Legal-mal action vs. patent firm time-barred

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The statute of limitations barred a tech company’s legal malpractice suit against a law firm that handled patent applications related to a product the plaintiff was jointly developing with another company, a U.S. District Court judge has determined.

Plaintiff BlueRadios, a Colorado company that develops wireless technology, partnered with Massachusetts-based Kopin Corp. to develop Golden-i, a headset that would play audio and video wirelessly.

Kopin insisted on using its own Boston law firm, defendant Hamilton, Brook, Smith & Reynolds, to prosecute patents related to the project. Between 2008 and 2012, the firm amended multiple patent claims in a manner that resulted in only Kopin employees being credited as inventors and only Kopin being assigned the patents, a situation BlueRadios allegedly discovered in 2014 when another lawyer inventoried its IP.

When BlueRadios brought a legal malpractice claim against Hamilton Brook in 2021, the firm asserted that the action was time-barred.

BlueRadios argued in response that it did not know it was harmed by the firm’s actions until 2017 during separate litigation with Kopin in Colorado. BlueRadios also argued that the statute was tolled by the continuous representation doctrine and fraudulent concealment.

But Judge Denise J. Casper found that BlueRadios was on constructive notice of its claims as early as 2008 when its CEO called the firm “reckless” in leaving off a BlueRadios developer in one of the patent applications.

As for the tolling arguments, Casper found there could be no continuous representation because BlueRadios could not establish the existence of an attorney-client relationship in the first place.

“It is undisputed that ‘BlueRadios did not make any individual requests for [Defendants] to perform discreet tasks,’ BlueRadios was not invoiced by the Law Firm for any legal services, and did not voice that it considered the Law Firm to be its counsel prior to the Colorado lawsuit where it sought to disqualify the Law Firm from representing Kopin,” Casper wrote in granting summary judgment to the defendant.

Casper also rejected the fraudulent concealment argument, emphasizing that an attorney with an independent and conflicting duty to an existing client has no duty of disclosure to a separate party based on a confidential relationship.

The 37-page decision is BlueRadios, Inc. v. Hamilton, Brook, Smith & Reynolds, P.C., et al., Lawyers Weekly No. 02-441-24.

Untimely actions

Defense counsel Richard M. Zielinski of Boston declined to comment, as did Boston attorney Douglas W. Salvesen, one of BlueRadios’ local counsel.

However, Christopher W. Blazejewski, a Boston attorney who handles legal malpractice cases, said anyone who represents lawyers and law firms in Massachusetts should read the ruling.

“The decision stands against the misguided proposition that a plaintiff with purported claims against a lawyer can, without consequences, shrug off acting in a timely manner when it knew or was on notice of facts giving rise to such claims,” he said.

Jessica Gray Kelly of Boston predicted that the plaintiff would have a difficult time if it tried to appeal, given how precise and thorough the decision is. She noted, in particular, that Casper could have concluded her analysis after finding that BlueRadios was on notice of appreciable harm from the firm’s drafting of patent applications as early as 2008, since that was enough to negate the continuing representation or fraudulent concealment doctrine on its own.

But Casper went a step further in finding that neither doctrine is available when there is no attorney-client relationship and determining that none existed here, given the lack of dispute that BlueRadios never actively communicated with the firm to request representation or legal advice.

“This is important because it emphasizes that the analysis of whether there is an attorney-client relationship is not a subjective one from the perspective of the alleged client,” Kelly said.

The decision stands against the misguided proposition that a plaintiff with purported claims against a lawyer can, without consequences, shrug off acting in a timely manner when it knew or was on notice of facts giving rise to such claims.

Newton attorney Sara N. Holden said that regardless of the outcome in the case, law firms can avoid leaving themselves vulnerable to similar litigation by being clear at the outset who they are representing.

“There is a temptation, when incipient relationships are cordial, to help everyone, including nonclients, and assume that all will go well. But the lawyer needs to be careful about stepping over any line into giving legal advice to the other parties to the venture, which can create a conflict or later claim of malpractice if the relationship sours,” Holden said.

Charles P. Kazarian of Boston noted that BlueRadios sued Kotin for breach of contract in Colorado in 2016, which should have indicated to the plaintiff that if there was to be a case against the law firm that allegedly caused the problem, it needed to file its action within Massachusetts’ three-year statute of limitations period or secure a tolling agreement.

“Unfortunately, the tolling agreement was not obtained until Dec. 5, 2017, just a few months — but a fateful few months — too late,” Kazarian said.

He emphasized that when a potential legal malpractice cause of action presents itself, plaintiff’s counsel needs to apply the most conservative accrual analysis and act promptly in filing suit if Rule 11 requirements can be satisfied or by obtaining a tolling agreement as quickly as possible.

Uncredited contributions?

BlueRadios and Kopin contracted in 2007 to co-develop Golden-i.

According to the complaint, BlueRadios and Kopin agreed they would seek patent protection for certain IP that BlueRadios had already developed, as well as for inventions created as part of the Golden-I project. They also apparently agreed that Kopin would pay for the patent applications, including counsel fees.

BlueRadios asserted that, over the next several years, it had extensive contact with the defendant, the firm Kopin brought in for the patent work, and that it conveyed highly confidential information to the firm, including specs for technology it had already invented.

Though the firm and BlueRadios never had a written representation agreement, the firm never disclaimed representation of BlueRadios, nor did it inquire as to whether the plaintiff had its own representation or encourage it to seek independent counsel. BlueRadios’ CEO, Mark Kramer, and chief technology officer, Wilfred Tucker, both apparently believed the law firm would work to further both companies’ interests, though BlueRadios also often referenced the firm as “Kopin lawyers.”

In January 2008, the firm filed a provisional patent application that did not name anyone from BlueRadios as an inventor. Kramer described that to Tucker as “reckless” but did not write a formal letter to the firm, instead passing along BlueRadios’ concerns to a Kopin contact.

On other patent applications the law firm filed over the next few years, it initially listed inventors from both companies but subsequently amended them, apparently at Kopin’s behest, to remove claims involving BlueRadios’ technology, resulting in certain patents being issued only to Kopin.

In 2014, a contract lawyer hired by BlueRadios inventoried the company’s IP in preparation for a potential acquisition by Google and discovered that BlueRadios was not listed on patents related to Golden-i as it had believed.

By that point, the relationship between BlueRadios and Kopin had deteriorated. In August 2016, BlueRadios sued Kopin in federal court in Colorado for breach of contract and unsuccessfully moved to disqualify the law firm as Kopin’s litigation counsel, asserting that it had also represented BlueRadios.

Meanwhile, BlueRadios and the defendant entered a tolling agreement on Dec. 5, 2017.

BlueRadios brought its malpractice action on March 22, 2021. The law firm moved for summary judgment, arguing that the suit was time-barred.

The plaintiff argued in response that the firm had served as its counsel pursuant to the BlueRadios-Kopin contract until 2016, and thus the continuous representation statute tolled the statute. BlueRadios further argued that the concealment doctrine also tolled the statute.

Motion granted

Casper found that the claims were, indeed, time-barred, rejecting both tolling theories.

Specifically, she found that BlueRadios had constructive notice of a potential claim against the firm as early as 2008, when, in January, Kramer described the firm to Tucker as “reckless” and in December, when the plaintiff had notice that one of the patent applications incorrectly listed Kopin as the sole inventor.

Casper also found that BlueRadios had notice by November 2014 at the latest, when its contract counsel informed the plaintiff that BlueRadios inventors had been deleted from certain patent applications.

The judge further found that continuous representation could not toll the statute unless the plaintiff could establish an attorney-client relationship with the firm.

“On this record, absent active communication from BlueRadios requesting individualized legal advice or request for legal representation, BlueRadios has failed to adduce evidence that there is a genuine dispute that an implied attorney-client relationship was formed,” she said, adding that the fraudulent disclosure argument failed for lack of a duty to disclose.