Axcess International, Inc. v. Baker Botts, L.L.P.

Justices Lang-Miers, Evans, and Schenck (Opinion)

The Dallas Court of Appeals affirmed a take-nothing judgment in favor of Baker Botts because the plaintiff failed to prove causation through its expert witness. Axcess International sued its former patent counsel, Baker Botts, alleging that while Baker Botts was representing Axcess in prosecuting its patent applications for certain active-radio-frequency-identification (“RFID”) technology, it was also representing Axcess’s chief competitor, Savi Technologies, in patenting arguably similar RFID technology. The conflict was discovered (by Baker Botts at least) when Savi forwarded to Baker Botts letters from Axcess alleging patent infringement.

Axcess ultimately sued Baker Botts, alleging the firm breached its fiduciary duty and was negligent. Axcess’s expert testified that, had Axcess known Baker Botts was prosecuting patents for Axcess’s competitor, Axcess would have hired other counsel; and, with conflict-free counsel, Axcess could have threatened to file or actually filed an interference proceeding with the USPTO and amended the claims of its existing patent applications. He further testified that had Axcess taken these actions, and had the interference proceeding been successful, Axcess would have been in a better position to negotiate a business solution with Savi and some unspecified business deal would have been reached.

The Court of Appeals held the expert’s testimony regarding (1) how the USPTO would have ruled in an interference proceeding and (2) how Savi would have reacted to Axcess’s hypothetical claims, was wholly speculative. In short, the Court found Axcess’s causation theory depended on how third parties would have reacted under hypothetical circumstances. But, “Axcess had to prove—not just suggest or theorize, but prove with competent, non-speculative evidence—that the third parties would have actually taken such action.” Axcess failed to provide evidence that similar interference claims have been successful in the USPTO or that Savi likely would have capitulated and entered into a better deal with Axcess given different facts. The causation testimony was, therefore, legally insufficient, and the Court affirmed the take-nothing judgment.