We have written several blogs about legal malpractice cases – cases wherein clients sue their former attorneys, alleging negligence and malpractice. Of late, such cases have become so common as to no longer merit comment. A recent case, however, has caught our attention because, as far as we can determine, the only negligence and malpractice in this sorry affair was committed by the plaintiffs’ new attorneys when they drafted the complaint alleging negligence and malpractice on the part of the plaintiffs’ former attorneys.
(Stephen Ruff and Ruffactory, Inc. v. Reising, Ethington, Barnes, Kisselle, P.C.)
Ruff and his company retained Reising, Ethington to file and prosecute applications for federal registration of the trademark “THE GUARDIANS” and a patent covering an invention entitled, “SHOE.” The firm was successful in both matters, securing both the trademark registration and the patent. Thereafter, unfortunately, things started to go downhill.
Ruff and company, acting through their new attorneys, allege that Reising, Ethington, their former attorneys, “breached [their legal and fiduciary] duty by failing to sufficiently notify [him] of the required ten year filing of continued use …” leading to cancellation of the registration. Ruff further alleges that “DreamWorks Animation is planning an animated motion picture entitled “The Guardians, starring Leonardo DiCaprio,” to be released on November 2, 2012.
Ruff alleges that his registration “covered merchandise bearing the words ‘The Guardians’ and any characters associated with the words ‘The Guardians’.” It is his belief that, but for the cancellation of his trademark registration, DreamWorks would have been compelled to license his trademark in order to sell “a vast array of merchandise” referencing the movie. He alleges he “will incur millions of dollars in damages as a result of lost revenue.”
With respect to the patent, Ruff alleges that it “entitled [him] to patent protection for a shoe with a compartment in or around the heel of a shoe to hold items the wearer wanted to carry.” He contends that he has a letter from Attorney Ethington assuring him that the patent gave him “protection against infringement of any shoe that had a compartment in the ‘region of the heel’.” However, his new attorneys have failed to attach a copy of this letter as an exhibit to the complaint.
About the same time, Ruff, acting through his former attorneys, sued an alleged infringer of the patent. The alleged infringer offered to settle this case for $108,500 (3.5% of past sales of the accused shoes) plus a 5% royalty on future sales. Ruff, who by coincidence was behind in paying his attorneys at the time, alleges that they “strongly urged” him to accept this offer as they felt he had “a very slim chance” of winning the case. He “begrudgingly” agreed.
He now alleges, in the complaint drafted by his new attorneys, that “in case of patent infringement, the infringed-upon party is entitled to all revenues derived as a result of the infringement” and that the accused infringer “made $3.1 million in revenue from the shoe that infringed upon [his] patent.” To compensate him for these losses, he is seeking $15 million in lost revenue, plus punitive damages and attorney’s fees.
Ordinarily, we take an impartial view of these cases, leaving it to the courts to determine the merits of the matter alleged. This case, however, is an exception to that practice. The complaint is replete with such utter nonsense that the new attorneys should be ashamed to have drafted it.
In federal trademark practice, a “Declaration Of Use,” also known as a “Section 8 Declaration or Affidavit,” is required to be filed in the FIFTH year after a registration issues. In the TENTH year, if the mark is still in use, an application for RENEWAL of the registration is filed. If by some oversight a trademark registration is allowed to expire, or is cancelled for failure to file a Section 8 Declaration, but the mark has remained in use, the trademark owner may simply file a new application, claiming the original “date of first use.” No rights are lost. Assuming that Ruff’s former attorneys had, indeed, failed to “sufficiently” notify him of the need to RENEW his registration – use of the word “sufficiently” indicates there WAS some notice – he could have corrected the failure by re-registering the mark.
Moreover, overcome with curiosity, we examined the cancelled trademark registration (Reg. No. 2,502,415). The registration is for a simple word mark. There is no mention of “any characters associated with the words” as alleged in the complaint.
Plunging deeper into the morass, we secured a copy of the Shoe patent (U.S. Patent No. 5,921,008). The claims of this patent are all limited to a shoe having “a drawer adapted to be slidably received within [a] compartment” in the heel. A shoe with a compartment in the heel, but lacking a drawer in the compartment, DOES NOT INFRINGE the patent. This may explain the failure of the new attorneys to attach a copy of the alleged letter as an exhibit to the complaint.
Finally, leaving aside the fact that Ruff SETTLED with the accused infringer for a respectable 3.5% royalty on past sales, AND the fact that infringement of the '008 patent was never proved, the measure of damages in a case where patent infringement IS proven, is NOT “all revenues derived as a result of the infringement” as alleged in the complaint. The legally set measure is the patent owner’s lost profits, but in no event less than a reasonable royalty. Ruff GOT a reasonable – 3.5% - royalty!
The worst malpractice we see in this matter was on the part of the new attorneys in drafting the complaint – or taking the case. It’s cases like this that give lawyers a bad name. Shame on them!
THE LESSON TO BE LEARNED: Make sure your new lawyers know what they’re doing before suing your former lawyers for malpractice.
Sounds to me like Ruff got greedy after settling on the shoe patent, and is looking for a repeat performance with his former attorney. It also seems like the first law firm did better by its client than the new law firm, and Ruff is doing himself a disservice by alienating his prior counsel.