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David C. Hricik

May 10, 2004

The Honorable Jon Dudas
Acting Under Secretary of Commerce for Intellectual Property &
Acting Director of the United States Patent and Trademark Office
2121 Crystal Drive
Crystal Park II, Suite 906
Arlington, VA 22202

Notice of Proposed Rulemaking
Changes to Representation of Others Before
the United States Patent and Trademark Office
68 Federal Register 69442 (December 12, 2003)

By U.S. Mail and by email to ethicsrules.comments@uspto.gov

Dear Mr. Under Secretary,

In response to the Office’s call for comments, published at 69 Fed. Reg. 4270 (Jan. 29, 2004), please find my comments attached. Some of these are likely to be included in the submission by the American Intellectual Property Law Association. If I can provide further assistance, please let me know.

Very Truly Yours,

David C. Hricik


1. The phrase “immediate or prospective” which appears throughout the rules is vague. Does “immediate” mean “pending”? When is a representation “prospective.” It should be defined. The word “prospective” and “prospective business” appears in various rules. E.g., 11.402(a).

2. The comment on page 69467 stating that the payment of maintenance fees is a very useful comment, since it is often overlooked by practitioners, but it creates the wrong presumption. It states that the receipt, without more, of a periodic notice of maintenance fees “may well” create a subjective belief that the firm sending the notice represents the client. The presumption should be stated otherwise: absent other facts, the mere receipt by a client of a fee maintenance reminder does not create a reasonable basis for believing there is an attorney client relationship.

3. The comments and rules make exception for adverse use of “generally known” information. E.g., page 69481. One ambiguity in the current rules is whether public information (e.g., patents) can ever be “confidential” and, if so, if it is always deemed “generally known.” The rules should provide that, at minimum, U.S. patents and published US applications can never be “confidential.”

4. The comments go a long way toward eliminating the existing ambiguity about whether confidential information must be turned over under 1.56. See, e.g., 11.106(c). However, one key uncertainty facing practitioners is whether they must disclose confidential information received by one client that is material to another client’s application, as recognized by the split in Molins v. Textron. See David Hricik, Aerial Boundaries: The Duty of Candor as a Limitation on the Duty of Patent Practitioners to Advocate for Maximum Patent Coverage, 44 So. Tex. L. Rev. 205 (Winter 2002). Neither the comments nor the rules do anything to resolve that issue, and leave it vague. Similarly, Section 11.106(g) permits disclosure of confidences when 1.56 requires but only after the representation has ended. Is it the Office’s position that a lawyer who receives confidences from one client that are material to another client’s application may not disclose that information until the representation has ended? That would appear to be the impact of 11.106(g) along with the comments. Is that correct?

5. In 11.101, the rules lack scienter, and thus are grossly overly broad. Specifically, Section 11.101(c)(2), (3) & (4) are violated – and thus is “misconduct” under 11.804(a). We believe the word “knowingly” should be included after the word “practitioner” in the first line of each of subsections (2), (3) and (4).

6. 11.102(g) does not require disclosure of conduct which constitutes inequitable conduct, since it is not “fraud.” Should 11.102(g) be re-worded to state: “A practitioner receiving information clearly establishing that the client has, in the course of the representation, perpetrated a fraud upon a person or tribunal, or violated section 1.56 of this Chapter, in connection with practice before the Office...”

7. Section 11.103(a) requires practitioners exercise “zeal.” The word “zeal” was deliberately omitted from the Model Rules and seems inconsistent with the predominantly ex parte nature of Office practice, and further inconsistent with the fact that all matters before the Office are affected with the public interest. Requiring “zeal” in the text of the rule seems odd when the Model Rules do not contain that requirement.

8. 11.105(b) goes too far in requiring the lawyer to distinguish between the rates for preparing the application and prosecuting applications. If the requirement is left in, would it comply with this provision for a practitioner to simply state: “My hourly rate for preparation and prosecution of patent applications $200.00 per hour.”

9. 11.105(c) permits contingency fees in prosecuting patents. If this is the intent of the Office, then the Office should remind lawyers that entering into a contingency fee arrangement with a patent prosecution client would create some of the same conflicts of interest that arise when a lawyer takes an interest in an application. It may be that 11.08(j)(3) could be amended to explain that it covers contingency fees. Another way to address this might be to amend 11.08(a) to provide: “A practitioner shall not enter into a business transaction with a client having immediate or prospective business before the Office, or knowingly acquire an ownership, possessory, security, contingent, or other pecuniary interest adverse to a client having immediate or prospective business before the Office unless...” At minimum, the comments to 11.08(a) should clarify whether that rule applies to contingency fees taken in applications. Contingent fees in patent cases create unique issues not shared with normal litigation-made contingent fees, and the rules should reflect those unique issues.

10. Section 11.105(c) has a clause that does not make sense. It says that “except in a matter in which a contingent fee is prohibited by paragraph (d) of this section.” Paragraph (d) relates to division of fees. As written, it would prohibit a division of a contingent fee between firms, which seems odd. We assume this is a mistake in need of correction.

11. Rule 11.07, in light of the choice of law provision in 11.805 does not appear to be workable. Under 11.805(b)(1), a lawyer who is representing a client for conduct in the Office is governed by the PTO Rules. Under 11.07(a) and (b), a practitioner faces a conflict of interest only if he is representing both clients before the Office. Is this what the office intends? In light of the choice of law provision, 11.07(a) would permit a lawyer to represent a client before the office even where (1) representation of that client is directly adverse to another client, (2) the lawyer does not reasonably believe the representation will not be adversely affected; and (3) the clients do not give informed consent – so long as the client to whom the lawyer is adverse is not being represented by the practitioner before the Office. State law would, ostensibly, be preempted. Presumably, in 11.107(a) the clause “having immediate or prospective business before the Office” following “will be directly adverse to another client” should be deleted, and the same change made to (b) to remove the clause “where any of the clients or third party have immediate or prospective business before the Office”.

12. The preceding comment raises a much more important but more general concern. The rules repeatedly (upwards of 30 times) use the phrase “immediate or prospective business before the Office” which, apparently, is designed to avoid imposition of the PTO Rules to state ethical matters which are not implicated by the PTO’s federal objectives. The current PTO Code achieves this result through a much more elegant means, by simply stating that the PTO Code is not intended to preempt state law beyond that necessary for the PTO to achieve its federal objectives. Indeed, during adoption of the PTO Code, the PTO repeatedly refused to put into specific rules language like “immediate or prospective business before the Office,” instead relying on the general preemption provision which, in turn, relied upon the scope of federal preemption recognized by the Supreme Court in Sperry. E.g., 50 FR 5158, 5163-64; 50 FR 5158, 5165; 50 FR 5158, 5166. The approach the PTO took in the mid-1980's avoided many drafting problems present with the current draft. That approach should be taken today. Rather than inserting “immediate or prospective business” into various rules -- which can lead to awkward and unforeseen issues -- the PTO should either use the choice of law provision to establish the boundaries of PTO practice or adopt a rule essentially like current 10.1 to establish that same proposition. The current approach is going to lead to mischief since it is a limitation that has not ever been adopted previously. Further, it may make the question of whether the PTO can enforce its rules turn on interests of clients and third parties are involved in PTO proceedings – rather than on the broad reach identified by the Sperry court. (Additional issues concerning this limitation are discussed below. E.g., items 16, 17. Sometimes the limitation is not in places where it “should” be. Each rule, if the PTO intends to continue this approach, must be reviewed to see if the phrase has been inadvertently left out, not just incorrectly included.)

13. 11.108(e)(3) refers to advancing costs of medical exams. Is this necessary?

14. 11.108(e)(3) does not appear to permit a practitioner who takes over a matter after another practitioner has withdrawn or been terminated to advance fees to prevent or remedy abandonment of a client’s application caused by the prior practitioner unless the client agrees to be ultimately responsible for those. It seems odd to permit a practitioner who fouls up the client’s case to advance those costs, but not the lawyer who is brought in to remedy the situation, and in an emergency the rule as written could create difficulties.

15. Section 11.108(j) refers to “papers received from a client.” This appears too narrow, since it would permit the practitioner to have a proprietary interest in papers he obtained from third parties (e.g., foreign patent offices; foreign libraries; research facilities) on the client’s behalf without complying with subsections (1) to (3) of this section. The phrase “papers received from a client” should be changed to: “papers received from, or acquired on behalf of a client.”

16. Section 11.108(j)(2) permits lawyers to contract for contingent fees “in civil cases.” This rule would appear to be unnecessary, given that representation in civil cases would appear to be governed by state or other law, not these Rules. If the provision is intended to permit lawyers to agree with clients that, prior to issuance of a patent, the client can agree that the lawyer will represent the client on contingent basis in infringement suits, perhaps it should so state.

17. Section 11.108(j)(3) states “in a patent case.” Does that mean that it applies in a patent suit in federal court, or only while a practitioner is prosecuting an application?

18. As written, Section 11.109(a) does not prevent a lawyer from acting adversely to a former client in a substantially related matter, so long as the lawyer did not represent the former client before the Office. Under the choice of law rules, this would allow lawyers to be adverse in the Office to former clients under circumstances where no state would permit it – where the lawyer is in position to misuse confidential information against the former client, for example. This, again, appears to be an example of where insertion of the phrase “in practice before the office” in the first clause creates unintended issues. See item 12, above. Subsection (b) of this rule, because of the location of that clause, appears to be broader than (a), and would appear to be correct in its application. One way to fix (a) may be to delete “in practice before the Office.” Subsection (c) creates the same issues as (a), and in combination with the choice of law rules would allow a lawyer to prosecute a patent by using information against a former client – so long as the lawyer gained that information in a representation that was not “in a matter before the Office.” This phrase needs to go! These are fundamental mistakes which were avoided in 1985 by the Office’s persistent refusal to put these phrases into the rules.

19. The phrase “associated on a continuing basis” is vague. In ethics parlance, “associated” implies that sort of relationship – lawyers in a firm are associated with each other, for example. The use of “on a continuing basis” could also be argued to mean that a practitioner who is merely temporarily associated with a firm creates imputation under 11.110(a).

20. With respect to 11.110(c) and 11.107, does the patent office have a position on whether, and if so when, so-called “advanced waivers” are enforceable? Providing guidance to practitioners on this issue, particularly in commentary to 11.107 would be useful.

21. With respect to 11.113, the PTO should consider adopting the Ethics 2000 version of Model Rule 1.13, which takes into account various issues created by Sarbanes-Oxley and related law.

22. Section 11.115(a) is not substantially the same as current rule 10.112(a), as the comments state, but it should be. As written, it creates two problems. First, it limits the banks into which client funds may be deposited. The current rule was deliberately written (in response to a comment, even) to allow lawyers to deposit funds into any bank account in the US (and some foreign accounts). The new rule limits the lawyer to banks licensed to do business in the same state as the lawyer or his firm. The old rule was written the way it was to benefit clients, and the new rule should be the same. The second problem is that, as written, this rule would require lawyers who receive funds from a client to deposit those funds into a limited number of state banks – even if those funds were received by the lawyer in connection with something other than Office-related activities. For example, under this rule as written all money received by a firm representing X Corporation must be deposited into specific banks, even if the money was received for purposes having nothing to do with the office.

To remedy the first problem, the existing language of 10.112(a) should be used. If the requirement that the bank be FDIC or FSLIC insured, then that language could be added in. To remedy the second, the phrase “in connection with activities before the Office” should be inserted in existing 10.112a) after the first use of “a practitioner’s firm”.

23. The phrase “fiduciary relationship” in 11.115(f)(4) should be deleted since it is a comment on law. “Practitioner-client relationship” would be better.

24. In Section 11.116(1), the phrase “or other law” leads to confusion concerning choice of law. Must a lawyer withdraw if the representation violates state ethics rules, but not the PTO Rules? Based on the choice of law provision, the answer would appear to be “no” but “other law” invites this argument. If the intent is to preclude representations in the Office which violate state law, then the choice of law rule needs to be amended, or this point made clearer. (I do not believe that should be done; the PTO Rules, alone, should apply; but this phrase leaves that door open. The comments should, at minimum, shut it.) In a similar vein, the comments state that the “court” may need an explanation, again confusing choice of law

25. The preemption issue concerning 11.117 is worth addressing. Does this provision mean that the state cannot preclude a practitioner from selling a practice (and, likewise, a practitioner from acquiring one)? This rule has not been widely adopted, and the question of whether the PTO has authority to adopt 11.117 – is it necessary to achieve its federal objectives? -- is not addressed by the comments, and would appear to be a tenuous matter. Before the PTO adopts this rule – and practitioners rely on it – the PTO should expressly state that state law to the contrary is preempted in order for the PTO to achieve its federal objectives. .

26. Section 11.202 has a broader “reach” than the other rules, allowing a lawyer to intermediate if only one of two clients has business before the Office. Was this intended? On the other hand, this rule is limited to “business” and not “prospective or impending” business. Was that intended? See comment 12 regarding these phrases, above.

The phrase “may make it” in (d) should be changed to “make it”.

You will no doubt have people argue that 11.202 should be deleted because it was deleted in the Ethics 2000 version of the Model Rules. Most states, however, still have 2.02 as a distinct rule, and it is a useful rule for lawyers. Keep it in.

27. 11.203 also implicates the choice of law issue and the authority of the PTO to regulate the practice of law. The rule would appear to apply (based on choice of law rules) even where the practitioner’s evaluation does not relate to the matter pending before the office. For example, it would purport to apply where the practitioner is providing an evaluation for a patent client, even if the matter being evaluated is not before the Office. To remedy this, insert “pending before the Office” between “matter” and “affecting a client” and delete the phrase “where either the client or other person has immediate or prospective business before the Office”. At the same time, as written, it would govern the conduct of a practitioner on behalf of a third party simply where that third party has activity before the Office. Is that necessary for the PTO to achieve its federal objectives? Again, these phrases create ambiguity which was avoided in the mid-1980's and which should be avoided again.

28. The introductory phrase if 11.302(b) is confusing. I assume it’s meant to say that if the information is subject to rule 1.56, it must be disclosed. I don’t think you need to have the clause since information which is subject to 11.106 still must be disclosed if covered by 1.56, and the absence of the clause in other rules could be argued to show that information need not be disclosed.

29. In 11.303, what does “in regard to practice before the Office” mean? For example, is 11.303 violated where a practitioner while representing an infringer in federal court misrepresents something concerning practice before the office? Is that necessary for the PTO to achieve its federal objectives? The phrase should be deleted.

30. 11.303(a)(3) would not, as written, require a practitioner to disclose to the Office controlling adverse authority not known to the examiner during prosecution or other ex partes proceedings. The rule should require that, by adding “or Office” after “opposing counsel”.

31. In 11.303(c), what does “in regard to practice before the Office” mean? Does it include the hypothetical in number 29, for example? This phrase should be deleted.

32. As written, 11.303(d), last sentence, would require disclosure of information favorable to patentability. Is that wise? The clause “whether or not such information is adverse” should be deleted.

33. 11.303(e)(5) -- is “or any employee of the Office” necessary? If it is necessary here, then it probably needs to be inserted in numerous places elsewhere. Deleting it is probably wise.

34. In 11.304(a), should the phrase “or the Office’s” be inserted after “another party’s” in order make it unethical for lawyers to unlawfully obstruct the Office’s access to evidence? That would seem to be wise.

35. In 11.304(e), should “the guilt or innocence of the accused” be deleted as superfluous?

36. 11.304(f) would seem to permit lawyers to advise nonclients to refrain from providing to parties during interference proceedings information covered by Rule 1.56, and which should have been submitted to the Office. As worded, for example, a lawyer who represents the corporation, and not a former-employee inventor, could advise the former employee not to submit information (as a former employee, he is not an “agent”) to the opposing party, since doing so will not harm the interests of the inventor. I am not sure if this was what is intended.

37. In 11.307(a), should this be limited to inter partes proceedings? If so, insert “inter partes proceeding” between “a” and “proceeding” in the first clause. It may be unworkable if it applies to prosecution, for example, and probably would not normally apply there, anyway, so why not make it clear that it doesn’t.

38. Should a new (c) be added to 11.401 which states: (c) Fail to comply with 37 C.F.R. 1.56. The reason for that is to avoid making it seem as if there is tension between complying with 11.106 (confidentiality) and 1.56 (candor). See Molins.

39. Section 11.402(b) defines “party” more narrowly than the ABA Model Rules since it does not include either (a) a person who supervises, directs or regularly consults with the organization’s lawyer concerning the matter or (b) whose act or omission in connection with the matter may be imputed to the organization for purposes of civil liability. This is a substantial retrenchment of the scope of Model Rule 4.02, and we believe it unwise. The scope should be the same as the Model Rule.

The PTO should clarify that, as seems to be its intent, 11.402 does not reach former employees.

40. With respect to 11.504(a)(3), see the comments concerning 11.117, above, and PTO authority to promulgate this rule as written.

41. With respect to 11.505, does the PTO have authority to regulate the practice of law by lawyers in matters that are not before the Office? Subsection (a) would allow the office to discipline practitioners for violations of state unauthorized practice law. Is that within the scope of the PTO’s authority under Sperry? The same is true for comment (b). Items (c), (d), and (e) seem appropriate.

42. Section 11.701, as written, allows lawyers to make false or misleading statements about the practitioner’s services for former clients before the Office. Again, this is an example where insertion of the phrase “business before the office” and the like has created unintended consequences. To remedy this, delete “for persons...” to the end of the sentence and replace it with: before the Office.

43. Throughout the 700's, the phrase “immediate or prospective” is used. Is the phrase “prospective” unduly broad in this context? Likewise, there is no scienter requirement – the practitioner need not know about the client’s prospective need for office service. Is that the intended balance?

44. 11.705(c) may conflict with state law. What is the federal objective of the PTO which supports this rule?

45. Should 11.803(a) include examiners, or “employees of the Office”?

46. 11.803(a) should refer to the OED, not “the appropriate professional authority.” Should this not be required to be in writing?

47. In 11.803(b), “section” should be “subsection”. Here, the rule refers to the PTO Rules by a different term than it does elsewhere. There should be consistency, and clarity, and so perhaps “PTO Rules of Professional Conduct” should be used each time to avoid confusion with state rules, for example.

48. Is Section 11.803(f)(3) intended to apply if a practitioner is representing a party in federal court, and alleges inequitable conduct there? If so, this creates interesting separation of powers problems. We believe 803(f)(3) should be limited to alleging in a proceeding before the Office that inequitable conduct has occurred.

49. As written, there is no scienter requirement for a violation of 11.804(h)(4) -- a lawyer can be disciplined if he unwittingly accepts assistance forma former employee of the Office in certain matters. Scienter should be required by amending this rule to insert “Knowingly” at the beginning of the subsection.

50. Same comment with respect to subsections (6) and (7).

51. Concerning subsection (8), which “codes of professional responsibility” apply? This rule seems vague, and it may be that the reference is intended to be to th PTO Rules of Professional Conduct.

52. Should item 10 be expanded to include, not just frivolous complaints about practitioners, but also employees of the Office?

53. Subsection (I) of 11.804 seems to be a definition, not a rule, and belongs elsewhere unless this definition applies only to 11.804, in which case it should say so. If it applies more broadly, then it should not be wedged into this rule.

54. Choice of Law. Rule 11.805 does a better job than the old rules of noting when PTO rules apply. However, there is no statement of intent to preempt. If the PTO Code preempts under 11.805, it should so state, since right now it merely states that the PTO Rules apply -- and not necessarily to the exclusion of state rules. Is it the office’s position that the PTO rule preempt state law when they apply? If there is no intent to preempt, then the PTO Code should so state, since otherwise practitioners are still left with their existing dilemmas. Indeed, the comments can be read as not preempting state law. See 69504 (“It would be appropriate to apply...”). If the PTO Code does not preempt state law, the PTO should so state, to avoid lawyers believing they can rely only on it if PTO law applies to their conduct. 11.805(b)(3)(ii) should be amended to state that where the PTO rules apply, other law to the contrary is preempted.

What is the purpose of 11.805(b)(2)? The PTO cannot make choice of law determinations for courts. This provision seems unwise and unworkable.

55. What does “participate in the representation of the client” mean for purposes of 11.806? What if the client pays hourly, and the practitioner receives a share of profits from the client. This needs definition.

56. I have advised clients who have run into this problem: suppose client advises the practitioner of material prior art. Practitioner advises the client of the duty to disclose. Client takes action which, under state law, constitutes termination of the attorney-client relationship. Must the practitioner, nonetheless, discloses the prior art to the office? Under the current PTO Code, the answer is “yes” according to the PTO’s response to comments. 50 FR 5158, 5165. Under the new rules, is the answer the same?

57. Definitions:

“Attorney.” As written, a lawyer who is licensed in two states, but disbarred in one, is an “attorney.” Is that what is intended?

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