In a recent decision the Austrian Supreme Court had to decide on the
professional liability of an attorney-at-law due to malpractice in a utility
model infringement action.
The claimant argued that due to miscounselling of the defendant the claimant
failed to initiate proceedings for invalidation of the utility model in suit at
the Austrian Patent Office. According to the Austrian Patent and Utility Model
Act in case that nullity of the IP right in suit is argued in the infringement
proceedings, infringement proceedings must be stayed in case the infringement
court considers nullity to be likely. Thus, Austria has a so-called bifurcated
litigation system. For initiating invalidation proceedings a term of one month
is set by the infringement court. In case the defendant fails to prove
initiation of an invalidation action within the term set, the infringement court
has to decide the case without taking into account any objection relating to the
invalidity of the utility model in suit.
Rather than counselling for filing an invalidation action the attorney advised
the subsequent claimant to take a licence of a European patent having a better
priority than the utility model in suit. Due to this advice of their attorney
the one-month term for filing the invalidation action lapsed, and the
infringement court decided the case without taking into account any objections
regarding the invalidity of the utility model. With regard to the objection
based on having a licence of an EP patent being of better priority, a court
expert appointed by the infringement court found that the subject matter of the
EP patent and of the utility model was the same. Accordingly - if an invalidity
action would have been filed by the claimant - such a claim would have been
successful. As the infringement court found that the defendant was not
successful in proving that it had a licence, the infringement court found
against the defendant/now claimant in the indemnity proceedings.
In the indemnity proceedings based on malpractice of the attorney the Supreme
Court found that it is part of the attorney's liability to replace the damage
caused by the breach of duty. If the breach of duty lies in an omission to
initiate an action, an omission actually causes damages, in case it can be
proven by the claimant that the performance of a particular course of action
would have prevented the occurrence of the damage and this action would have
been possible. However, causality is to be denied if the same disadvantage would
have occurred even when all dutiful actions would have been taken. Thus, if the
clients would have lost for other reasons, there is no causal link between the
breach and the lost proceedings. In the present case it was - in view of the
Supreme Court - not sufficiently clear on the basis of the facts determined by
the 1st instance court whether the claimant would have lost the infringement
proceedings anyway in view of an alleged out-of-court settlement. Accordingly,
the case was sent back to the 1st instance court.
Actions for malpractice of an attorney are extremely rare in Austria. However,
this decision highlights that in patent and utility model disputes clients are
well advised to mandate an attorney-and-law and a patent attorney as the
bifurcated litigation system has many (procedural) pitfalls into which attorneys
not specialised in IP may easily fall into.
Dr. Rainer Beetz, LL.M.