Cooper & Elliott Blog

How Patent Legal Malpractice Can Devastate a Business

Posted on Thu, Aug 30, 2018 @ 5:00 PM

As a business owner, one of the most valuable things you can get from an attorney is a sound opinion, one based on facts and knowledge of the law. That opinion doesn’t guarantee your success, but it should assure you that there are no legal impediments that will keep you from moving your business forward.

A legal opinion should reflect careful crafting and thorough research. Opinions bandied around the water cooler are free, but an attorney’s opinion comes at a price and if he or she makes a mistake out of ignorance or a lack of due diligence, it’s too often more than just an “oops.” A faulty legal opinion can be devastating to a business and to the all the lives connected to it, from the owner to the investors to all the employees and their families.

 We’ve talked about the issue of legal malpractice, and how its victims are just as deserving of legal representation and fair compensation as the victims of personal injury or wrongful death. The question that must be asked before pursuing a legal malpractice case is, “Did the attorney, in this case, meet the minimum ‘standard of care?’” If not, there may be grounds for a lawsuit.

Ohio civil litigation attorneys address a patent oversight

A recent case provides—unfortunately—a clear example of legal malpractice in business law. The client, Xpansion, Inc.*, was looking to bring an exciting new product to the market. Xpansion had hired a patent law firm to get its product patented and, thereby, gain the exclusive right to sell it. The company was charged a hefty fee by the firm to conduct the patent search and file the necessary paperwork.

Such a fee would normally be justified considering the time and effort involved in obtaining a patent—except in this case, the law firm failed do its job. It turned out that there was already “prior art” for this idea, meaning it was not free and clear to be patented. Xpansion’s attorneys should have caught this problem early on but didn’t. And, based on the faulty guidance it received, Xpansion revved up its manufacturing and distribution plans, investing millions of dollars in a product that ultimately couldn’t be patented.

It is the responsibility of a patent attorney to find instances of prior art in a preliminary patent search. With more than 300,000 patents granted in 2015 alone, it’s not unusual for a company or individual to come up with an idea that someone else has already patented, especially if that product doesn’t exist in the marketplace. If an idea can’t be patented, it’s best to know that before your company makes an enormous investment in its development and marketing. As you can see, there’s a lot riding on that attorney’s ability to correctly identify prior art.

Legal malpractice leads to civil litigation

Xpansion’s patent attorneys fell short of the “standard of care” in this case, and it nearly destroyed the company. It had to shut down for months and re-tool for the future. Hundreds of employees were laid off while the company regrouped.

Fortunately, instances of legal malpractice are relatively rare. But the effects can be enormous, financially and personally, to businesses and people alike. If you have been injured through legal or medical malpractice that calls for civil litigation, don’t hesitate to give us a call. We’re here to help.

*Names in this article have been changed to protect our client’s privacy.

The outcome of any client’s case will depend on the particular legal and factual circumstances of the case.

 

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