Trackpad Locks after sleep

Macbook Air 13" has worked for 2 years without any issue. Since last week Trackpad gets locked intermittently after coming back from sleep. Interestingly, mouse can be moved, keyboard works, right click works (set to lower right of trackpad). It is just the click which does not work. Re-start does not help either.

Last week I started using the Magic Mouse. If I bring the Magic mouse close, problem gets resolved and I can use both the mouse and trackpad.

OS is 10.10.5. Any ideas? Don't want to get locked up when I do not have the Magic mouse nearby.