Patent attorneys sued by former client for overbilling, poor representation

MARSHALL -- Several technology companies are seeking more than $1 million from the attorneys they allege did an inadequate job of representing them in a Marshall patent infringement lawsuit and overbilled them for the work.

Plaintiffs DataTern Inc. of Tyler,FireStar Software Inc. of Framingham, Mass. and Amphion Innovations PLC, a company based in the Isle of Man, filed a breach of contract suit against Foley & Lardner LLP on Jan. 29 in the Eastern District of Texas-Marshall Division.

According to the complaint, DataTern and Amphion are companies that own intellectual property and hold numerous U.S. patents. In 2007, the companies purchased several patents from FireStar.

"Plaintiffs discovered that some of their patents were being infringed upon and filed claims against Red Hat Inc. in an action styled FireStar Software Inc vs. Red Hat Inc. et al, Civil Action No. 2:06-cv-258 in the U.S. District Court for the Eastern District of Texas, Marshall Division," the complaint states. "Plaintiffs were represented by Foley & Lardner LLP in the lawsuit."

Foley & Lardner is a Wisconsin law firm admitted to appear pro hac vice in Texas for the infringement suit against Red Hat.

There are more than 1,000 attorneys with the Foley & Lardner firm, and the DataTern suit does not give the name of a specific lawyer connected with the litigation. The original complaint refers to the defendant only as "Foley."

The plaintiffs claim they never signed a written fee agreement with Foley, but "an agreement was reached between plaintiffs and Foley that Foley would represent plaintiffs in the lawsuit."

According to the complaint, the agreement provided for "reasonable hourly rates" to be charged "only for tasks necessary to advance plaintiffs' interest," and that Foley would directly pay any third-party expenses.

"Pursuant to the agreement, Foley was to diligently pursue and prosecute all of plaintiffs' patent infringement claims," the suit states.

However DataTern and the others allege that over the course of a year, Foley failed to "fully and adequately" represent their interests. They also allege the firm failed to complete certain tasks while over-billing for other tasks that were unnecessary and "otherwise failed to adequately prosecute plaintiffs' claims."

The case was closed when parties agreed to an undisclosed settlement in December 2008.

"Defendants' actions have caused and will continue to cause damage to plaintiffs," the suit states. "Plaintiffs are entitled to recover damages for the pecuniary loss of the benefits of the contract and all other economic harm caused by defendants' actions, which exceed $1,000,000.00."

The plaintiffs are also asking Foley & Lardner to pay their fees for hiring Robert Varner Jr. and Steven E. Aldous of Dallas to represent them in the lawsuit. In addition they seek all costs, expenses, interest and other just relief to which they may be entitled.

On Feb. 2, former Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office Jon W. Dudas joined Foley & Lardner as a partner in the Washington, D.C. office, working with the Intellectual Property and Public Affairs Practices.