Law Firm Sued for Malpractice, Cover-Up

Plaintiff Muzik, Inc. filed a complaint against defendant law firm Perkins Coie LLP for legal malpractice and fraud. The suit was filed in the Supreme Court of the State of New York. Muzik is represented by Greenspoon Marder and Robins Kaplan., and seeks $150 million in damages.

Muzik alleged that Perkins Coie failed to obtain patents for its headphone technology. The inventions include voice control for headphones and technology that governs how devices and smartphones communicate with each other. Muzik wanted to create “voice and touch activated ‘smart’ headphones.” Products such as Apple’s AirPods and Amazon’s Echo Dot would have paid royalties to Muzik. 

The complaint stated Sean Grygiel, at the time an attorney for Perkins Coie, “tried to cover up repeated failures in seeking and securing patents, at one point by manufacturing false patent application numbers.” Grygiel was not named as a defendant in the lawsuit.

Because Muzik believed its technology was patented, they “unwittingly disclosed key technology without the protection that Grygiel and Perkins Coie represented to be in place.” Therefore, Muzik lost revenue from its developed technology and wasted resources. If Grygiel and Perkins Coie “acted within the standard of care, Muzik would have the rights to royalties and the advantage of being first to market, on core technologies in the rapidly growing field of connected devices.” Instead, Muzik stated that it lost this valuable opportunity and revenue stream.

Muzik first worked with Grygiel in 2012, when he worked at law firm Fish & Richardson. Grygiel persuaded Muzik to follow him to Perkins Coie in 2014, where he was a partner; he claimed he had a unique understanding and familiarity with the company and its patent portfolio, which would benefit Muzik for continuity and efficiency. Muzik claimed, “[h]owever, retaining Perkins Coie was a fatal mistake for Muzik.” Perkins Coie allegedly “repeatedly breached its fiduciary duties of loyalty and its duty of care owed to Muzik while collecting hundreds of thousands of dollars in fees.”

According to the complaint, Perkins Coie failed to carry out several critical responsibilities.  They failed to file applications or inform why certain patents would not be available.  They also failed to communicate developments in the patent process to either Muzik or its investors, and they failed to include key information about Muzik’s technology in the applications.  Initial applications were allegedly allowed to lapse and some applications were never filed. Finally, Perkins Coie allegedly manufactured false patent application numbers to cover up their mistakes.

In another alleged incident, which purportedly occurred in December 2014, Chip Hardt, Muzik’s VP of Strategic Operations, was invited to a conference to discuss a piece of Muzik’s intellectual property, called Drum Sticks. Grygiel informed his client that he could speak about the technology because a patent application had been filed; “[h]owever, a patent application for the Drum Stick technology was not filed before the conference.”

Muzik also alleged they were not informed of rejected applications or provided an opportunity to amend them. According to Muzik, its “Core Four” technologies, which were key components to its business, were never filed, even though Grygiel provided application numbers. Muzik believes Grygiel fabricated these numbers to hide that they were never filed. This was only discovered after Muzik sought new counsel and Perkins Coie handed over Muzik’s paperwork and files to the company’s new representation.