Tuesday, July 28, 2009

Attorney's Liens For Patent Prosecution Work

The Massachusetts Supreme Judicial Court decided the following two questions in the affirmative:

We consider in the present case, as a matter of first impression, the scope of the Massachusetts attorney's lien statute (lien statute), G.L. c. 221, § 50, vis-à-vis patent prosecution work. The United States Court of Appeals for the First Circuit has certified the following questions to this court, pursuant to S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981) [FN2]:

"1. Does [G.L. c. 221, § 50,] grant a lien on patents and patent applications to a Massachusetts attorney for patent prosecution work performed on behalf of a client?

"2. If [G.L. c. 221, § 50,] does grant a lien and the issued patents or patent applications are sold, does the attorney's lien attach to the proceeds of the sale?"

The court concluded:

By its substantial amendment of the lien statute in 1945, the Legislature significantly expanded an attorney's right to recover legal fees for services rendered to a client in a variety of proceedings. The language of G.L. c. 221, § 50, states that an attorney shall have a lien for reasonable fees and expenses not only from the "authorized commencement of an action, counterclaim or other proceeding in any court," but also from the "appearance in any proceeding before any state or federal department, board or commission." When an attorney files a patent application for a client with the USPTO, that action constitutes appearing in a proceeding before a Federal department. [FN6] See 35 U.S.C. § 1 (2006) (USPTO was established as agency of United States, within Department of Commerce); 37 C.F.R. § 10.1 (2008) ("proceeding" before USPTO includes application for patent). Moreover, the broadening of the statute suggests a recognition by the Legislature that attorneys are entitled to be compensated for the work they perform that falls outside the purview of traditional litigation "in any court."

In assessing the scope of an attorney's lien for reasonable fees and expenses, the language of G.L. c. 221, § 50, provides that the attorney shall have a lien "upon his client's cause of action, counterclaim or claim, upon the judgment, decree or other order in his client's favor entered or made in such proceeding, and upon the proceeds derived therefrom." In the context of patent prosecution work, the patent application is the client's "claim." It is a request for recognition of a property right whereby an inventor can exclude all others from making, using, or selling a patented invention for a designated period of time. Therefore, in accordance with the first phrase of the "upon" clause, when rendering legal services to a client to secure a patent, an attorney can assert a lien on the patent application when it is filed with the USPTO, and the lien necessarily remains attached to the subsequently issued patent, protecting the attorney's right to compensation.

Contrary to the argument of the liquidating supervisor, the language of G.L. c. 221, § 50, does not require a "judgment" in order for an attorney's lien to attach. The repetition of the word "upon" in the statute describes three separate and independent bases for the assertion of an attorney's lien, namely (1) "upon [the] client's cause of action, counterclaim or claim," (2) "upon the judgment, decree or other order in [the] client's favor entered or made in such proceeding," and (3) "upon the proceeds derived therefrom." Interpreting the statute as requiring a "judgment" before a lien can attach, would render superfluous the words in the first "upon" clause. As we have already stated, every word of a statute must be given effect. See Bankers Life & Cas. Co. v. Commissioner of Ins., supra. Had the Legislature intended to limit the parameters of the lien statute to only those instances when an attorney has obtained a judgment, then the Legislature simply would have said that the attorney shall have a lien for his reasonable fees and expenses "upon the judgment, decree or other order in his client's favor," and nothing more.

The case is Ropes & Gray LLP v. Jalbert, decided July 28, 2009.  (Mike Frisch)

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