is a legal
conclusion based on factual findings concerning: (1) the scope and content of the prior art; (2)
the level of ordinary skill in the prior art; and (3) the differences between the claimed invention
and the prior art. Medichem, S.A. v. Rolabo, S.L., 437 F.3d 1157, 1164 (Fed. Cir. 2006) (citing
Velander v. Garner, 348 F.3d 1359, 1363 (Fed. Cir. 2003). “In review of a jury verdict on the
ground of obviousness, the underlying findings of fact, whether explicit or presumed as
necessary to support the verdict, are reviewed for substantial evidentiary support; and the
ultimate question of obviousness is reviewed for correctness in law, based on the factual
premises.” Cardiac Pacemakers, Inc. v. St. Jude Med., Inc., 381 F.3d 1371, 1375–76 (Fed. Cir.
2004) (“These standards are applied by the district court upon motion for judgment as a matter of
law, and again by the appellate court upon grant or denial of that motion.”); see Duro−Last, 321
F.3d at 1108.
Here, ATS&K’s Rule 50(b) argument challenges the sufficiency of Rappaport’s
testimony to establish obviousness. (ATS&K Mem. at 25; ATS&K Reply at 19−21.) However,
despite twice moving for a directed verdict, Defendants did not raise this issue. Had ATS&K
presented this argument at trial, Protostorm would have had the opportunity to present evidence
elaborating on the claimed deficiencies in its proof as to obviousness. ATS&K’s failure to do so
thus prejudiced Protostorm.

Accordingly, the Court cannot consider ATS&K’s Rule 50(b)

argument concerning obviousness.
B. Defendants’ Rule 50(b) Damages Argument is Not Properly Before the Court
Defendants’ contention that Protostorm failed to establish damages to a reasonable
certainty largely rehashes arguments already rejected by the Court in the pretrial Daubert
hearing. Specifically, Defendants assert that Rappaport’s damages analysis was insufficient as a

26

matter of law because (1) Rappaport did not perform an infringement analysis, and (2)
Rappaport’s hypothetical future licensing revenue projections were speculative and not
established to a reasonable certainty. (ATS&K Mem. at 18−24; ATS&K Reply at 16−18;
Brundidge Mem. at 17−19). Defendants particularly challenge Rappaport’s reliance on the June
2007 Yankee Group report in forming his opinion on damages. (ATS&K Mem. at 5, 22−23.)
However, Defendants did not challenge Rappaport’s damages analysis in their oral Rule 50(a)
motion at the close of Plaintiffs’ case. (See Tr. 1277−81.) Although ATS&K discussed damages
in its renewed Rule 50(a) motion prior to closing arguments, ATS&K’s discussion was directed
at another argument that Rappaport’s report, assuming it was reliable, mistakenly assumes that
everyone in the field of dynamic in−game licensing would have signed a license. (Tr. 2825.)
Defendants accordingly failed to preserve a Rule 50(b) argument based on the reliability of
Rappaport’s report.
Furthermore, the admissibility of expert testimony is not the proper subject of a Rule 50
motion, which is a vehicle to challenge the sufficiency of the evidence presented in a case, not
evidentiary rulings. See Gierlinger v. Gleason, 160 F.3d 858, 869 (2d Cir. 1998) (no proper
post−trial motion for judgment as a matter of law when memorandum of law challenged only
evidentiary rulings and jury instructions); Martinez v. Port Auth. of N.Y. & N.J., 01 CV 721,
2005 WL 2143333, at *2 (S.D.N.Y. Sept. 2, 2005), aff’d, 445 F.3d 158 (2d Cir. 2006). As
explained by the Honorable Charles S. Haight in LNC Investments, Inc. v. First Fidelity Bank:
A disappointed litigant may raise such evidentiary issues in support of a motion
for a new trial under Rule 59 . . . , or on direct appeal, in which event the court of
appeals will consider whether the trial court’s evidentiary rulings constituted
reversible error. But it is inherent in the standards which govern the granting or
denial of a Rule 50(b) JMOL motion that the motion must be determined on the
basis of the evidence the trial judge admitted and the jury considered. It is the
record made at trial, consistent with the trial judge’s evidentiary rulings, to which
one must look in evaluating whether a rational jury could have arrived at the
27

verdict reached. Conceptually, one may allow the possibility that the jury was
deprived of evidence it should have heard or seen, or that it heard or saw evidence
that it should not have. . . . these perceived wrongs may be complained of by
means of other procedural vehicles, but they can play no part in determining
whether, on the record actually made, the [Plaintiffs] are entitled to judgment as a
matter of law.
126 F. Supp. 2d 778, 785 (S.D.N.Y. 2001).
Fairly read, Defendants’ Rule 50(b) arguments challenge the admission of Rappaport’s
damages analysis into evidence. ATS&K acknowledges as much in its response to Protostorm’s
waiver argument, stating that the Court’s ruling on Defendants’ Daubert challenge to
Rappaport’s testimony “constituted a definitive ruling on the issue,” that is reviewable on appeal.
(ATS&K Reply at 16 n.13.) Thus, while ATS&K’s arguments are appropriately raised in a Rule
59 motion for a new trial 17 or on direct appeal, the correctness of the admission are not relevant
to the evaluation of their Rule 50(b) motion. The record on the Daubert hearing reflects the
Court’s reasons for admitting Rappaport’s testimony, and the Court will not revisit that ruling
here. 18 Accordingly, Defendants’ arguments regarding claimed deficiencies in Rappaport’s
damages testimony are neither preserved nor properly before the Court on a Rule 50(b) motion.

17

Although the Court may, in its discretion, view ATS&K’s arguments under the Rule 59 new
trial rubric, it declines to do so here, given that ATS&K has explicitly withdrawn its motion for a
new trial.
18

To the extent that Defendants’ damages arguments can be viewed as challenging the
credibility and weight the jury accorded Rappaport’s testimony, Defendants’ argument still fails.
The weighing of the experts’ testimony is a matter for the jury and will not be disturbed by this
Court. See Nwanji v. City of New York, 98 CV 4263, 2000 WL 1341448, at *6 (S.D.N.Y. Sept.
15, 2000) (denying plaintiff's motion for judgment as a matter of law where the case rested
largely on the credibility of the witnesses who testified at trial). Additionally, viewing the
evidence in the light most favorable to upholding the jury’s verdict, the Court finds that the
record evidence was sufficient to enable Protostorm to prove its damages with reasonable
certainty and to provide the jury with a reasonable basis for calculating the damage award.
Rappaport testified at length regarding his thought process and methodology in determining the
range of damages suffered by Protostorm, based on what he believed were conservative
estimates of the royalty base and the royalty rate. (Tr. 966−70, 977−81, 993−1008.) Rappaport
28

V.

Sufficiency of the Evidence to Support the Jury’s Verdict
Accordingly, Defendants’ Rule 50(b) motions are restricted to Defendants’ challenge to

the sufficiency of the evidence regarding Section 102 anticipation, their duty to prosecute the
patent application, the statute of limitations, and punitive damages. As set forth above, the Court
is compelled to deny the motions unless, when viewing all of the evidence in the light most
favorable to the plaintiff, there is “such a complete absence of evidence supporting the verdict . .
. . , or the evidence in favor of the movant is so overwhelming that reasonable and fair−minded
persons could not arrive at a verdict against it.” Kinneary, 601 F.3d at 155 (citation and
alterations omitted); accord Stubbs v. Dudley, 849 F.2d 83, 85 (2d Cir. 1988) (stating that the
standard for granting a motion for judgment as a matter of law is “appropriately strict”). This
stringent standard has not been met here.
A. The Jury’s Verdict Regarding Anticipation Is Supported By the Evidence
ATS&K briefly contends that Protostorm failed to meet its burden to show patentability
under Section 102 because Rappaport’s testimony distinguishing the draft hypothetical claims
from prior art was flawed, and was thus insufficient to rebut the testimony of Defendants’ expert,
Larry Nixon, that the Protostorm invention was anticipated by prior art. (ATS&K Mem. at 25
n.13; ATS&K Reply at 19, n.17; see Tr. 2824.) The Court disagrees. At trial, Rappaport
explained that based on his experience, the most direct way Protostorm would have earned
money from the patented invention was from licensing the patent to third parties interested in
practicing the invention. (Tr. 968−70.) Rappaport testified extensively regarding the 2007
Yankee Group Report, its findings and forecast for the in−game advertising market, what
inferences and estimates he drew from the report, and how he arrived at his damages calculations
therefrom. (Tr. 977−79, 993−96.) Rappaport further testified that he conducted additional
research online for in−game advertising, which confirmed the numbers shown in the Yankee
Group Report. (Tr. 979−81.) Rappaport also explained that to determine the royalty rate, he also
relied on his experience, specific video game situations in which he was involved and the royalty
rates used in those situations, and a 2011 consumer products survey by the Licensing Executive
Society. (Tr. 997−1001.) This evidence was not contradicted by Defendants, who offered no
alternative damage amount at trial.
29

testified that the subject matter of Protostorm’s patent application could have been patentably
distinguished over prior art, including the “Miles” reference that Nixon claimed anticipated the
Protostorm invention. (Tr. 938, 946, 955, 1147−48; see Pl. Ex. 79 at 3.) Although ATS&K now
suggests that Rappaport impermissibly distinguished the Protostorm invention on the basis of
features that are not recited in the claims (ATS&K Mem. at 26 n.13; ATS&K Reply at 19 n.17
(“Anticipation challenges . . . must focus only on the limitations actually recited in the claims”
(citing DDR, 773 F.3d at 1252)), Rappaport specifically explained that all “of the elements set
forth in [the hypothetical] claims” were “not found or disclosed or suggested in the Miles patent”
(Tr. 1147). The jury was entitled to, and presumably did, credit Rappaport’s testimony over that
of Nixon. Neither legal precedent nor overwhelming conflicting evidence compels the
conclusion that the Protostorm invention was anticipated by prior art or that a patent would not
have been issued to Protostorm on that basis.
B. The Jury’s Verdict Regarding the Duty and Breach Elements of Protostorm’s
Legal Malpractice Claim Was Supported By the Evidence
1. Defendants’ Duty to Draft Rappaport’s Hypothetical Claims
The Court preliminarily addresses Defendants’ Rule 50(b) argument that the evidence
was insufficient to show that Defendants had a duty to draft the hypothetical claims in
Rappaport’s report. ATS&K’s Rule 50(b) motion asserts, for instance, that Protostorm failed to
establish a duty to draft the hypothetical claims because the claims were not supported by the
PCT application specifications, and Rappaport’s formulation of the hypothetical claims was
speculative and conjectural. (ATS&K Mem. at 26−31.) Brundidge presses a similar theory,
asserting that the question of ATS&K’s duty to conceive of, modify, and prosecute the
hypothetical claims drafted by Rappaport should have never reached the jury, and impermissibly

30

expanded the scope of the summary judgment rulings. (Brundidge Mem. at 15−16.) Such
contentions fundamentally misstate the issues tried before the jury, the jury instructions, and the
verdict sheet.
As the Court noted during the oral presentation of Rule 50(a) motions at trial, the
summary judgment decision of the previously assigned judge, the Honorable Nicholas G.
Garaufis, narrowed the questions to be decided by jury at trial. Significantly, Judge Garaufis
ruled that if the jury found that Plaintiffs retained Defendants to fully and substantively prosecute
the patent application to completion and that the attorney−client relationship between Plaintiffs
and ATS&K persisted after September 2001, as a matter of law, Defendants failed to exercise
ordinary skill. Protostorm, 834 F. Supp. 2d at 158. 19 Consistent with this ruling, the Court
instructed the jury not to “consider whether Defendants failed to meet the standard of care with
respect to the drafting of the PCT application, in deciding whether the breach element had been
proven.” (Dkt. 529 at 13.) The jury was instead instructed that to resolve the breach issue, it had
only to determine whether (1) “Defendants were retained to substantively prosecute the patent
application,” and (2) “the attorney−client relationship persisted after September 2001.” (Id.)
The Court explained to the jury that “if you find that Defendants were retained to do more than
physically file the PCT Application and that the attorney−client relationship persisted after
September 2001, then you must find that Plaintiffs have met their burden of proof with respect to
the breach element of their legal malpractice claim.” (Id.) 20

19

Although Brundidge argues that Judge Garaufis’s ruling was “clear error” (Brundidge Mem. at
n.4), a Rule 50 motion is not an occasion to revisit summary judgment rulings that determined
the course of the trial. If Brundidge preserved his objection, such arguments may be presented
on appeal.
20

Brundidge’s motion takes issue with this jury instruction as confusing, contending that more is
required to establish a responsibility to prosecute a patent. (Brundidge Mem. at 13.)
31

Defendant’s assertion that the jury was tasked with determining whether Defendants had
a duty to draft Rappaport’s hypothetical claims is belied by these instructions. As discussed, the
Court specifically instructed the jury not to consider whether ATS&K met the standard of care
with respect to drafting Protostorm’s PCT application. Instead, the jury was instructed that it
need only decide two issues, i.e., whether Defendants were retained to shepherd Protostorm’s
application through the patent prosecution process and whether there was an attorney-client
relationship between the parties after September 2001. Juries are presumed to follow their
instructions, and there is no indication that the jury impermissibly departed from their
instructions. Additionally, as Protostorm correctly observes, Defendants failed to object to the
Court’s instructions to the jury regarding breach and duty. 21
ATS&K’s additional argument that Protostorm failed to establish a duty and breach of
duty to draft the hypothetical claims since “Rappaport’s testimony was the only basis for

Specifically, Brundidge contends that Protostorm was required to show that he was responsible
for the national phase of patent prosecution after September 2001, which would have required
Protostorm to choose countries, authorize a local agent to file applications with the national
offices, and pay fees. (Id. at 8−9, 13.) Brundidge’s trial counsel, however, failed to raise any
such issue at trial regarding the jury instructions. Brundidge also asserts that there is no evidence
that ATS&K or Brundidge ever received the information upon which Rappaport based his
hypothetical patent claims. (Id. at 16.) Brundidge’s arguments again misconceive Protostorm’s
theory of liability and the nature of the jury instructions, which focuses on whether the scope of
the attorney−client relationship included prosecution, and whether its duration persisted after
September 2001. As discussed below, the evidence introduced at trial supports the jury’s verdict
on both questions. For now, the Court notes that Worthington’s June 25, 2001 email to ATS&K
and Brundidge instructed them that Protostorm wished to designate all PCT countries. (Pl. Ex.
37.) Based on the jury’s finding of continued representation to prosecute the application, it
follows that ATS&K and Brundidge had a duty to confirm the country designations and confirm
the correctness of the patent application with the co−inventors. The evidence at trial established
that ATS&K and Brundidge did neither.
21

ATS&K now objects to the admission of testimony that it contends prejudicially suggested
that ATS&K had a duty to draft the hypothetical claims. (See ATS&K Mem. at 27, n.14 (citing
Tr. 956, 1041).) ATS&K failed to timely object to the testimony and cannot do so now. The
Court further reiterates that a Rule 50(b) motion is not a proper vehicle for complaints about
evidentiary rulings.
32

Protostorm’s assertion that ATS[&]K had a duty to draft the hypothetical claims and that
testimony should have been excluded” (ATS&K Mem. at 30−31; see id. at 27−28) is similarly
misguided. 22 Aside from the fact that the jury was asked to determine a duty to prosecute rather
than a duty to draft claims, the Court notes that Rappaport’s testimony regarding the hypothetical
claims was directed at the causation element of Protostorm’s legal malpractice claim rather than
the duty and breach elements. The jury was asked to determine separately if, by a preponderance
of the evidence, Protostorm showed “that, ‘but for’ Defendants’ negligence, [it] would have
obtained at least one issued, subsisting, valid and enforceable U.S. patent or corresponding
foreign patent on the Protostorm inventions.” (Dkt. 529 at 13−14.) Rappaport’s testimony about
the hypothetical claims thus was part of Protostorm’s proof that the Protostorm invention would
have been patentable. (See id. at 14 (instructing jury to consider Rappaport’s hypothetical claim
testimony in connection with causation element).)

Moreover, ATS&K’s arguments about

Rappaport’s testimony simply repeat those made during the Daubert hearing concerning the
admissibility of that testimony. As previously noted, challenges to the admissibility of evidence

22

ATS&K objects that Rappaport never explained how he derived his hypothetical claim
language, and that the hypothetical claims differ substantially from the claim language in the
PCT application and June 2001 draft application. (ATS&K Mem. at 27−28; see id. at 30, n.15.)
Rappaport, however, testified at length regarding how he formulated the hypothetical claims.
(E.g., Tr. 933−38). Rappaport specifically identified language in the second provisional
application that should have been included, but was omitted in the PCT application that ATS&K
filed. (Tr. 934−36; see Pl. Ex. 86 at 00140−41.) Rappaport further opined that the first and
second provisional patent applications and the material in the June 2001 draft application should
all have formed part of the specification that ATS&K filed. (Tr. 937−38, 956−57; see Pl. Ex. 79
at 2−3.) Rappaport also compared the hypothetical claims he drafted to the language of the June
2001 draft application, and explained that while his claim closely tracks the June 2001 draft
language and captures the same elements, he expanded on the language for clarity so that it could
be more easily understood by the examiner. (Tr. 947−49, 956.) Finally, Rappaport testified to
his belief that with the typical back and forth from the PTO, competent patent lawyers would
have been able to draft claims substantially similar to his hypothetical claims, which resemble
the June 2001 draft. (Tr. 955−57.)
33

are not relevant to a Rule 50(b) analysis. 23 In any event, the Court declines to reconsider its
ruling to admit Rappaport’s testimony for the reasons set forth at the Daubert hearing.
2. Defendants’ Duty to Prosecute the Patent Application
Brundidge’s 50(b) motion contends that the record evidence made clear that neither
ATS&K nor Brundidge individually were responsible for prosecuting Protostorm’s patent
application. (Brundidge Mem. at 12−15.) 24 Upon reviewing the trial record, the Court finds that
there existed ample evidence to support the jury’s conclusion that ATS&K, Brundidge, and
Bailey all owed a duty to Protostorm to fully prosecute its patent application.
Among the evidence admitted at trial was a June 20, 2001 email from attorney Dale
Hogue (“Hogue”) 25 to Brundidge and Bailey transmitting documents and drawings necessary for
the preparation of the final patent application, and stating that “[a]t this point you have the final
patent application. I will add nothing further and any changes will be made by you to eliminate
confusion.” (Pl. Ex. 31; Tr. 623, 681.) Hogue testified that when he sent that letter, he
understood that he had “finished as much as [he] could finish” and “ha[d] nothing further to do”
on the application, and that he expected that “the filing and prosecuting attorney would decide
whether [the attached application] was a sufficient application” and “could change it if they felt

23

ATS&K acknowledges that the Court ruled on the admissibility of Rappaport’s testimony at
the Daubert hearing and that ATS&K’s Rule 50(b) challenge “is not a pure sufficiency of the
factual evidence argument” but rather an argument that “[w]ith Rappaport’s testimony properly
excluded, Protostorm cannot establish that ATSK had a duty to draft the hypothetical claims.”
(ATS&K Reply at 22.)
24

ATS&K’s motion on the sufficiency of Protostorm’s evidence on duty focuses on its argument
that Protostorm failed to prove that it had a duty to draft the hypothetical claims. (ATS&K
Mem. at 26−31.)
25

Prior to the events at issue in this case, Hogue was of counsel to ATS&K. However, by the
time the Protostorm patent application was being prepared, Hogue had ended his of counsel
relationship with ATS&K and had created his own law practice.
34

it was necessary.” (Tr. 623.) 26 Hogue further testified to his understanding that ATS&K was
“going to prepare and file the application and prosecute it” and that he had no further
responsibilities. (Tr. 627.) On June 25, 2001, Kathy Worthington, an attorney who was assisting
Protostorm’s corporate counsel in obtaining the desired patent, sent an email to Brundidge and
Bailey directing ATS&K to file an international patent for Protostorm under the PCT instead of a
domestic application, and specifying that Protostorm wanted to designate every PCT signatory
country. (Pl. Ex. 37.)
Also admitted into evidence was a June 27, 2001 letter from Bailey to Protostorm’s
corporate counsel John J. Ginley (“Ginley”), copying Worthington and Hogue, which reported
that the Protostorm PCT application was filed on June 25, 2001. (Pl. Ex. 41.) Significantly,
Bailey’s letter advised of upcoming procedural steps, confirming that “[i]f any amendments are
necessary, we [ATS&K] will make them . . .”, and assured Ginley that ATS&K would keep
Ginley, Hogue, and Worthington “abreast of further developments in this application, as they
occur.” (Pl. Ex. 41 at AN 00196−97; Tr. 607−10, 1477, 1544−45.) Bailey and Brundidge each
acknowledged at trial that according to the letter, ATS&K would have made any necessary
amendments. (Tr. 779, 1477, 1544−45.)
In addition to these letters, the jury’s finding was supported by records demonstrating that
ATS&K maintained a docket sheet that recorded future “PCT deadlines” applicable to the
Protostorm application, and generated periodic reminders to attorneys of upcoming deadlines.
(Pl. Exs. 5−9; Tr. 600−02, 654, 658, 889−91, 897, 906, 1524−25.) The docket sheet indicated a
September 27, 2001 deadline for confirming country designations for the Protostorm PCT
application with the PTO. (Pl. Exs. 6, 7; Tr. 601−02, 692, 889−91.) The docket sheet also

26

Hogue’s deposition testimony was read into the trial record.
35

indicated that the “national phase” for the Protostorm PCT application would begin on January
27, 2002 and that the “national phase deadline” was January 27, 2003. (Pl. Exs. 6, 7.)
ATS&K, Brundidge, and Bailey were also listed as Protostorm’s representative in various
filings before the PTO. (Pl. Ex. 24 at 000021; Tr. 818, 881−84, 887−89, 899−900, 930−31.)
Bailey, on behalf of ATS&K, signed the first provisional application after adding a claim and a
figure. (Pl. Ex. 24 at 00021; Tr. 1456, 1516.) Bailey signed the PCT application filed with the
United States Receiving Office on June 25, 2001 as well as the application transmittal letter on
behalf of ATS&K. (Pl. Ex. 36 at AN 00072; Tr. 1473−75, 1522.) In addition, both Brundidge
and Bailey were listed on Protostorm’s PCT application as the “agent[s] or common
representative[s]” for Protostorm. (Pl. Ex. 36 at AN 00073; Tr. 1473−75, 1522.)
Testimony elicited from Defendants further supports this inference. Bailey testified that
ATS&K was the attorney of record for Protostorm before the PTO. (Tr. 1549.) Brundidge also
testified that as of the filing of the PCT application, the PTO would consider him to be a
representative of Protostorm. (Tr. 686.) Bailey acknowledged that any PTO notices or office
actions regarding the application would have been sent to ATS&K because the firm was listed as
the correspondence address. (Tr. 1485; see Pl. Ex. 36 at AN 00073.) Indeed, as Brundidge
testified, notices to Protostorm were, in fact, received by the firm (Tr. 1674−75, 1690−91; see Pl.
Exs. 54, 84 at W00077), and PTO actions from the receiving office would be handled by
ATS&K (Tr. 780.)
In sum, there was more than adequate evidence in the record to support the jury’s verdict
as to Defendants’ duty to prosecute the patent application on behalf of Protostorm.

36

3. Protostorm’s and ATS&K’s Attorney−Client Relationship Persisted After
September 2001
The Court also finds that, contrary to Brundidge’s arguments, there was sufficient
evidence to support the jury’s finding that his and/or ATS&K’s representation of Protostorm
persisted after September 2001. (See Brundidge Mem. at 13−16.)
The evidence detailed above, together with evidence that the patent prosecution process
could take several years (See Tr. 269−70, 327, 332; Pl. Ex. 16), supports this conclusion. The
jury’s verdict finds further support from Faulisi’s testimony and Protostorm’s business
notebooks reflecting communications between Protostorm and Brundidge in December 2001
regarding the status of the patent application. Faulisi testified, and the notebooks reflect, that at
that time, Brundidge provided advice regarding procedural matters in pursuing patent protection.
(Tr. 301−02, 306, 308−13; see ATS&K Exs. AAAAAA at P002763−64, BBBBBB.)

27

Also

supporting the jury’s verdict were ATS&K’s docketing records that noted deadlines after
September 2001 in the patent prosecution process. (Pl. Exs. 5−9; Tr. 600−02, 654, 658, 889−91,
897, 906, 1524−25.) As previously noted, PTO notices or actions regarding the application
would have been sent to the ATS&K. (Tr. 1485; see Pl. Ex. 36 at AN 00073.) ATS&K
continued to receive notices after September 2001 regarding the patent application.

(Tr.

1690−91; see Pl. Ex. 54 (January 3, 2002 notice).) Brundidge acknowledged that ATS&K
would be responsible for handling office actions. (Tr. 780.) The jury’s conclusion is further
supported by Brundidge’s and Schiavelli’s testimony that ATS&K did not file anything with the
PTO to end their representation of Protostorm before the agency. (Tr. 641, 725−26, 731, 1406,
1694−95.) That testimony was substantiated by evidence of bibliographic information retrieved
27

Citations to “ATS&K Ex.” in this Memorandum & Order refer to ATS&K’s trial exhibits as
attached to the Declaration of Robert S. Goodman submitted by Protostorm in opposition to
Defendants’ Rule 50(b) motions. (Dkt. 650 & Exs.)
37

as late as March 2008 from the World Intellectual Property Organization (“WIPO”) that reflected
ATS&K, and specifically Bailey, as the agent on Protostorm’s PCT application. (Pl. Ex. 63; Tr.
1693.) Based on this record, a reasonable jury could conclude that Defendants’ attorney-client
relationship with Protostorm persisted after September 2001.
Although Defendants points to evidence supporting their position that the attorney−client
relationship between Protostorm and ATS&K was terminated in 2001, this evidence was not so
“overwhelming” that reasonable and fair minded persons could not arrive at a verdict against
Defendants.

Kinneary, 601 F.3d at 155.

For instance, evidence that Protostorm did not

follow−up with ATS&K regarding its patent application between December 2001 and mid−2006
does not require the jury to conclude that the attorney client−relationship was terminated (see
Brundidge Reply at 2; Tr. 319−21, 449−51), especially in light of evidence that Protostorm’s
principals understood that the patent approval process could take several years (Tr. 269−70, 327,
332; Pl. Ex. 16), and were counting on ATS&K to shepherd the application to its conclusion (Tr.
258, 288, 332). Additionally, contrary to Brundidge’s assertions that Protostorm’s principals
halted the company’s business operations and closed its office thereby terminating any legal
representation by ATS&K in about December 2001 (Brundidge Mem. at 8−9, 14), there was
evidence that Protostorm maintained its corporate existence and that its principals continued to
seek capital for the company (see, e.g., Tr. 317).
Brundidge’s October 1, 2001 letter stating that ATS&K would take no further action on
the application until Protostorm made a payment to reduce its balance also does not compel a
finding that the attorney−client relationship was severed.

(See ATS&K Mem. at 32−33;

Brundidge Mem. at 14; Pl. Ex. 84; Tr. 705.) First, the jury was permitted to credit Faulisi’s
testimony that he did not receive the letter until after he spoke to Schiavelli in June 2007, which

38

followed multiple attempts to reach ATS&K about the status of the patent application. (Tr. 301,
321−24). Second, even assuming that ATS&K sent the letter to Faulisi in October 2001, a
reasonable trier of fact could conclude that the language of the letter did not sever the
attorney−client relationship, but only threatened to stop work if Protostorm did not pay
outstanding bills. Brundidge himself testified that the purpose of the letter was to “offer[]
[Protostorm] the opportunity to pay their bills and give us a retainer.” (Tr. 706.) 28 Third, as
noted above, there was more than adequate evidence in the record to support the jury’s finding
that an attorney−client relationship continued after the letter, including evidence of
communications between ATS&K and Protostorm regarding the status of the patent application
in December 2001. (Tr. 301−02, 306, 308−13; see ATS&K Exs. AAAAAA at P002763−64,
BBBBBB.) 29 The evidence of conversations between Brundidge and Protostorm’s principals in
December 2001 also supports an expectation that ATS&K, through Brundidge and Bailey, would
continue to work to prosecute the application.

28

On this issue, the jury also could have found some support in the testimony of the defense’s
legal ethics expert, John Steele, for the conclusion that more was needed to sever an attorneyclient relationship than Brundidge’s October 1, 2001 stop-work letter. Although Steele opined
that Protostorm’s non-payment of certain fees owed to ATS&K as of October 1, 2001 justified
ATS&K’s termination of the attorney-client relationship with Protostorm, he acknowledged, on
cross-examination that the letter did not explicitly state that the relationship was terminated and
suggested that if Protostorm took certain actions, such as paying the fees that were due, the
relationship would continue. (Tr. 2574, 2576-77, 2632-34.) Steele also acknowledged that
ATS&K’s records appeared to show that Protostorm had, in fact, made a payment on or about
October 1, 2001 and that the only amount still owing on that date was slightly less than $4,000.
(Tr. 2638-39.)
29

Brundidge confirmed that according to billing records, at the time he stopped work on
September 20, 2001, Protostorm had been making payments on other invoices and the invoice of
$3,847 was less than 90 days old. (Tr. 712−13, 748; see Pl. Ex. 4.) Brundidge also
acknowledged that on October 1, 2001, the same date as the letter to Ginley, Protostorm made a
payment of $1,092.70 to ATS&K on a trademark matter. (Tr. 719−20; see Pl. Ex. 4.)
39

In light of the above evidence, Brundidge’s contention that the jury did not make findings
as to his individual liability is without merit. (See Brundidge Mem. at 12−13.) The Court
additionally notes the jury was instructed that Plaintiffs must establish the elements of their legal
malpractice claim “as to each Defendant separately.” (Dkt. 529 at 10.) To that end, the verdict
sheet requested that the jury answer the question of whether Protostorm retained Defendants to
substantively prosecute the patent application as to each defendant separately. (Verdict Sheet at
2.) Contrary to Brundidge’s contention that “Protsotorm confused the jury as to Brundidge’s
individual liability and defenses” (Brundidge Reply at 1), the verdict sheet reflects the jury’s
attention to the differences in proof between ATS&K and the individual defendants, and in fact
found that Schiavelli was not retained to prosecute Protostorm’s patent application and thus did
not have an attorney−client relationship with Protostorm that persisted after September 2001.
(Verdict Sheet at 1−2.)
C. The Jury’s Verdict Regarding the Statute of Limitations was Supported by the
Evidence
Defendants contend that Protostorm’s malpractice action is time−barred because
Protostorm did not commence the action within three years after the cause of action accrued, and
because there was insufficient evidence at trial for the jury to conclude that the statute of
limitations was tolled through Defendants’ continuous representation or concealment of its
malpractice. (ATS&K Mem. at 31−34; Brundidge Mem. at 6−10; Dkt. 626−1 ¶ 7.) The Court
disagrees.
1. The Record Evidence Supports The Jury’s Finding of Continuous Representation
The statute of limitations applicable to Protostorm’s malpractice claim is three years,
N.Y. C.P.L.R. § 214(6), and it begins to run on “the day an actionable injury occurs,” regardless
of when the plaintiff discovers the injury, McCoy v. Feinman, 785 N.E.2d 714, 718 (N.Y. 2002).
40

Under the “continuous representation doctrine,” the statute of limitations is tolled for as long as
“there is a mutual understanding” between attorney and client “of the need for further
representation on the specific subject matter underlying the malpractice claim.” Id.; see also
Shumsky v. Eisenstein, 750 N.E.2d 67, 72 (N.Y. 2001) (continuous representation existed where
plaintiffs were “left with the reasonable impression that defendant was, in fact, actively
addressing their legal needs” in connection with the specific subject matter in question).
Accordingly, the Court instructed the jury that the statute of limitations is tolled under the
doctrine of continuous representation for as long as there is a mutual understanding between the
attorney and client of the need for further representation on Protostorm’s patent application.
(Dkt. 529 at 21.) The Court further explained that no continuing representation exists where the
task for which the attorney was retained is complete, or the evidence did not support a finding
that the client continued to have trust and confidence in the attorney. (Id. at 21−22.)
According to Defendants, there was no evidence that ATS&K’s representation of
Protostorm continued beyond March 4, 2005 (three years before this action was commenced).
Rather, Defendants contend, the evidence established that the attorney−client relationship
between Protostorm and ATS&K ended in October 2001, when ATS&K sent the stop-work letter
to Faulisi. (ATS&K Mem. at 31−33.) The Court disagrees.
The trial record was replete with evidence from which the jury could reasonably infer that
there was a mutual understanding of a continued need for representation on Protostorm’s patent
application. The previously described evidence that supported the jury’s finding that Defendants
continued to represent Protostorm after September 2001 also supports the jury’s verdict
regarding continuous representation. The Court highlights, in particular, Faulisi’s testimony that
he understood that the approval process at the Patent Office could take several years (Tr. 269-70;

41

327, 332), and that he relied on ATS&K to keep the application up to date until completed(Tr.
258, 288, 332).

There also was testimony that ATS&K did not take steps to end their

representation of Protostorm before the PTO; thus, ATS&K and Bailey were identified as the
agent on Protostorm’s PCT application as late as March 2008. (Tr. 641, 725−26, 731, 1406,
1693−95; Pl. Ex. 63). 30 Drawing all reasonable inferences in Protostorm’s favor, the Court finds
that a reasonable juror could have concluded that the statute of limitations was tolled because
ATS&K continued to represent Protostorm after March 2005.
Brundidge, who was added to this case as an individual defendant when Plaintiffs filed
the Second Amended Complaint on August 24, 2009, separately asserts that the jury did not find
that the statute of limitations was tolled through August 24, 2006—or three years before the
filing of the Second Amended Complaint—instead finding only that the statute of limitations
was tolled through March 4, 2005. (Brundidge Mem. at 6; Dkt. 114.) Thus, Brundidge argues,
there was no basis in the record for tolling the statute of limitations through August 24, 2006,
and this action is time-barred as to him. (Brundidge Reply at 5.) Brundidge also argues that
there was no basis to find continuous representation by him through August 25, 2006 because he
had left the firm by then. (Brundidge Mem. at 7 n.7.) Bailey’s Rule 50(b) motion joins the
portion of Brundidge’s motion that relates to the statute of limitations defense, and argues that
because he (Bailey) left the firm in 2004, “there could not possibly have been a factual finding of

30

Citing to Piliero v. Adler & Stavros, 723 N.Y.S.2d 91 (N.Y. App. Div. 2001), Brundidge
contends that “the mere fact that ATS&K did not withdraw as attorney of record on the PCT
application” does not establish continuous representation. (Brundidge Mem. at 9.) Piliero is
distinguishable, however, because the client retained new counsel and the only evidence of a
continuous relationship was the absence of a formal substitution filing in Court. 723 N.Y.S. 2d
at 92. Here, there is no evidence that Protostorm retained new counsel to prosecute the
application and the failure to withdraw is just one fact among others that supports the jury’s
finding of a continuous relationship.
42

any continuous representation” by him. 31

(Dkt. 626−1 at n.2.)

The Court rejects these

arguments.
First, these arguments smack of sandbagging. Defendants never raised any of these
issues at trial, nor did they seek any findings from the jury on these issues. Defendants did not
argue to the jury that it should find that Brundidge’s representation of Protostorm did not
continue through August 24, 2006. Nor did Defendants argue that Brundidge and Bailey could
not be held responsible for ATS&K’s conduct because they had left the firm before August 24,
2006 and March 4, 2005, respectively. 32 To the contrary, Defendants agreed to the sole Verdict
Sheet question regarding the statute of limitations issue, namely, whether each of the
“Defendants’ representation of Plaintiff(s) continued[d] after March 4, 2005.” (Verdict Sheet at
3 (indicating jury’s individualized findings that ATS&K’s, Bailey’s and Brundidge’s
representation continued after March 4, 2005).) Having failed to raise these statute of limitations
arguments at trial, Brundidge and Bailey cannot now attack the jury’s verdict as deficient based
on the absence of relevant factual findings or the jury’s failure to consider legal standards on
which it was never instructed. 33

31

Unlike Brundidge, Bailey was named as a defendant in the original complaint filed on March
4, 2008.

32

Indeed, Defendants offered no evidence about the precise dates of Brundidge’s and Bailey’s
departures from ATS&K. Brundidge merely testified (in response to Plaintiffs’ questioning) that
he left “in 2004” (Tr. 647), and Bailey similarly testified that he “believe[d]” [his departure] was
around 2004” (Tr. 1453). Bailey’s Rule 50(b) motion simply reiterates that he “left the firm in
2004.” (Dkt. 626−1 ¶ 7.)
33

Even if Brundidge and Bailey had made a timely statute of limitations argument, the evidence
at trial was sufficient to support a finding that ATS&K’s representation of Protostorm continued
into 2008. The jury specifically found that ATS&K’s, Brundidge’s and Bailey’s representation
of ATS&K continued after March 4, 2005. (Verdict Sheet at 3.) Although there was no end
date, the evidence further showed that Brundidge permitted his appearance at the PTO on behalf
43

Second, Brundidge’s and Bailey’s argument that the statute of limitations should not be
tolled as to them based on their departures from the firm was specifically rejected by Judge
Garaufis, in connection with the parties’ summary judgment motions. As Judge Garaufis found:
To the extent that a continuous attorney-client relationship existed between
Plaintiffs and ATS & K, it is of no moment that Brundidge and Bailey both left
the firm in 2004. (Pl. 56.1 ¶¶ 9, 12.) The continuous representation doctrine “is
rooted in recognition that a client cannot be expected to jeopardize a pending case
or relationship with an attorney during the period that the attorney continues to
handle the case.” Waggoner v. Caruso, 68 A.D.3d 1, 7, 886 N.Y.S.2d 368 (1st
Dep’t 2009). For the same reason, a client cannot be expected to bring a
malpractice suit against a law firm’s ex-partner while the client is still represented
by the firm in the same matter. See New Kayak Pool Corp. v. Kavinoky Cook
LLP, 74 A.D.3d 1852, 1853, 902 N.Y.S.2d 497 (4th Dep’t 2010);Waggoner, 68
A.D.3d at 7, 886 N.Y.S.2d 368; HNH Int’l, Ltd. v. Pryor Cashman Sherman &
Flynn LLP, 63 A.D.3d 534, 535, 881 N.Y.S.2d 86 (1st Dep't 2009); Pollicino v.
Roemer and Featherstonhaugh P.C., 260 A.D.2d 52, 55, 699 N.Y.S.2d 238 (3d
Dep't 1999); Antoniu v. Ahearn, 134 A.D.2d 151, 152–53, 520 N.Y.S.2d 562 (1st
Dep't 1987).
Protostorm, 834 F. Supp. 2d at 156, n.19. As Judge Garaufis explained, Protostorm could not be
expected to sue ex-ATS&K partner Brundidge or ex-ATS&K attorney Bailey while ATS&K was
still representing Protostorm. Thus, the relevant deadline for purposes of tolling the statute of
limitations was the date at which ATS&K’s representation of Protostorm, ended, which as the
jury found, was after March 4, 2005.
Citing no legal authority, Brundidge offers only a policy argument against Judge
Garaufis’s prior ruling, contending that it effectively imposes indefinite tolling of claims against
professionals who leave their firms. (Brundidge Mem. at 7 n.2 (citing Protostorm, 834 F. Supp.
2d at 156).) To the extent Brundidge’s argument has any merit, the Court finds it inapplicable in
a case such as this, where the ex-professionals, Brundidge and Bailey, were directly involved in

of Protostorm to remain in effect, never withdrew from representation of Protostorm at the PTO,
and gave Protostorm advice that evidenced a continuing attorney−client relationship into 2008.
44

the alleged malpractice, and all compensatory damages stemming from their conduct were
ultimately attributed back to the firm.
Having found that the jury’s verdict that the statute of limitations was tolled is supported
by the evidence on the record, the Court declines to address the sufficiency of the evidence to
support the jury’s alternative verdict that Defendants knowingly concealed material facts that
they had a duty to reveal to Plaintiffs that prevented Plaintiffs from learning of Defendants’
malpractice until at least March 2005. (Dkt. 529 at 22−23.) 34 The verdict sheet instructed the
jury that it need not reach a verdict on concealment if it found that the statute of limitations was
tolled under the continuous representation doctrine. (Verdict Sheet at 3−4.) Nor is it appropriate
to disturb the jury verdict based on ATS&K’s contention that the jury improperly considered
concealment despite already finding a continuous attorney−client relationship. (See ATS&K
Mem. at 31, 34−35 n.16; ATS&K Reply at 23.) There is no indication that the jury’s verdict as
to other elements of Protostorm’s legal malpractice claim was unduly affected by the jury
considering evidence of concealment. If anything, the evidence on concealment may have
informed the jury’s determination on the propriety of awarding punitive damages. As discussed
in the following section, the jury’s decision to award punitive damages is supported by the
evidence. The Court thus sees no reason to disturb the jury’s verdict on the statute of limitations.
D. The Jury’s Punitive Damages Award Was Not Against the Weight of the
Evidence
The Court instructed the jury that it had discretion to award Plaintiffs punitive damages if
it found “by a preponderance of the evidence that Defendants acted with malicious intent to
34

Defendants’ motions argue that the evidence conclusively establishes that there was no
concealment because ATS&K sent the patent application to Worthington and Ginley on June 27,
2001, and all parties had access to the published PCT application. (ATS&K Mem. at 31, 34−35
n.16; Brundidge Mem. at 10; see Pl. Ex. 41.)
45

violate Plaintiffs’ rights or unlawfully injure them, or . . . with callous or reckless disregard of
Plaintiffs’ rights[.]” (Dkt. 529 at 20.) The jury returned a verdict awarding punitive damages to
Protostorm in the amount of $900,000 as to ATS&K and $100,000 against Brundidge. (Verdict
Sheet at 5−6.) ATS&K’s Rule 50(b) motion contends that the Court erred in allowing the jury to
consider punitive damages because there was no evidence that ATS&K engaged in any gross,
wanton, or willful fraud or morally culpable conduct. (ATS&K Mem. at 35−36; ATS&K Reply
at 24−25.) Brundidge asserts that there was no factual record that Brundidge individually
committed wanton or malicious acts or that Brundidge knew of any error in Plaintiff’s patent
application. (Brundidge Mem. at 20−21.) 35
Drawing all reasonable inferences in Protostorm’s favor, the Court finds that a reasonable
juror could have concluded that ATS&K, and Brundidge individually, acted with either
malicious intent or with callous or reckless disregard of Protostorm’s rights, thus supporting an
award of punitive damages. The evidence at trial clearly established that Brundidge was the
partner at ATS&K responsible for the Protostorm matter. Combined with Brundidge’s testimony
that he did not substantively review Bailey’s work in filing the PCT application, nor review the
materials Brundidge sent to Protostorm—especially given the inexplicable failure to designate
the United States for patent protection in the PCT application—it was reasonable for the jury to
infer at least callous disregard of Protostorm’s rights. The jury was also permitted to infer
malicious intent or reckless disregard based on (1) Brundidge’s order for ATS&K to stop work

35

Brundidge cites to the Court’s observation in its order on allocation of damages to ATS&K
that, “[w]ithout further evidence about the precise acts for which the Jury found Brundidge
responsible for punitive damages, the Court cannot conclude that Brundidge’s conduct was
authorized or ratified by ATS&K” such that the punitive damages award against Brundidge
should be re−apportioned to ATS&K. (Brundidge Mem. at 20 (citing Dkt. 565 at 9).) That there
was no evidence of firm ratification tied to specific acts by Brundidge does not mean that there
was no factual record of wanton or malicious acts by Brundidge.
46

on the PCT application on September 20, 2001 even though he was aware of an impending
September 23, 2001 deadline to request an extension to file a Power of Attorney with the PTO
and a September 27, 2001 deadline to correct the failure to designate the United States, (2) not
alerting Protostorm to these deadlines, and (3) allowing the deadlines to pass without seeking
further extensions, despite acknowledging that extensions are freely given, easily filed, and had
been successfully obtained before. (Pl. Ex. 48; Tr. 692, 694−696, 704−05, 708, 733, 752−53,
771−72). As Brundidge testified at trial, his emails to Worthington on September 25 and 27,
which did not copy either Faulisi or Shakespeare, did not mention the two PTO deadlines. (Tr.
702, 704, 1682−83; see Pl. Ex. 51.) Although Brundidge acknowledged that an attorney has an
obligation to give a client sufficient time to meet deadlines or retain other counsel when stopping
work on a matter, he admitted that he did not speak to Protostorm’s principals before ordering
ATS&K to stop work on Protostorm’s pending PCT application, and that he did not speak to the
principals about the two impending deadlines. (Tr. 704, 710.) Brundidge also acknowledged
that his October 2001 letter did not inform Protostorm that the two September 2001 deadlines
had passed without action. (Tr. 706−07; 1670−72, 1688−90; see Pl. Ex. 84;.) 36 There was also
evidence that Brundidge communicated with Protostorm’s principals in December 2001
regarding procedural matters and represented that the PCT application was proceeding.
(ATS&K Exs. AAAAAA at P002763−64, BBBBB at P002770−71; Tr. 301−02, 306, 308−13.)
Additionally, the jury could have inferred willful or callous disregard to Protostorm’s rights
based on ATS&K’s failure to disclose that the United States was not designated in the PCT
application until January 2008, despite Faulisi’s repeated requests for information from ATS&K
36

Although Brundidge’s letter attached a PCT Notification of Receipt of Record Copy that
contained the initials of countries designated (Pl. Ex. 84 at W00077−78, Tr. 1688−90),
Brundidge did not point this out to Protostorm, and the jury was entitled to draw the inference
that a layperson would not have noticed the failure to comply with the deadlines.
47

beginning in mid−2006. (See Pl. Exs. 58, 60, 61; Tr. 319−32.) In sum, the evidence was
sufficient for the jury to find that ATS&K and Brundidge, at a minimum, acted with willful,
callous, or reckless disregard of Plaintiffs’ rights.
Finally, the Court finds that Brundidge may not prevail on his contention that there can
be no punitive award when there are no underlying compensatory damages. The New York State
courtdecisions cited by Brundidge stand for the proposition that no punitive damages can be
awarded where the underlying claim for compensatory damages is barred. (Brundidge Mem. at
19−20 (citing Prote Contracting Co. v. Bd. of Educ. of City of New York, 714 N.Y.S.2d 36 (App.
Div. 2000) (compensatory damage claim dismissed); Rocanova v. Equitable Life Assur. Soc. of
U.S., 634 N.E.2d 940 (N.Y. 1994) (compensatory damage claim barred by release); Hubbell v.
Trans World Life Ins. Co. of New York, 408 N.E.2d 918 (N.Y. 1980) (compensatory damage
claim barred by res judicata). By contrast, in this case, there was no legal bar or impediment to
Protostorm’s compensatory damage claim, and the jury found that Protostorm was entitled to
compensatory damages. (Verdict Sheet at 5.) The jury also specifically found that Brundidge
was liable to Protostorm for legal malpractice, and apportioned 15% of the fault to Brundidge
(Id.) 37 Post−verdict, the Court assigned all compensatory damages to ATS&K, consistent with
the parties’ understanding at trial that the acts of ATS&K’s principals and employees are
attributable to ATS&K, and fault allocated to Brundidge as part of his employment at ATS&K
must be paid by the firm. (Dkts. 565 at 8−9.) The Court held Brundidge individually liable for

37

On the Verdict Sheet, the jury was instructed to apportion fault among Defendants, Plaintiffs,
and non−party Dale Hogue. This was necessary because the parties had requested that the jury
find liability with respect to each defendant and because ATS&K asserted comparative
negligence defenses. During a conference related to jury instructions, Defendants requested that
the Court allocate damages post−judgment and acknowledged that because the acts of the
principals are attributable to ATS&K, the 10% fault allocated to Brundidge must be paid by
ATS&K. (Tr. 2838−39, see also Tr. 3024.)
48

the $100,000 in punitive damages separately awarded against him by the jury, however, because
there was no evidence that ATS&K authorized any wanton or malicious conduct by Brundidge.
(Dkt. 565 at 9.) Thus, Protostorm prevailed on its cause of action against Brundidge, even
though ATS&K was ultimately responsible for paying Brundidge’s share of compensatory
damages.
CONCLUSION
For the foregoing reasons, the motions to set aside the jury verdict pursuant to Rule 50(b)
filed by defendants ATS&K, Brundidge, and Bailey are denied. Notwithstanding Rule 6.3 of the
Joint Local Civil Rules of the Southern and Eastern Districts of New York, the Court will not
entertain any motion for reconsideration of this Memorandum & Order. See Somlyo v. J. Lu-Rob
Enterprises, Inc., 932 F.2d 1043, 1048 (2d Cir. 1991) (district courts have inherent discretion to
depart from Local Rules).
SO ORDERED.

/s/ Pamela K. Chen
PAMELA K. CHEN
United States District Judge
Dated: June 5, 2015
Brooklyn, New York

49