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Young Conaway Stargatt & Taylor, LLP v. OKI Data Corp.

Superior Court of Delaware, New Castle

August 1, 2014

YOUNG CONAWAY STARGATT & TAYLOR, LLP, Plaintiff, Counterclaim-Defendant,
v.
OKI DATA CORPORATION and OKI DATA AMERICAS, INC., Defendants, Counterclaim Plaintiffs.

Submitted: March 21, 2014

On Plaintiff's Motion for Summary Judgment As to Counterclaim – GRANTED in part, DENIED in part

Donald E. Reid, Esquire. Morris, Nichols, Arsht & Tunnell LLP, 1201 N. Market Street, Wilmington, DE 19899. Attorney for Plaintiff, Counterclaim-Defendant.

Kevin W. Gibson, Esquire. Gibson & Perkins PC, 1326 North King Street, Wilmington, DE 19801. Attorney for Defendants, Counterclaim-Plaintiffs.

OPINION

WILLIAM C. CARPENTER, JR. JUDGE

Before this Court is Young, Conaway, Stargatt & Taylor, LLP's ("Plaintiff") Motion for Summary Judgment relating to the Counterclaim filed by Oki Data Corporation, Oki Data Americas, Inc., ("Defendants") with their Answer to the Complaint. Plaintiff's Motion argues that, even accepting all allegations as true, Defendants have failed to set forth facts in the Counterclaim from which this Court may rule in Defendants' favor. The Court finds that the undisputed material facts do not support Defendants' first claim of malpractice as the alleged error did not result in any harm to Defendants. However, there are material issues of fact as to the second claim and, thus, summary judgment thereon is not appropriate. Accordingly, the Motion for Summary Judgment is hereby GRANTED in part and DENIED in part.

A. BACKGROUND

I. Procedural History

In February 2013, Plaintiff filed the underlying Complaint against Defendants for unpaid legal fees and expenses in connection with Plaintiff's representation of Defendants in the U.S. District Courts for the District of Delaware and Eastern District of Pennsylvania. Thereafter, on May 7, 2013, Defendants filed an Answer and Counterclaim alleging that Plaintiff committed malpractice in their representation of Defendants before the International Trade Commission in a separate but related matter (hereinafter, the "ITC Action"). Plaintiff filed the instant Motion for Summary Judgment As to Counterclaim on February 4, 2014 arguing that: (1) the alleged malpractice was more than three years ago and, thus, is barred by the statute of limitations and (2) the alleged malpractice, even if true, didn't cause any harm to Defendants and, as such, is not actionable.

Argument on Plaintiff's Motion was set for February 20, 2014, however, no response was filed by Defendants and, on February 18, 2014, Plaintiff wrote to the Court asking that the Motion be granted as unopposed. In response, Defendants' counsel wrote a letter apologizing for the oversight and filed a Rule 56(f) Motion for Additional Time to Answer Plaintiff's Motion for Summary Judgment, attaching a declaration of Marc R. Labgold, Ph.D. in support of the malpractice claims. The Court wrote to the parties and told them that Plaintiff's Motion would still proceed to oral argument and Defendants could present their defense on the record. Accordingly, the Rule 56(f) Motion was denied and rejected.[1] After argument, the Court ordered the parties to submit supplemental briefing to explain with more particularity the parts of the ITC Action which were allegedly affected by the malpractice. Both parties filed their supplements on March 7, 2014. Plaintiff was also granted leave to respond to Defendants' filing and did so on March 21, 2014.

II. The ITC Action

The ITC Action involved allegations that Defendants infringed on a number of patents. Defendants hired Plaintiff to defend such claims and now allege malpractice was committed in the defense of the infringement allegations on one patent, termed the '690 patent. The '690 patent is for "a toner image fixing method" for printers. The patent is comprised of 16 claims, which define the scope of the patent. The first claim in the '690 patent contains a number of elements setting forth the general premise of the patent, the background of the invention, and the scientific formulas and materials used in the implementation of such (referred to as the independent claim). The remaining claims (2-16) incorporate the invention from claim one and add additional elements (referred to as the dependent claims).

Defendants were originally accused of infringing all claims in the '690 patent. However, as the case progressed, the patent holder withdrew a number of their allegations and only proceeded on claims 1, 2, 5, 6, 9, 10, 13, and 14. Defendants, through Plaintiff-counsel, planned to defend such claims by arguing that two of Defendants' printers, the "OL400e Product" and the "OL1200 Product, " encompassed all elements of all claims in the '690 patent and were on sale at least one year prior to the '690 patent's filing date; thus rendering the '690 patent invalid. If Defendants proved that either or both of these printers encompassed all elements of each claim in the '690 patent and were on sale at least one year prior to the patent's filing date, such would be called "invalidating prior art" and Defendants would be relieved of any infringement allegations.

Unfortunately, just prior to Defendants' expert's deposition, Defendants withdrew their on-sale defense as to the even-numbered claims (claims 2, 6, 10, and 14). Defendants contend that Plaintiff, as counsel to Defendants, gave incorrect legal advice to their expert and, due to this advice, the opinion of the expert as to the even-numbered claims was legally incorrect and irrevocably tainted. Plaintiff-counsel allegedly told the expert that if the independent claim (claim 1) was invalidated, due to the on-sale defense, all dependent claims (claims 2-16) were also invalidated. Thus, the expert's opinion explained why the on-sale defense invalidated claim 1 and then, without further analysis, determined that the even-numbered claims were automatically invalidated as well. Both parties agree that this conclusion is legally incorrect. Defendants contend that Plaintiff only realized and admitted their legal error when confronted ...


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