United States Court of Appeals

For the First Circuit

No. 08-1257

IN RE ENGAGE, INC., ET AL.,

Debtors

ROPES & GRAY LLP,

Appellant,

v.

CRAIG R. JALBERT, as Liquidating Supervisor,

Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Douglas P. Woodlock, U.S. District Judge]

Before

Lynch, Chief Judge,

Boudin and Lipez, Circuit Judges.

D. Ross Martin with whom Christopher Thomas Brown, Jonathan B.

Lackow, and Ropes & Gray LLP were on brief for appellant.

Robert M. Abrahamsen, Michael A. Albert, Allen S. Rugg, Eric

G.J. Kaviar, Wolf, Greenfield & Sacks, P.C., Erik Paul Belt, and

Bromberg and Sunstein LLP were on brief for Boston Patent Law

Association, amicus curiae.

Andrew Z. Schwartz with whom Joshua S. Pemstein and Foley Hoag

LLP were on brief for appellee.

October 6, 2008
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LYNCH, Chief Judge. The key issue in this bankruptcy

case is whether the Massachusetts attorney's lien statute, chapter

221, section 50 of the Massachusetts General Laws, applies to

patent prosecution work performed by attorneys. The courts of the

Commonwealth have never addressed this issue. Nor is it clear from

existing case law or a reading of the statute what the answer is.

Further, any chosen answer will have significant policy

ramifications. We conclude the issue should be certified to the

Massachusetts Supreme Judicial Court ("SJC"), pursuant to its Rule

1:03. See Boston Gas Co. v. Century Indem. Co., 529 F.3d 8, 15

(1st Cir. 2008).

I.

The case arises from federal bankruptcy proceedings

initiated five years ago by Engage, Inc., an advertising software

company, and certain of its affiliates ("Debtors"). The relevant

facts are briefly recounted. Ropes & Gray LLP ("R&G") performed

legal services -- primarily patent prosecution work -- for the

Debtors from around July 2002 through May 2003. The Debtors filed

petitions for relief under Chapter 11 of the Bankruptcy Code on

June 19, 2003. In a filing before the bankruptcy court shortly

thereafter, R&G asserted it was owed $108,737.11, secured by an

attorney's lien under chapter 221, section 50 of the Massachusetts

General Laws, for unpaid patent prosecution work performed prior to

this date. Additionally, R&G asserted an unsecured claim for
The bankruptcy court based its rejection of R&G's secured 1

claim primarily on Virginia law, which it found to be applicable.

Engage I, 315 B.R. at 211-13. However, it proceeded to analyze

Massachusetts law in the alternative and reached the same

conclusion. Id. at 213.

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approximately $49,517.37, primarily for corporate licensing work

performed in 2003.

The Debtors, who had sold their patents and patent

applications in transactions before and after the petition date,

agreed to reserve from the sale proceeds an amount equal to R&G's

asserted lien, while reserving their rights to object to R&G's

claims. On August 4, 2004, the Liquidating Supervisor filed an

objection to R&G's secured claim, arguing, inter alia, that the

Massachusetts attorney's lien statute did not apply to patents and

patent applications.

The bankruptcy court agreed, sustaining the Liquidating

Supervisor's objection. In re Engage, Inc. (Engage I), 315 B.R.

208, 208 (Bankr. D. Mass. 2004). In an October 8, 2004 order, it

held that the lien statute did not apply to patent prosecution

work. Id. at 213-14. It concluded that neither a patent nor a 1

patent application is a "judgment, decree or other order" under the

terms of the statute. Id. at 214. Even if a patent could be

characterized as an order, the court reasoned that the proceeds

from the sale of a patent would be derived not from the order but

from the sale of the underlying intellectual property. Id. R&G

could have no more than an inchoate lien in the proceeds from the
The district court rejected the bankruptcy court's 2

determination that Virginia law rather than Massachusetts law

applied. Engage II, 330 B.R. at 14. We agree that Massachusetts

law applies.

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sale of the Debtors' patents and patent applications. Id. at 214-

15. Thus, the bankruptcy court reasoned, R&G's claim was

unsecured. Id. at 217.

R&G appealed the bankruptcy order to the district court.

It also filed a motion requesting that the district court certify

questions on the attorney's lien statute to the SJC. In re Engage

Inc. (Engage II), 330 B.R. 5, 6 n.1 (D. Mass. 2005). On September

1, 2005, the district court affirmed the bankruptcy court, finding

that the attorney's lien statute did not apply to patents or patent

applications or to proceeds from the resulting sale. Id. at 7, 2

14-21. The district court also rejected R&G's request for

certification, concluding that the issue could be resolved by

applying existing case law. See id. at 6 & n.1. The matter was

then returned to the bankruptcy court because the order was not yet

"final" within the meaning of 28 U.S.C. § 158(d).

On August 15, 2007, R&G and the Liquidating Supervisor

filed a joint motion before the bankruptcy court, agreeing to

liquidate R&G's claim. The parties also agreed that the

Liquidating Supervisor would reserve $27,500, which R&G would

receive if it were ultimately found to have a secured claim. The

bankruptcy court approved this compromise and disallowed the
The Boston Patent Law Association filed a brief as amicus 3

curiae in support of R&G.

R&G's motion for certification was denied on June 30, 4

2008, without prejudice to reconsideration by this panel after oral

argument.

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secured claim in its final order, issued September 10, 2007. On

December 27, 2008, the district court affirmed the final order on

the grounds set forth in its 2005 decision. R&G appealed to this

court and again requested that questions on the Massachusetts 3

attorney's lien statute be certified to the SJC.4

II.

This court may certify questions to the SJC in cases,

such as this, where it finds no controlling precedent and where the

questions may be determinative of the pending cause of action. See

Mass. S.J.C. R. 1:03; Boston Gas Co. v. Century Indem. Co., 529

F.3d at 15; Nieves v. Univ. of P.R., 7 F.3d 270, 274 (1st Cir.

1993). These conditions are met. First, the SJC has not decided

whether the Massachusetts attorney's lien statute applies to patent

prosecution work, and, if so, whether the attorney's lien attaches

to proceeds from the sale of issued patents or patent applications.

Second, in our view, this state law issue may be determinative of

R&G's cause of action, and there is no controlling precedent,

bringing the case within Rule 1:03. R&G's arguments in the
If the SJC determines, in response to the first question 5

we certify, that the lien statute does not apply to patents or

patent applications, that will be dispositive of the entire federal

case. If the SJC holds that the lien statute does apply, it may be

that that decision alone will not dispose of one portion of R&G's

claim, which is to post-petition sale proceeds.

R&G claims that, under federal bankruptcy law, if it had

a lien on any of the patents or patent applications that were sold

subsequent to the petition date, then it would have a lien on the

proceeds from any such sales, independent of state law. On this

view, it is possible that only one of the two questions that we

certify below will itself determine part of R&G's claim. If the

SJC determines that the Massachusetts attorney's lien statute

applies to patent prosecution work, then the status of R&G's claim

as to the post-petition sale proceeds may hinge on federal rather

than state law. Nonetheless, the second certified question will

still be determinative as to the pre-petition sale proceeds.

To the extent it should become necessary, we will address

the federal law issue in light of the SJC's answers. See Brown v.

Crown Equip. Corp., 501 F.3d 75, 80 (1st Cir. 2007).

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bankruptcy court depend on the appropriate construction of the

Massachusetts attorney's lien statute.5

We also think it appropriate to exercise our discretion

in favor of certification. In a case such as this, it is within

our discretion either to "make our best guess on this de novo

review issue" or to certify the question to the SJC. Boston Gas

Co., 529 F.3d at 13. This is not a case in which "the course [the]

state court[] would take is reasonably clear." Nieves, 7 F.3d at

275 (alterations in original) (quoting Porter v. Nutter, 813 F.2d

37, 41 n.4 (1st Cir. 1990)) (internal quotation marks omitted).

Moreover, certification is particularly appropriate here since the

answers to these questions may hinge on policy judgments best left

to the Massachusetts court and will certainly have implications
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beyond these parties. See Boston Gas Co., 529 F.3d at 14-15; Brown

v. Crown Equip. Corp., 501 F.3d 75, 78 (1st Cir. 2007).

It is true that even in the absence of controlling

precedent, certification would be inappropriate where state law is

sufficiently clear to allow us to predict its course. See Hugel v.

Milberg, Weiss, Bershad, Hynes & Lerach, LLP, 175 F.3d 14, 18 (1st

Cir. 1999); Armacost v. Amica Mut. Ins. Co., 11 F.3d 267, 269 (1st

Cir. 1993); Nieves, 7 F.3d at 274-75. This case, however, presents

a close and difficult legal issue. See Boston Gas Co., 529 F.3d at

15; Brown, 501 F.3d at 77.

We explain why we think so. Some background on the

nature of patents and the patent prosecution process informs our

analysis. Patents are granted by the United States Patent and

Trademark Office in potentially multi-staged proceedings which,

while not akin to a traditional trial, may take on certain

adversarial qualities. Decisions of the Patent Office may be

appealed by the applicant or, in some instances, challenged by a

third party before the Board of Patent Appeals and Interferences.

35 U.S.C. § 134. An applicant may challenge a decision by the

Board by appealing to the Federal Circuit, id. § 141, or by filing

a suit in district court, id. § 145. If granted, a patent provides

a right to exclude others from practicing an invention. See id. §§

271, 283; Crown Die & Tool Co. v. Nye Tool & Mach. Works, 261 U.S.

24, 35-37 (1923). This exclusive right is "a species of property
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. . . of the same dignity as any other property which may be used

to purchase patents." Transparent-Wrap Mach. Corp. v. Stokes &

Smith Co., 329 U.S. 637, 643 (1947). A favorable decision by the

Patent Office thus provides the applicant with a property interest

-- to exclude others from use of the property -- which may itself

be sold, and in that sense is independent of the underlying

intellectual property. This property interest, even at the stage

of a patent application, is freely assignable. Federal law, 35

U.S.C. § 261, provides that "patents shall have the attributes of

personal property. Applications for patent, patents, or any

interest therein, shall be assignable in law by an instrument in

writing."

Turning back to the state law question, the Massachusetts

attorney's lien statute provides that:

From the authorized commencement of an action,

counterclaim or other proceeding in any court,

or appearance in any proceeding before any

state or federal department, board or

commission, the attorney who appears for a

client in such proceeding shall have a lien

for his reasonable fees and expenses upon his

client's cause of action, counterclaim or

claim, upon the judgment, decree or other

order in his client's favor entered or made in

such proceeding, and upon the proceeds derived

therefrom.

Mass. Gen. Laws ch. 221, § 50. This present version of the statute

was enacted in 1945. The previous version read:

An attorney who is lawfully possessed of an

execution, or who has prosecuted a suit to

final judgment in favor of his client, shall
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have a lien thereon for the amount of his fees

and disbursements in the cause . . . .

Rev. Laws. Mass. 1902 ch. 165, § 48.

In our view, the change in and expansion of the language

in the 1945 amendment tends to support R&G's arguments that a

patent application is a "claim" and that a patent is an "order in

[the] client's favor." The lien statute was broadened in 1945

beyond actions and counterclaims to include "other proceeding[s]."

It was also broadened to include "proceeding[s] before any state or

federal department, board or commission" -- terms that encompass

administrative proceedings and both state and federal proceedings.

This tends to support R&G's argument that the state legislature's

broadening of the statute was a rejection of a limitation on

attorney's liens to only traditional "cause[s] of action,

counterclaim[s] or claim[s]." By broadening the statute to other

proceedings before any federal department, the state legislature,

R&G argues, also rejected limiting the applicability of attorney's

liens to trial-like proceedings against an adverse party.

The language of the statute itself does not contradict

R&G's arguments. Pursuing a patent before the Patent Office clearly

constitutes a "proceeding" before a federal department. The fact

that "claim" is a term of art in patent law does not mean that the

filing of an application for a patent before the Patent Office

cannot also be a "claim" under the statute. See Black's Law

Dictionary 264 (8th ed. 2004) (defining "claim" as, inter alia, "[a]
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demand for . . . property . . . to which one asserts a right"). Nor

does the plain language of the statute itself dictate that the

issuing of a patent by the Patent Office -- which confers a legal

right upon the client -- cannot be an "order."

The language and history of the state statute also tend

to favor somewhat R&G's position that an attorney's lien may arise

prior to the issuance of a "judgment, decree or other order." Given

the structure of the amended statute, specifically the repetition

of "upon," it is natural to read the statute as applying,

independently, to a "cause of action, counterclaim or claim," to a

"judgment, decree or other order in [the] client's favor," and/or

to "proceeds derived therefrom." The Liquidating Supervisor argues

that the text of the statute "follows the procedural progression of

a typical litigation," so one must have a "judgment, decree or other

order" and "proceeds derived" from that order for a lien to be

enforceable. This reading is less natural.

The Liquidating Supervisor's reading is also somewhat out

of keeping with the statute's history. The change in language

implemented in 1945 may evince a legislative intent to abrogate the

requirement that a suit proceed to final judgment before an

attorney's lien attaches.

This is not a case, however, in which the text or

statutory history are so clear as to make certification "a waste of

judicial resources." See Armacost, 11 F.3d at 269. It is unclear,
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for example, whether "therefrom" in the third "upon" clause is

intended to refer to the subject of the previous two clauses or only

to that of the immediately preceding clause. That is, the lien may

apply to proceeds derived from a claim or a judgment or it may apply

only to those derived from a judgment; the text does not obviously

foreclose either reading. And while it is evident that the

legislature intended to expand the applicability of the lien beyond

court and court-like adversarial proceedings, it is also likely that

it intended some limit on the scope of the statute. The Liquidating

Supervisor argues that one consequence of an expansive reading of

the statutory terms would be that a "cause of action" or "claim" may

also extend to applications, filed by attorneys, for "taxi

medallions, nursing home licenses, zoning variances, building

permits, liquor licenses, . . . [or] environmental permits."

Neither side can point to text or to legislative history that

conclusively addresses this issue. This is not surprising. In

1945, the number and type of administrative proceedings were far

fewer. Of course, patent applications made to the Patent Office

predate the 1945 amendment.

The Liquidating Supervisor argues, and the district court

found, that there is a body of case law interpreting the

Massachusetts lien statute sufficient to allow a federal court

safely to resolve the issues of state law presented in this case.

If this were the case, then certification would be inappropriate,
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notwithstanding the lack of binding precedent or unambiguous

statutory command. See Marbucco Corp. v. Suffolk Constr. Co., 165

F.3d 103, 105 (1st Cir. 1999); Snow v. Harnischfeger Corp., 12 F.3d

1154, 1161 (1st Cir. 1993); see also Nicolo v. Philip Morris, Inc.,

201 F.3d 29, 33 (1st Cir. 2000).

The Liquidating Supervisor can point to language in

certain opinions that appears to support his interpretation of the

attorney's lien statute. We focus on the principal state cases

cited. Torphy v. Reder, 257 N.E.2d 435 (Mass. 1970), arose from a

suit in equity brought against Reder by Reder's wife to determine

ownership in several stock certificates and bankbooks, among other

things. Id. at 437. After a court ordered Reder to surrender the

property, an attorney who had represented Reder through part of the

proceedings claimed he had an attorney's lien on the stock

certificates. Id. The SJC rejected the lawyer's claim, finding

that "since there was no decree in [the client's] favor there was

nothing to which the statutory lien could attach." Id. "[T]he type

of lien created" by the attorney's lien statute, the SJC reasoned,

"is a charging lien which binds the judgment or money decree for

payment of expenses incurred and for services rendered by an

attorney." Id. at 437-38 (emphasis added).

In Collins v. Town of Webster, 522 N.E.2d 12 (Mass. App.

Ct. 1988), two parties, represented by different lawyers, were

jointly awarded a judgment of $86,888.88 in a suit arising from a
The Liquidating Supervisor's citation to In re Leading 6

Edge Prods., Inc., 121 B.R. 128 (Bankr. D. Mass. 1990), a

bankruptcy court decision interpreting the Massachusetts statute,

is not authoritative as to the direction of state law. The

Liquidating Supervisor also cites two unpublished Massachusetts

appeals court decisions, Bartermax, Inc. v. Discover Boston MultiLingual Trolley Tours, Inc., No. 06-P-1827, 2008 WL 314150 (Mass.

App. Ct. Feb. 5, 2008), and Gormley v. Wilkins, No. 00-P-1490, 2002

WL 31204473 (Mass. App. Ct. Oct. 3, 2002). Under the appeals court

rules, these decisions, issued prior to February 25, 2008, could

not be relied upon or cited as precedent. See Chace v. Curran, 881

N.E.2d 792, 795 n.4 (Mass. App. Ct. 2008); Lyons v. Labor Relations

Comm'n, 476 N.E.2d 243, 246 n.7 (Mass. App. Ct. 1985). We do not

consider them.

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taking by eminent domain of certain property by the town of Webster.

Id. at 12-13. After judgment was entered, the attorney for one

party claimed he had the right to be paid from the full amount of

the damages awarded. Id. at 13. The Massachusetts appeals court

rejected the claim that the attorney had a lien on the full amount,

finding that he only had a lien over his clients' share of the

recovery. Id. at 13-14. Under the Massachusetts statute, the court

reasoned, "the attorney's lien may be enforced only to the extent

of the judgment in favor of the client." Id. at 14.6

The language in these cases, however, does not provide

"compelling guidance" on the direction of state law in the present

context. Nicolo, 201 F.3d at 33. First, there is the danger of

unmooring language from the facts of a case and the precise issue

presented in the context of those facts. Neither Torphy nor Collins

involve patent prosecutions or proceedings before an administrative

agency. Further, as R&G notes, both are cases in which the
The same is true of Northeastern Avionics, Inc. v. City 7

of Westfield, 827 N.E.2d 721 (Mass. App. Ct. 2005), and Craft v.

Kane, 747 N.E.2d 748 (Mass. App. Ct. 2001), two state court cases

that the Liquidating Supervisor argues adopt the reasoning of

Leading Edge. The disputes in both Northeastern Avionics and Craft

arose after settlement agreements had been reached in the

underlying actions. See Ne. Avionics, 827 N.E.2d at 725 (holding

that a settlement constitutes a "judgment" for the purposes of the

Massachusetts attorney's lien statute and therefore that a lien

could attach to the proceeds of that settlement); Craft, 747 N.E.2d

at 752 n.8 (distinguishing Leading Edge on the grounds that,

"[h]ere, . . . there is a settlement payment of money," and

therefore a "judgment" to which the lien attached).

R&G points out that the attorney's lien statutes of two 8

other states have been interpreted in accordance with R&G's

arguments, see Hedman, Gibson & Costigan, P.C. v. Tri-Tech Sys.

Int'l, Inc., No. 92 Civ. 2757, 1994 WL 18536, at *4 (S.D.N.Y. Jan.

14, 1994); Schroeder, Siegfried, Ryan & Vidas v. Modern Elec.

Prods., Inc., 295 N.W.2d 514, 515-16 (Minn. 1980). The language of

the statutes involved in those cases is, however, very different.

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attorney's lien was asserted after a resolution to the proceedings

was reached. By R&G's reading, these cases deal only with the 7

question of what constitutes a judgment "in [the] client's favor"

once a judgment has been issued; they say nothing about how a state

court would interpret the statute in the pre-judgment context.

R&G can also point to language supporting its

interpretation of the statute. See, e.g., In re Discipline of an

Attorney, 884 N.E.2d 450, 462 n.19 (Mass. 2008) ("By the plain terms

of [the statute], for an attorney to be entitled to file a lien,

there must be, among other requirements, 'an action, counterclaim

or other proceeding in any court,' and the attorney must have

'appear[ed] for [the] client' in that matter." (alterations in

original)). Thus, we find that the existing case law does not 8
R&G asserts there is nothing secret about the identity of 9

the attorney on an issued patent or a patent application, as the

name of the law firm appears on the first page of an issued patent

and a search of patent applications lists all law firms that have

appeared in a given patent prosecution.

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provide sufficient guidance to allow us reasonably to predict the

course of Massachusetts law. See Brown, 501 F.3d at 77; Nicolo, 201

F.3d at 33.

This is also not a case in which the "policy arguments

line up solely behind one solution." Boston Gas Co., 529 F.3d at

14. As the SJC has recognized, the "underlying goal" of the

Massachusetts attorney's lien statute is "the protection of the

unpaid attorney." Boswell v. Zephyr Lines, Inc., 606 N.E.2d 1336,

1341 (Mass. 1993). One may argue that a patent attorney who

successfully secures a legal right for his or her client in

proceedings before the Patent Office should receive the same

protection accorded to an attorney who secures a favorable judgment

for his or her client in court.

The Liquidating Supervisor cautions, on the other hand,

that an overly broad reading of the statute would create a system

of roving, secret liens, in which "any pending applications before,

or rights granted by, any municipal, state or federal agency" would

give rise to unrecorded liens of unlimited duration, causing

considerable disarray to the rights of later purchasers.9

Ultimately, determining the scope of the Massachusetts attorney's
The Liquidating Supervisor argues that certification is 10

improper because R&G failed to request certification prior to the

bankruptcy court's first order and only requested certification in

its appeal to the district court. This may weaken R&G's claim for

certification. See Boston Car Co. v. Acura Auto. Div., Am. Honda

Motor Co., 971 F.2d 811, 817 n.3 (1st Cir. 1992) ("[T]he practice

of requesting certification after an adverse judgment has been

entered should be discouraged." (quoting Perkins v. Clark Equipment

Co., 823 F.2d 207, 210 (8th Cir. 1987))); Fischer v. Bar Harbor

Banking & Trust Co., 857 F.2d 4, 8 (1st Cir. 1988). However, R&G

did request certification in the district court. Moreover, this

court maintains discretion to certify questions to the SJC when a

party fails to request certification in the court below, or even

sua sponte. See Nieves, 7 F.3d at 278 n.15; Fischer, 857 F.2d at

8; see also Brown, 501 F.3d at 77.

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lien statute may well involve policy judgments, and those judgments

are best made by the SJC. See Brown, 501 F.3d at 78.

We have noted that the fact "[t]hat a legal issue is

close or difficult is not normally enough to warrant certification,"

since otherwise cases involving state law "would regularly require

appellate proceedings in two courts." Boston Gas Co., 529 F.3d at

15. The answers to the questions in this case, however, clearly

have implications which go beyond these parties. See id.; Brown,

501 F.3d at 77. Certification may superficially appear to be a less

efficient route, but any answer a federal court may give on this

state law question is not a final answer. Only the SJC can give a

final answer in this case. Given the importance and complexity of

the questions presented in this case, we find certification is

proper here.10

We therefore certify to the Massachusetts SJC the

following questions:
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1. Does chapter 221, section 50 of the

Massachusetts General Laws grant a lien on

patents and patent applications to a

Massachusetts attorney for patent prosecution

work performed on behalf of a client?

2. If chapter 221, section 50 of the

Massachusetts General Laws does grant a lien

and the issued patents or patent applications

are sold, does the attorney's lien attach to

the proceeds of the sale?

We would also welcome any additional observations about

Massachusetts law that the SJC may wish to offer.

The clerk of this court is directed to forward to the

Massachusetts SJC, under the official seal of this court, a copy of

the certified questions and our decision in this case, along with

a copy of the briefs and appendix filed by the parties, which set

forth all facts relevant to the issues certified. We retain

jurisdiction pending that court's determination.

It is so ordered.